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Tuesday, January 7

7th Jan - EZ disinflation, recovery elsewhere

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Analysis: Euro zone - reasons to be wary in 2014Reuters
EU elections, bank stress, German court, reform zeal, deflation.

German party manifestos are increasingly likely to downplay European issues and reflect negative attitudes toward the EUEuropp / LSE

World-Beating Debt Burden Is No ‘Serious Threat’ to DenmarkBB
Danish central bank Governor Lars Rohde said most of the nation’s households would survive a jump in interest rates or a loss of income as Denmark tops world debt rankings.

Crisis Management: Europe Eyes Anglo-Saxon Model with EnvySpiegel
Should the ECB follow the Anglo-Saxon model and buy up vast quantities of sovereign bonds in attempt to finally overcome the euro crisis? ECB head Mario Draghi is under pressure to act now. But what are his options?

Periphery business cycle monitorDanske Bank
Euro area periphery data continue their improvement and in line with this sovereign spreads have tightened further.

Eurozone fund chief dashes Greek hopes for debt dealeuobserver
There will be no debt restructuring," Regling said. The ESM is Greece's largest creditor, with €133 billion in 30-year loans already disbursed at an interest rate of 1.5 percent.

The next sudden
Financial crises are generally preceded by credit booms and a build-up of external debts. Although it is unclear whether Turkey is experiencing a financial bubble, as of 2013, 58% of the corporate sector’s debt was denominated in foreign currencies. This column argues that this explains the Central Bank of Turkey’s interventions to prop up the value of the Turkish lira. Given the relatively low level of reserves and the unfolding corruption scandal, it is a critical question how long the Bank can continue to do so.

Core inflation in EZ 0.7% in December, lowest on record
Euro area annual inflation down to 0.8% - Eurostat
Euro zone inflation drops unexpectedly in December – Reuters
Europe's flashing red lights of deflation – TradingFloor
Disinflation Trend That Should Keep Mario Draghi Up At Night – BI
*Mr. Draghi Plays Chicken With Deflation – WSJ
Surprise drop in euro zone inflation shows deflation risk – Reuters
German Unemployment Drops as Euro-Area Inflation Slows – BB

Lew Will Push EU to Avoid Race to Bottom on Finance RulesBB
Treasury Secretary Jacob J. Lew will press European officials to follow the U.S. lead in adopting tougher banking regulations to ensure that American financial firms aren’t put at a competitive disadvantage.

Macro Implications of Extending Emergency Unemployment CompensationEconbrowser

Yield Chasing Never Ends Well – Even in EquitiesThe Reformed Broker

How Divided is the Fed?Tim Duy’s Fed Watch
What I am watching for in the minutes - signs of division.  Division on the forecasts themselves will make it hard to agree to a successor to the Evans rule.  Divisions on the reaction function will make it even harder.

5 Things Yellen Will Face in Her Regulatory AgendaWSJ
Janet Yellen, who could be confirmed as chairwoman of the Federal Reserve as soon as today, will have her hands full trying to unwind the central bank’s programs for stimulating the economy. But that’s just the beginning of her new challenges. As the regulator of the largest U.S. financial institutions, including those most likely to pose risks to the economy as whole, the Fed also has a host of regulatory issues on its agenda.

Factbox: Five facts about next U.S. Fed chief YellenReuters

Trade Deficit decreased in November to $34.3 Billion – Calculated Risk
Trade Deficit Slides 13%, Lowest Since October 2009, Exports Rise To Record – ZH
Trade deficit smallest in four years; imports weak – Reuters
Trade Gap Shrinks to Four-Year Low as U.S. Oil Imports Drop – BB
US Trade Balance Improves, Net Exports to Help Q4 GDP – Marc to Market
CoreLogic: House Prices up 11.8% Year-over-year in November – Calculated Risk

Europe’s Lessons for China’s ReformersDaniel Gros / Project Syndicate
While China’s opening to the outside world has enabled it to achieve astonishing economic progress over the last three decades, the country might now have reached a level of income at which the problem is no longer “too little market.” On the contrary, some of China’s key problems today require more government intervention.

Great Graphic: Yen and NikkeiMarc to Market

Insights Q1 Outlook: Next stop, AsiaTradingFloor
Steen Jakobksen: Emerging Asia, the erstwhile saviour of the West in the global financial crisis, is set to tumble in 2014. But take heart, this is a structural necessity that marks the beginning of the end.

Commodity Outlook: A time of plentyTradingFloor
A surfeit of supply is the common thread in commodity markets. With agricultural warehouses brimming, more oil being pumped and metals extraction zipping ahead, prices will be under pressure in 2014 unless sustainable growth can be achieved.

Macro Outlook: Steady as she goesTradingFloor
Mads Koefoed: Expect the US to lead growth prospects in 2014 as a rise in households’ net worth helps to propel the economy forward. But if you’re a French bull, rein in your horns — it looks nasty.

Forex Outlook: Full steam aheadTradingFloor
John J Hardy: The taper calendar is set for the New Year after the Fed’s December meeting and Q1 will see a concerted effort to wean the forex market off quantitative easing.

Equity Outlook: Going upTradingFloor
Peter Garnry: Don’t pay any heed to those who say equities are in a bubble. If you really want to make the most of your portfolio in 2014, the biggest risk is not being long enough on risky assets.

January Sentiment SummaryShort Side of Long
Managers exposure towards equities resembles group think * Retail investors continue to pile into global stock markets * Nasdaq speculators continue to maintain elevated bullish bets * Volatility Index is coiling into a compressed decision point…* Household exposure to stocks has risen to levels of 2007 top * Bund funds are experiencing a 7th consecutive monthly outflow * Speculators are once again pressing Treasuries with shorts * Funds continue to shun commodities as downtrend persists * Agricultural exposure is at one of the lowest levels in years… * Speculator are holding net long positions on the US Dollar * Hedge funds remain bearish on the overall PMs sector * Silver’s sentiment is now at one of the lowest levels in decades

Commodities Update: The polar vortex heats up marketsDanske Bank
A polar vortex has hit the US, bringing freezing temperatures all the way down to the southern states. The hard wind chill and heavy snowfall has created an urgent demand for energy to heat up houses, putting imminent pressure on natural gas supplies. Consequently, natural gas spot prices have soared.
The extreme winter weather has also spurred worries over the possible effects on winter wheat and citrus crops, sending grains and juice prices up

The scientist's approach to FX in 2014TradingFloor
As the markets start again for 2014, the overall macro themes that were dominant at the end of last year are likely to persist with US tapering, eurozone deflation, the UK recovery and the relative success of Abenomics all key.

HS ja Kilpailuvirasto saavat kyytiä ministeriltäKL
S-ryhmän ja S-etukortin joutuminen Kilpailuviraston syyniin ei miellytä kaikkia ministereitä.

Pankkiunioni tulee – pidä kiinni lompakostasiSampo Terho

Asuntolainojen nosto hiipuiVerkkouutiset
Asunnonostajille ilouutinen: Lainamarginaalin kasvu pysähtyiTalSa

Asuntolainojen korkomarginaalin kasvu pysähtynyt syksyn aikanaSuomen Pankki

"Suomelle jää Musta Pekka käteen"TalSa
Asiantuntijat uskovat euron heikkenevän tulevaisuudessa, mutta tarkempi ajankohta jakaa mielipiteitä. Heikompi euro olisi mannaa Suomen viennille.