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Wednesday, January 8

8th Jan - FOMC minutes ahead

Later today (19:00 GMT) we get the minutes from the Federal Reserve's FOMC December meeting, which deciced to commence tapering in the current month. Do they agree? Who disagreed? What's next?

Previously on MoreLiver’s:

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Scotching the EurozoneProject Syndicate
Conventional wisdom suggests that Scottish independence is possible, albeit not very likely, while any country’s departure from the eurozone is fanciful. But the monetary decisions that a newly sovereign Scotland would have to make are at least as likely to be faced by some eurozone countries over the next couple of years.

A consistent trinity for the EurozoneMarco Buti /
First, sound fiscal policies need to be conducted while keeping sustainable welfare systems. Second is the conflict between policy objectives and economic realities – vulnerable economies cannot reduce their debts and simultaneously gain competitiveness. Third, financial stability and integrated financial markets cannot be established unless the relationship between banks and their sovereigns is reformed.

Is Europe Growing Together or Growing Apart?Bank of Finland
While a core group of countries may be developing together, there appears to be at least seven identifiable groups of countries with different growth dynamics…These results provide awkward implications for policy, particularly for those who thought that simply having a union would draw countries closer together (endogenous OCA criteria)

Why Reinhart and Rogoff are Wrong About the Eurozone’s Debt Structure and the Costs of Debt MutualisationYanis Varoufakis
It is a serious mistake to identify debt mutualisation with jointly and severally guaranteed Eurobonds. For there is another mechanism by which to mutualise debt and substantially reduce the Periphery’s aggregate debt without incurring any costs upon countries like Germany.

U.K. House Prices to Extend Gain as Loan Access EasesBB

EU Puts Banking-Union Credibility on Line in TalksBB

Analysis: America to Europe: Stronger banking union would help boost growthReuters
Lew’s comes to Europe airing concernsMacroScope / Reuters
The United States has a message for Europe: If you want to help your ailing economy, consider pledging taxpayer money from across the euro zone to help troubled banks.

ECB Preview: Still pressure from low inflationDanske Bank
Pressure on the ECB to ease further, but we expect it t0o refrain from cutting rates…likely to ease monetary policy further in April due to a new drop in inflation and core inflation

Turning JapaneseLong Short / FT
The ECB is dithering about taking radical action, such as negative interest rates or the QE which Japan is now using in an attempt to devalue its way to growth. The ECB thinks inflation will rise again next year. If it does not, investors must hope the central bank steps in before deflation becomes a serious threat.

ECB preview: Talk is cheap — expect little concrete tomorrowTradingFloor

I expect the ECB to refrain from any concrete action at the January meeting of the governing council despite the recent tick down in inflation.

Will the ECB push eurozone small caps higher?Humble Student
While no action is likely this week, we may get greater clarity on this issue as any central bank stimulus targeted at the real economy would be tremendously bullish for eurozone small cap stocks

Euro area unemployment rate at 12.1% – Eurostat
Volume of retail trade up by 1.4% in euro area – Eurostat
Spain Youth Unemployment Rises To Record 57.7%, Surpasses GreeceZH
Euro zone unemployment holds at record high, retail sales rebound – Reuters
German Factory Orders Rose More Than Expected in November – BB
Spanish Bonds Gain With Portugal’s as European Retail Sales Jump – BB

5 Things to Watch in Housing in 2014WSJ
Will Inventory Rise? * Where Is the Home-Construction Recovery? * What Happens to Mortgage Credit? * What Will Investors do With Their Homes? *  When Does Housing Hit a Tipping Point on Affordability?

The US should extend emergency unemployment benefitsalphaville / FT

Fed’s Rosengren Says Economy Far From Where Needed – WSJ
Rosengren Signals Support for Taper Strategy After Dissent – BB
Fed to ease foot off accelerator, but won't hit brakes: Williams – Reuters
Fed’s Williams: Fed Likely to Taper More, End Bond-Buying This Year – WSJ

Minutes of the Dec 17-18 FOMC meeting – FED
Fed Minutes Reveal "Waning Benefits Of QE" – ZH
FOMC Minutes: "Proceed cautiously" with QE3 Tapering – Calculated Risk
Hilsenrath Analysis: Fed Minutes May Show Amicable Taper Decision – WSJ
Key Passages in Fed Minutes: Consensus on QE, Focus on Bubbles – WSJ
USD, Bonds, And Bullion Down Post Fed Minutes – ZH
The Fed had no idea if the taper would terrify marketsWaPo
“Tapering will happen - unless there are exceptional shocks” – TradingFloor

Fed Discusses Tool That May Eventually Help It Set RatesWSJ
Minutes try to reassure; plus an interesting par about financial vulnerabilitiesalphaville / FT
Minutes suggest it will be difficult to strengthen forward guidance furtherDanske Bank
FOMC Minutes - The Quick Review – Tim Duy’s Fed Watch

China’s Credit Hole Seen Limiting 2014 Growth ProspectsBB
China’s new credit probably fell by a record in the second half amid a crackdown on speculative lending, limiting prospects for economic expansion this year as policy makers focus on controlling financial risks.

Guide to the Markets Q1 2014 JP Morgan

7+1 FX trades of 2014 Nordea
Scandies to parity. Short NOKSEK * Canada back to Earth. Long USDCAD * Safe haven no more. Long GBPCHF * Terms of trade. Short EURPLN * Too much tightening priced in. Long AUDNZD *
LatAm rebalancing. Long MXNBRL * Least against most fragile. Long INRTRY * Too low. Long FX volatility

361 Capital Weekly Research BriefingThe Reformed Broker

Weekly Bond Update: New issuance picking upTradingFloor
With fresh money seeking work, the expected new year issuance has begun with a high level of activity and investor interest.

Päivänpaiste sokaisee velkamyrskyn silmässä – Jan Hurri / TalSa
Eurokriisi näyttää tyyntyneen kuin paha myrsky olisi ohi. Kriisin oireet ovatkin rauhoittuneet – mutta syyt ovat ennallaan tai entistä pahempia: talous on heikompi ja velkataakka raskaampi kuin ennen kriisiä. Euroalue onkin ennemmin myrskyn silmässä kuin suojassa.

Yritysjohtajat vauhdittaisivat terveydenhuollon yksityistämistä, kansa haraa vastaanYLE
Yritysjohtajat yksityistäisivät nykyistä nopeammin sosiaali- ja terveyspalveluja. Lisäksi tappiota tehneet yritykset voisi työpaikkojen menetyksen uhallakin jättää ilman valtion tukia, kertoo Yle Uutisten kysely.

Raportti: Suurilla suomalaisyrityksillä kymmeniä tytäryhtiöitä veroparatiiseissaYLE
Finnwatch-kansalaisjärjestön raportin mukaan suomalaisyrityksillä on veroparatiiseissa yhteensä 438 tytäryhtiötä. Tytäryhtiöitä on perustettu muun muassa Caymansaarille, Kyprokselle ja Brittiläisille Neitsytsaarille, ja lisäksi alhaisemman verotuksen maihin Belgiaan ja Hollantiin. Suomessa yhtiöiden raportointivelvollisuuksia säätelevät lait eivät velvoita julkaisemaan listausta mahdollisista tytäryhtiöistä.

Kolme kysymystä Suomen tulevaisuudesta: Stefan TörnqvistLibera

Kuntauudistus repii hallitusta: Maakuntien kansanedustajien kapina kasvaaSK
”Me näemme jo, että tämä uudistus menee seinään”, kokoomuksen kansanedustaja sanoo.

Uusi vuosi, vanhat ongelmatHannu Visti

Millainen EU:n pankkiunionin olisi pitänyt olla?Henri Myllyniemi / US