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Saturday, July 26

27th Jul - W/E: Markets & Economics

Previously on MoreLiver’s:

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Forward Premia and the Carry TradeEconbrowser

Mistrust the Financial StorytellersThe Psy-Fi Blog

In praise of human, over machine intelligenceHumble Student

Don’t Tell Anybody About This Story on HFT Power Jump TradingBB
Far from Wall Street in a Chicago neighborhood once synonymous with urban blight, two futures industry veterans are using secrecy and speed to mint fortunes.

Intro to Technical Analysis - Does it Work?About
We Settle the Question about the Usefulness of Technical Analysis.

Soros Chart Shows Euro-Yen Reaching 2008 High: Chart of the DayBB
The euro will surge to a six-year high against the yen by the end of 2014 as the European Central Bank isn’t printing money as fast as the Bank of Japan, according to Daiwa Securities Co.

Research Review: Momentum InvestingThe Capital Spectator

Another complementary factor modelHumble Student

Benjamin Graham: Father of the Efficient Market Hypothesis?A Wealth of Common Sense

Global House Price IndexThe Big Picture

Markets: Exuberance is not always ‘irrational’Reuters

High Yield Credit Market Flashing Red As Outflows SurgeZH
BofA warns that flows follow returns and this week saw the biggest outflows from high-yield funds in more than a year.

Tuesday Central BanksWSJ
Hilsenrath’s Take: Fed Economists Find Good News on Long-term Unemployed * Wall Street Adapts to New Regulatory Regime * Australia Central Banker Won’t Rule Out More Rate Cuts * South Korea Edging Toward Interest Rate Cut—Economists * Japan Cuts Growth Forecast, Urges Restraint on Debt Issuance

Tuesday Macro: Japan Trims Its Growth OutlookWSJ
Asian and European equities popped higher in early trade, as the political after-effects of the downing of Malaysia Airlines Flight 17 fade. As equities gained ground, gold prices softened, while safe-haven sovereign bond yields ticked higher. Otherwise, European news was thin on the ground. Earlier, the Japanese government trimmed its inflation-adjusted growth forecasts for the economy, as the April tax hikes take a bite out of consumption demand.

Wednesday Central BanksWSJ
Da Costa’s Take: The Fed Still Has Little Reason to Worry About Inflation * Regulators Said Deutsche Bank Suffers From Litany of Reporting Problems * Fed Concerned About Effects of New Interest Rate Tool on Markets * BOE’s MPC Has No “Preset Timing” For First Rate Move

Wednesday MacroWSJ
The latest fad in global investing has been to plough money into emerging-market currencies and the assets denominated in those, as well as those of countries such as Australia whose exporters’ fortunes are tied to emerging markets. In a world of low volatility, abundant central bank liquidity and record-low bond yields, developing world markets battered during last year’s “taper tantrum” are seen as one the few promising sources of higher returns.

Thursday Central BanksWSJ
Hannon’s Take: BOE Seeks Clarity on Wages As First Rate Rise Awaits * Carney: U.K. Economy Strengthening But Headwinds Likely to Keep Lid on Rate Rises * Conditions Suggest Volatile Money Flows to China, Official Says * Deutsche Bank Finance Chief Faces Heat After Financial-Reporting Exposure * Is the BRICS Bank More “Democratic” Than the World Bank?

Thursday MacroWSJ
There was generally good news on the global economic front Thursday, with both China’s and the euro zone’s midmonth purchasing manager indexes showing solid recovery, U.K. shoppers on a tear, and Spain delivering the welcome news of a drop in unemployment. All of that, along with solid industrial activity data out of Taiwan on Wednesday, suggest a synchronized pickup in global demand

Friday Central BanksWSJ
Hilsenrath’s Take: In A Quiet Moment, Big Decisions Loom for Fed * Greenspan Says Bubbles Can’t Be Stopped Without ‘Crunch’ * Japan’s Inflation Slows for Second Month * U.K. Economy Passes Pre-Crisis Peak * Russia Central Bank Raises Key Rate to 8.0%

Friday MacroWSJ
Divergence across the developed world economies is the theme of Friday’s data flow. Whereas Japan and Germany produced numbers that illustrate the ongoing struggle for the third- and fourth-largest economies, respectively, the U.K.’s GDP report highlighted its remarkable recovery over the past year or so and recent data in the U.S. point to a healthier outlook there.

World Economic Outlook UpdateIMF
The Slow Recovery ContinuesiMFdirect
The global growth projection for 2014 has been marked down by 0.3 percent to 3.4 percent, reflecting both the legacy of the weak first quarter, particularly in the United States, and a less optimistic outlook for several emerging markets. With somewhat stronger growth expected in some advanced economies next year, the global growth projection for 2015 remains at 4 percent.

China Manufacturing Gauge Rises to 18-Month High on Stimulus – BB
Economists React: China’s Manufacturing Sector Looking Good – WSJ
China July HSBC flash PMI at 18-month high – Reuters
German Services Output Expands at Fastest Pace in Three Years – BB
French Manufacturing Contracts in Sign of Sluggish Recovery – BB
Euro PMIs suggest higher activity in H2 – Danske Bank
Euro Economy Shows Unexpected Strength After ECB Action – BB
Euro zone business on solid footing in July but firms cut prices – Reuters
Global economy starts second half on solid footing: PMIs – Reuters
Manufacturing PMI Euphoria Boosts Futures To Fresh Record Highs – ZH
Strong but plenty of reasons not to get carried away – TradingFloor

IMF fears ultra-low rates are fuelling bubblesThe Telegraph
Chief economist Olivier Blanchard says fund is watching financial markets “like a hawk” because world economy is still too fragile to withstand interest rate rises

Jobs Hold Sway Over Yellen-Carney as Central Banks Set to SplitBB
Before the Federal Reserve and fellow central banks go to work raising interest rates, they first need others to go to work. That’s the signal from policy makers worldwide, as even those whose mandates focus on inflation put the health of labor markets at the heart of their decision making.

Michael Woodford interview on QEFED
Discussing the paper "Conventional and Unconventional Monetary Policy with Endogenous Collateral Constraints"

Central Banks: Stagnant wages leave central banks frettingReuters
After injecting trillions of dollars into the global financial system over the last six years, the world's central bankers now face a vexing question: why is so little of it showing up in workers' paychecks?

ECB Paper Identifies Most Growth-Friendly CutsWSJ

Great Graphic: G7 GDPMarc to Market

When are monopolies a good thing?FT

Liquidity Trap and Excessive LeverageIMF
In our model, contractionary monetary policy is inferior to macroprudential policy in addressing excessive leverage, and it can even have the unintended consequence of increasing leverage.

Neofiscalist delusions? – Worthwhile
What annoys me about market monetarists – Mainly Macro
Asymmetrical Doctrines (Vaguely Wonkish) – Krugman / NYT