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EUROPE
The
Alternative Davos Agenda: Greek Elections and Eurozone Woes – WSJ
ECB Meeting
and Greek Elections Are Likely to Dominate at World Economic Forum
Europe Needs Flexibility to Fuel Economic
Growth, Renzi Says
Growing
expectations on further QE measures from ECB and SNBs surprise rate cut has
increased expectations on Riksbank adding more stimulus as well. The market is
currently expecting a negative repo rate at around -0.08 % over the coming six
months.
SWITZERLAND
Guest
post: Was the Swiss National Bank nuts? – FT
Peter
Doyle, economist and former IMF staffer, argues that the SNB in fact kept its
exchange-rate cap for too long — and was wrong to have targeted the euro alone.
The
three big misconceptions about the Swiss franc – The
Economist
The cap on
the franc was unsustainable * SNB needed to worry about big losses on its euro
holdings * The cap was protectionist
What the
history of the Bundesbank might teach the ECB – FT
5 Things
to Look for in Eurozone QE – WSJ
The ECB’s
bond-purchase dilemma
– Bruegel
The fact
that the ECB did not share losses in the previous round of Greek debt
restructuring highlights the problem of sovereign QE, which is not feasible or
will be ineffective if fiscal implications are excluded. The design of the
programme is therefore crucial.
Paul De
Grauwe: The sad consequences of the fear of QE – The
Economist
Two reasons
why the case for QE is overwhelming: QE is merely a correction for what
happened during the last two years. The euro-zone economy is not getting off
the ground.
The ECB’s
bond-purchase dilemma
– Bruegel
German
opposition to government-bond purchases by the EC is solidifying ahead of the
programme’s likely announcement
Central
bank prophet fears QE warfare pushing financial system out of control – The
Telegraph
Former BIS
chief economist warns that QE in Europe is doomed to failure and may draw the region
into deeper difficulties: “QE is not going to help at all. Europe has far greater reliance than the US on small and medium-sized companies
(SMEs) and they get their money from banks, not from the bond market.”
ECB's QE
leaked: monthly €50 bn bond monetization – ZH
ECB
Preview: FAQ – Marc to Market
How Good
Would QE Be for European Equities? – WSJ
U.S. and Japanese precedent suggest
quite a lot. But there are good reasons to be cautious.
ECB QE. Much
too late and not to be counted on – Tony
Yates
The best
that is to be said for EZ QE is that will probably do no harm, and is worth a
shot.
Perhaps
it's worth going through with the QE exercise: Until policymakers see its
futility, they won't lift their gaze, as King suggests, to consider deep
structural reforms, which are much tougher to carry out than government bond
purchases.
As Size
of ECB’s Potential Bond Buying Emerges, What Does the Street Think? – WSJ
ECB’s QE
Plan a Cross Between the Fed’s QE2, QE3 – Hilsenrath – WSJ
Eurozone
QE: ‘Like Penalty Shoot-Outs at a World Cup’ — RBS – WSJ
Markets
Spring into Action as News Breaks on Potential Size of QE – WSJ
UNITED STATES
30Y
Treasury Yield Tumbles To Record Low – ZH
US Treasury
30Y yields have just broken to a new record low 2.3500% handle. The yield curve
(2s30s) has cracked lower to its flattest since 2008.
ASIA
BOJ on
hold despite marked downward revision of inflation forecast – Danske
Bank
BoJ is unlikely
to ease on the back of the decline in headline inflation we are likely to see
in the coming months. It can live with a temporary decline as long as the
economy continues to recover and inflation expectations do not decline
substantially.
BoJ:
inflation forecast cut gives room for more easing – Nordea
After its
meeting today the BoJ left the asset purchasing programme unchanged and instead
extended the loan scheme. Most interestingly the inflation forecast was lowered
significantly, which may be interpreted as the first step paving the way for
more easing in the future. The risk of another QQE expansion is realistic,
especially given the prospect of more dovish BoJ this year.
REGULARS
Daily
Central Banks – WSJ
Hilsenrath’s
Take: Japan’s Cautionary Tale as Fed Contemplates Rate
Increases * Fed’s Powell Says Rate-Rigging Undermines Trust in Banking * Don’t
Get ‘Overexcited’ About ECB Meeting, Says Nowotny * BOJ Cuts Price Forecast,
Stands Pat on Policy * BOE Hawks Drop Call for Higher Rates
Daily
Macro – WSJ
All eyes
are on the ECB meeting on Thursday. Expectations are that the ECB will launch a
substantial program of sovereign bond purchases, or quantitative easing…After
last week’s shock Swiss move, no one wants to be caught out by any ECB
surprises. Elsewhere, the story Wednesday is once again one of disinflation
making a mess of monetary policy makers’ options and the fallout that comes
from that.
Danske
Daily – Danske
Bank
Eye-Opener:
Rising loan demand, rate cuts and hikes, stronger GBP – Nordea
Has the BoE
turned more dovish with the drop in oil prices? * Huge Spanish bond issue
illustrates the demand still there * Wage growth to support GBP
Central
Banks Dominate FX Price Action – Marc
to Market
US Open – ZH
Futures
Lower After BOJ Disappoints, ECB's Nowotny Warns "Not To Get Overexcited";
China Soars
FX
Update – TradingFloor
The Bank of
Japan lowers its inflation forecast and JPY rallies while New Zealand inflation
pulls the rug out from under NZD. Today, the UK employment and earnings data
and BoE minutes, as well as the Bank of Canada are the chief sideshows ahead of
an ECB meeting for the ages tomorrow.
From the
floor – TradingFloor
Tomorrow's
ECB meeting gives us much to chew on – and the extent the ECB compromises on
the risk sharing of its quantitative easing programme is key.
OTHER
Martin
Wolf: Chronic economic and political ills defy easy cure – FT
Deficient
demand, stagnant productivity, fragile finance, unstable politics, tense geopolitics,
challenge overload. These conditions are chronic, not critical. They cannot be
cured quickly or easily. They can, however, be managed.
Recap
2015-01-20: CB credibility, BAML FMS – Global
Macro Trading
Fund
Managers' Current Asset Allocation – January – The
Fat Pitch
Globally,
managers are not just overweight equity and underweight bonds, they are
overweight the highest beta equities (technology, discretionary, banks) and underweight
defensives (telecom, staples). The largest underweight is energy.
Live
blog: Davos day one
– FT
FINNISH
Aamukatsaus – Nordea
Suomen työvoiman kasvu ei uskottavaa | Tuleeko Britannian
keskuspankki varovaisemmaksi? | ZEW odotuksia parempi joulukuussa
Talouspolitiikan arviointineuvoston raportti – Akateeminen talousblogi
PS: Teollisuuspolitiikaan täyskäännös, kohonnutta
poliittista maariskiä vähennettävä – PS
Verkkouutisten kysely: Suomen paikka on lännessä – Verkkouutiset
Populismi - syy vaiko seuraus annetusta tilasta? – Henri
Myllyniemi / US