10th Jan - Rally continues

EUROPE

Banking integration in the EMU: Let’s get real! – voxeu

Bank-to-bank lending in the euro area has increased, direct cross-border lending has not. The column shows that dependence on domestic banks reduces risk-sharing in a crisis, reducing GDP growth in affected country-sectors. Benefits from banking integration are only robust to global shocks if banking integration takes the form of cross-border lending to firms and households.

Germany is stagnating – Pictet

German industrial production (including construction) fell by 1.9% month-on-month in November, extending the sector’s decline to five out the six last prints.

  EUROPEAN CENTRAL BANK
Account of the monetary policy meeting – ECB

ECB Watch: The central bank sees new upside risks – Nordea

The ECB monetary policy account confirmed that the central bank remains comfortable with the current monetary policy setup. We think the discussion on new easing measures will pick up in the upcoming meetings.

Two Takeaways from ECB Record – Marc Chandler

Officials may have been more concerned with the deteriorating situation than they let on at the time * Confirmation that a new (third) Target Long Refinance Operation (TLTRO) is under consideration.

  ITALY

Italy's Salvini visits Poland to discuss eurosceptic alliance for EU elections – Reuters

Italy government leaders talk of nationalising lender Carige – FT

Italy’s Salvini touts ‘European spring’ with Poland’s rightwing government – FT

League head promises common plan to ‘fuel Europe with new strength and energy’

Salvini taunts the EU – FT

The problem is not only that enforcement in a non-militarised federation of highly sovereign, multi-lingual countries is difficult, which it obviously is. It is that precedents are continuously being set which weaken the case for enforcement, or give rise to claims of inconsistency.

UNITED STATES

No more Fed rate hikes – ABN AMRO
Dovish shift suggests a prolonged pause  *Accelerating wage growth alone unlikely to trigger more tightening, but rate cuts also look unlikely

OTHER

A U.S.-China Trade Deal Is Only Half the Fight – BB

Getting to an agreement is the easy part. Enforcing Chinese compliance will be a much bigger challenge.

The Big Read: Volatility: how ‘algos’ changed the rhythm of the market – FT

Critics say high-frequency trading makes markets too fickle amid rising anxiety over the global economy

REGULARS

EU Open Rundown – RANsquawk

FirstFT Daily Briefing – FT

Brussels Briefing – FT

The reform dilemma - the yellow vests in France have shrunk in number, but a minority have violent intentions and remain a big concern for the authorities

Brussels Playbook – Politico

Who’s in charge in Italy? — Looming China threat — To Romania, with love

Danske Daily – Danske Bank

More minutes (ECB) and Scandi CPI

Daily Market Comment – Marc Chandler

Equity Bounce Stalls while the Greenback Steadies at Lower Levels

Five Things You Need to Know to Start Your Day – BB

US Open Rundown – RANsquawk

US Open – ZH

Stock Rally In Peril As Markets Slide On Lack Of Trade Deal, Dismal Data