The best from the ending week's posts.
Previously on MoreLiver’s:
EUROPE
From measures of inflation to
the failure of European governance – mainly
macro
The
Eurozone is in recession, and no one is doing anything about it. The ECB are
keeping interest rates at 0.75%, and there are no plans for Quantitative
Easing. It is possible to speculate on possible factors here, but there is one
obvious answer. Consumer price inflation is expected to be pretty close to 2%
this year and next in the Eurozone as a whole. So with inflation on target,
what is there to do?
Europe's Third "Snake in the Tunnel" – Macronomics
Discouraging news – Free
exchange / The Economist
Given what
we know has happened so far in Europe as a result of self-defeating austerity and
myopic deficit targets, this seems like madness. If the Bundesbank successfully
holds the ECB hostage and demands further fiscal bleeding as the price of
additional monetary stimulus, the markets will realize that Mr Draghi is not in
fact armed with a big bazooka—just a pea-shooter.
King Says BOE Keeps QE Option Open as Recovery
Remains Subdued – BB
BoE still open to more QE – Nordea
PIIGS
Steen's Chronicle: Social
tension is now the elephant in the room – Saxo
Bank
We have been
surprised how little impact the strikes on the streets of Greece, Portugal and Spain have had on policymakers. But this
is finally changing: Eurogroup considers direct transfers to Greece.
Greece: End of the EU road? – Saxo
Bank
Leaked Greek troika report:
devil in the details
– Brussels
blog / FT
Greece will need as much as €32.6bn in new financing if the programme is extended through 2016…direct link to the troika draft (pdf)
Greece will need as much as €32.6bn in new financing if the programme is extended through 2016…direct link to the troika draft (pdf)
Portugal shut out of OMT in order to keep Greece out – Sober
Look
In order to
appear apolitical, the ECB applies this strange general rule that would keep Greece out of OMT. And Portugal is sacrificed in the process.
Is Rajoy considering an
IMF-only bail-out?
– alphaville
/ FT
Spain Will be Forced to Choose – Carnegie
UNITED STATES
Following
Japanese Models? – ZH
Nomura notes the similarities (demographics, monetary
and fiscal policy, investor allocation) between US and Japan,
suggesting that US is in danger of becoming the new Japan.
Merry Christmas and a
recessionary new year
– alphaville
/ FT
SocGen,
Nomura and Oxford Economics are pessimistic: In mid-2008, despite positive economic
surprises, the economy had actually entered recession six months earlier and
profits were already declining sharply. Yet, in mid-2008 virtually no economist
accepted that the US economy had already entered
recession! That is exactly what I believe is happening today.
As Good As It Gets – ZH
SocGen's
Albert Edwards: despite the upside economic surprises, profits have been
spiralling downwards.
FOMC
Minutes
Fed Says ‘a Number’ on FOMC Saw Need for Additional QE – BB
IEA REPORT
U.S. Oil
Output to Overtake Saudi Arabia’s by 2020 – BB
U.S. to Be World’s Top Oil Producer in 5
Years, Report Says – NYT
Markets
Hub: U.S. Flipping the Script on Oil Business – MarketBeat
/ WSJ
US to
become the biggest oil producer, says IEA – ASA
End of a Crude Alliance Between U.S. and the Middle East? – The Source / WSJ
End of a Crude Alliance Between U.S. and the Middle East? – The Source / WSJ
Don’t Expect
Lower Oil Prices Even as U.S. Output Surges – WSJ
EM energy:
nuggets from the IEA – beyondbrics
/ FT
US to overtake Saudi Arabia in oil as China's water runs dry – The
Telegraph
MARKETS
Friday Macro Update – Saxo
Bank
Steen
Jakobsen: We will have a volatile end to the year with people looking to take
profit for tax reasons in the US, combined with, at best, a
compromise on the fiscal cliff likely to be a drag on growth by 1.5% of GDP (could mean about -150 S&P500
points). The manipulation will continue for the rest of 2012, but if we are
right about the "saturation point" above then we are in for a quick
turnaround once the realization is made, which will mean we’ll have to look to
be nimble in resetting our portfolio for the upside rather than downside.
Woot! RoRo is fading – alphaville
/ FT
There are
more currency pairs uncorrelated to equities right now than at any time for
five years. In fact, he says, correlations have started to break down to the
extent that a majority of G10 currency pairs were uncorrelated with equity
returns over the last three months. Another false dawn or an actual end to the
dominant RoRo paradigm?
High yield debt
issuance in 2012 hits an all-time record – Sober
Look
One of the
reasons for this optimism has to do with new issue market pushing out the leveraged
finance maturity wall, as companies refinance into longer maturities…trend of
potentially loosening lending standards (such as toggle notes or dividend
deals) in the leveraged finance markets will be important to watch going
forward.
New Financial Forecasts:
Markets have taken another turn at risk-off – Nordea
(pdf)
or read the
summary
The Five Stages Of A
Sovereign's Life-Cycle – ZH
Bridgewater’s note
Global housing: big losers
and policy winners
– alphaville
/ FT
Goldman:
Globally, residential home prices have stabilised since the housing bust of
2007-09. But that statement hides significant variation underneath the global
aggregate
Equities performing in-line
with change in analysts’ optimism – ASA
Credit is finally getting back to reality – Sober
Look
High Yield
has traded down materially, as investors have had enough of ridiculous pricing
in this market
The Four Charts That Corporate Bond Managers
Fear The Most – ZH
Maturities
have been extended, amounts have grown and spreads have collapsed. Citigroup’s
Matt King believes things will end badly.
Key Points From the Q3
Earnings Season – PragCap
OTHER
EU, US economic surprise indices diverge – Sober
Look
The Misdirection of Currency
Wars – Marc
to Market
Currency
wars then, in either expression, seem to be more in the realm of rhetoric than
politics. There has been a long and sustained push from the developed countries
to get emerging markets to embrace more flexible currency regimes. The adoption
of unorthodox monetary policy by the U.S., Europe and Japan may, on the margins, increase such
pressure but few have capitulated.
A
good paper on shadow banking, finally – Sober
Look
An easy to follow, comprehensive, well researched, and
unbiased paper from FRBNY
IN FINNISH
Tässäkö Suomen toistaiseksi tolloin EU-sopimus?
– Jan
Hurri / TalSa
Eduskunta on juuri saanut lakiesityksen, jolla sen on
tarkoitus sitoa Suomi EU:n talouden uuteen vakaus- ja ohjailusopimukseen. Se on
Suomen toistaiseksi kenties omituisin EU-sopimus. Se vie talouspolitiikan
ohjausvaltaa eduskunnalta komissiolle mutta tarjoaa tilalle epämääräisiä
talousmittareita ja arvionvaraista sakkouhkaa.
Kaikki kusettavat – Pauli
Vahtera / IL blogit
Mitä isot edellä, sitä pienet perässä. Yhteiskuntamoraalimme
on rappeutunut niin pahasti, ettei kukaan uskalla enää tunnustaa asiaa. Jos
joku epäilee suomalaisten rehellisyyttä, koko koneisto käy voimallaan epäilijän
kimppuun.