The ending week's best reads, previous edition here.
EUROPE
European Risk Catalysts For
The Next Six Months
– ZH
Thoughts on the Euro’s Outlook in 2013 – PIIE
Despite the
numerous predictions of its demise, the euro is alive and well at the end of
2012. Indeed, it has again held its value against other currencies during the
year,1 confounding skeptics just as it did a year ago. As 2012 comes to a close
and the last European Union Council of the year has ended—there have been seven
in 2012!—it is time to take stock. As someone who ended 2011 on a positive note
for the euro, I am happy to report that the outlook remains positive for 2013.
Surplus to Requirements? – WSJ
The
European Commission on Tuesday released a special report devoted to euro zone
countries with large current account surpluses, Germany in primis, and while it
diplomatically refrained from making forceful policy recommendations, it
emphatically noted that the weak bank regulations and wage restraint exercised
by Europe’s largest economy ineluctably has had significant impact on other
members of the currency union.
The euro area’s need for
stabilization in historical perspective – bruegel
How often
does it happen that countries pertaining to the same economic area are in
dramatically different business cycle positions? How severe is the divergence?
How persistent is it?
Ifo Business Climate Improves – CESIFO
Ifo points to further improvement – Danske
Bank (pdf)
German Business Confidence Rises for a Second
Month – BB
What to expect from the EU in 2013 – Open Europe
Nordic Outlook 20-Dec 2012 – Danske
Bank (pdf)
European
Union: Financial Sector Assessment, Preliminary Conclusions – IMF
PIIGS
The Eurozone’s Delayed
Reckoning – Project
Syndicate
Nouriel
Roubini: The tail risks of a Greek exit from the eurozone or a massive loss of
market access in Italy and Spain have been reduced for 2013. But the
fundamental crisis of the eurozone has not been resolved, and another year of
muddling through could revive these risks in a more virulent form in 2014 and
beyond.
The probability of Greek
exit, revisited – voxeu.org
Jens
Nordvig: Fears of an imminent Greek exit from the Eurozone have subsided, for
now. This column attempts to measure the probability of a Greek exit, finding
that the changing fortunes of Greek political parties, and the possibility of
an early election, mean that the risk of a Greek exit may actually be quite
high. It suggests that, despite investors' efforts to measure political risk, a
persistent sense of unease about the Eurozone’s future is set to continue into
2013 and that Eurozone financial assets will thus continue to embed significant
risk premiums in the coming years.
ECB
Euro zone rescuer Draghi
faces daunting 2013
– Reuters
With two
short sentences, the head of the European Central Bank took the heat out of the
euro zone crisis this year. In 2013 Mario Draghi has to live up to even bigger
expectations.
Why Mario Draghi
scores AAA on PPP
– Hugo Dixon / Reuters
The ECB
boss, though, should not let the plaudits go to his head. Much of the euro zone
is in deep recession. If growth doesn’t return, the crisis could enter a new
ugly phase and his powers will be sorely tested.
Agenda 2013: the next steps in completing EMU – ECB
Speech by
Jörg Asmussen at Internationaler Club Frankfurter Wirtschaftsjournalisten, Frankfurt am Main, 19-Dec-2012
JAPAN
Implications of Japan’s new government:
Another false dawn
– Nordea
(pdf)
or read the
summary
Bank of Japan Preview: Intense
political pressure for more easing – Danske
Bank (pdf)
BOJ Loosens With Pledge to Review Inflation
Objectives: Economy –
BB
Under pressure from PM-elect, BOJ boosts
stimulus again – Reuters
The Bank of
Japan delivered its third dose of monetary stimulus in four months on Thursday
in a prelude to more aggressive action next year, as it faces intensifying
pressure from the country's next leader for stronger efforts to beat deflation.
Bank of Japan Eases – Global
Macro Monitor
The policy
move was as is expected and not quite the Abe QE that has sparked the massive
move in stock market and yen. The next
meeting is big as the Prime Minister Abe will be in power. The Nikkei is a down about 1 percent on
profit taking and the yen a bit stronger.
ECONOMICS
How soon is now, UK NGDP targeting edition – alphaville
/ FT
Guidance – Bank of Canada
Mark Carney, Governor of the Bank of Canada, 11-Dec-2012, Presented to CFA
Society Toronto
The Man Who Occupied the Fed:
How Charles Evans Saved the Recovery – The
Atlantic
Chicago Fed president Charles Evans has gone from dissenter to
intellectual leader in just a year. The future of the recovery might be at
stake.
December 2012 Quarterly
Review – BIS
Policy
measures and reduced short-term risks buoyed markets (all the files here)
Claudio
Borio on the financial cycle – Free
exchange / The Economist
What is this "financial cycle"? While
"there is no consensus on the definition," according to Mr Borio, it
can be understood as a sequence of "self-reinforcing interactions between
perceptions of value and risk...which translate into booms followed by
busts."
(audio) BizDaily: Central Bankers Take Centre-stage
– BBC
(mp3)
Central
bankers appear increasingly to be seizing the reins of economic power these
days, as the politicians throw up their arms and say - you fix it. Ben Bernanke
is setting Federal Reserve interest rates for years in advance, and when the
ECB's Mario Draghi says he'll do "whatever it takes to save the
euro", people believe him. But is the shift from the politicians to the
central bankers really a good thing?
MARKETS
Goldman Sachs: Top Ten Market
Themes for 2013 – The
Reformed Broker
CitiFX's 12 Charts Of
Christmas – ZH
"Momentum Ignition" - The Market's
Parasitic 'Stop Hunt' Phenomenon Explained – ZH
FX Comment: Monetary wars ON – Nordea
NEMO: The Five “Black Snakes”
2013 – Nordea
(pdf)
or the summary
Outrageous Predictions
2013: Extreme complacency – Saxo
Bank
or direct pdf
Some outliers for
2013 – alphaville
/ FT
Deutsche's 13 Outliers For '13 – ZH
Chief Economist’s
Corner – On the threshold of 2013 – Nordea (pdf)
Financial markets will focus on whether the euro
crisis is finally solved, whether the US can get
to grips with its fiscal policy, whether interest rates remain at record lows
and equity markets continue higher.
My Interview – MoreLiver’s
Daily
Nordea Risk Perception
Index week 51 – Nordea
(pdf)
Spread compression and decreases in implied vol. Risk
premiums likely to continue tightening in beginning 2013, but upside risks
remain. (summary)
Things That Make you Go Hmmm – Grant
Williams / ZH
The Ultimate
Valuation Matrix For Global Stocks – ZH
Chart Of The Day: From Here
To QEternity - Here Come The Central Printers – ZH
Business Insider’s 70 Best
Charts of 2012 – PragCap
OFF-TOPIC
What Will 2030 Look Like? – Above
The Market
The
National Intelligence Council is composed of the 17 U.S. government intelligence
agencies. The Council’s Global Trends
Report has, since 1997, worked with a variety of experts both in and out of
government service to examine factors such as globalization, demography and the
environment to produce a forward-looking document to aid policymakers in their
long-term planning on key issues of worldwide importance.
Google
Chairman Says Android Winning Mobile War With Apple – BB
Exclusive: Larry Page on Google – Fortune
Gift Giving Guide for
the Traders in Your Life – The
Big Picture
IN FINNISH
Ifon Sinn TE:lle:
Tämä räjähtää vielä silmille – TalSa
Saksalaisen Ifo-tutkimuslaitoksen johtaja tukee Suomen
vakuusvaatimuksia ja varoittaa euron pelastusyrityksistä.
Keskuspankeissa
kaikkien aikojen aikapommi – TalSa
Keskuspankkien kokeelliset kriisitoimet vaikuttavat
vaarattomilta, mutta pankkien taseissa paisuu kaikkien aikojen aikapommi.
Rahakokeiden riskit paljastuvat äkisti, kun yksityinen luottojen kysyntä alkaa
taas kasvaa. Silloin keskuspankeilla on edessään vaikea valinta: raju inflaatio
tai entistä pahempi velkakriisi.
Vaikeuksien kautta
nousuun: Suomi kasvuun vasta 2014 – Danske
Bank (pdf)
Danske Bank: Suomen
talous nousuun vasta 2014 – TalSa
Pankkiunioni tai ei – Suomi kantaa muiden
riskejä – Jan
Hurri / TalSa
Edes "aito
pankkiunioni" ei vähentäisi euromaiden liikoja velkoja eikä pienentäisi
liikoja pankkiriskejä. Rakenteilla onkin Frankensteinin finanssihirviö, jossa
riskit on vain tarkoitus ensin pilkkoa ja sitten koota uuteen kokoonpanoon.
Suomi saisi taas kantaakseen muiden riskejä – niin kuin kriisitoimissa tähänkin
asti.
9 kuukautta rauhaa – sitten euron haavat
revitään auki – TalSa
Suomi voi ensi
vuonna nousta syksyn suosta maailmantalouden elpyessä. Toivo on kuitenkin
pettävää, sillä syynä on eurokriisin välirauha, joka ei ratkaise vääjäämättömiä
ongelmia. Lisäksi väliaikaisenkin elpymisen tiellä on muutama merkittävä
kysymysmerkki. Näin arvioivat Taloussanomien haastattelemat asiantuntijat.
Suomen valtion toiminta voi loppua rahojen
loppumiseen – Ruotsin valtion ei – tyhmyri