Previously on MoreLiver’s:
Roundups and
Commentary
News – Between
The Hedges
Markets – Between The Hedges
Recap – Global Macro Trading
The Closer – alphaville / FT
Roundup – A View From My Screens
Roundup – Kiron
Sarkar / The Big Picture
Tomorrow’s Tape: Retail Sales – WSJ
US: – ZH
EUROPE
The Year Ahead in
the Eurozone: Lower Risks, Same Problems – EconoMonitor
Nouriel Roubini: Underlying all this is the issue of
the loss of external competitiveness associated with external current account
deficits that private foreign investors are unwilling to finance. Some internal
devaluation is ongoing, leading to a reduction in unit labor costs, but that
process is recessionary and occurring too slowly. Thus, though financial
conditions have improved and tail risks have lessened, the fundamental problems
of the euro zone remain.
Risk on and Draghi's
list! – TradingFloor
Unless we
see a significant deterioration in any of ECB president Mario Draghi’s list of
‘reasons to be cheerful in financial markets’ then the EUR is likely to stay
supported, irrespective of the disappointing growth projections.
UK
Last November, the British Labor leader, Ed Milliband,
claimed that Britain is
“sleepwalking” out of the European Union. Unfortunately, his assessment appears
accurate.
In his
forthcoming speech on Europe, due on January 18, UK Prime Minister David
Cameron must take account of the Conservative Party’s eurosceptic mood, but
above all speak for the country rather than the party and keep Britain in
Europe, argues a Financial Times editorial.
UNITED STATES
MARKETS
What I Am Thinking About As Markets Resolve
Issues – The
Big Picture
We are now
entering one of those periods of time when a broad variety of market factors
resolve themselves for better or worse. When this happens, markets can suddenly
shift in either direction. We can see an acceleration to the upside, or a
significant trend reversal.
Treasury yields capped by public sector
purchases – Sober
Look
Treasury
yields have risen at the start of the new year but have since stalled. 1.9%
yield seems to be the ceiling on the 10-year note for now.
Important Charts Updated! – The
Short Side of the Long
The other
side of the bond market that measures inflation expectations via TIP vs
Treasury spread, also known as break evens, disagrees. We seem to be
overheating and could be signalling a top for majority of risk assets including
S&P 500.
FED
Fed's
Williams expects growth to pickup, Concerned about policy
"uncertainty" – Calculated
Risk
Fed’s
Williams: Bond Buying Likely to Continue Into Late 2013 – WSJ
Fed’s
Evans: Conditions to Raise Rates Could be in Place by 2015 – WSJ
Fed’s
Lockhart: Wrong to Call Current Policy ‘QE Infinity’ – WSJ
MACRO DATA
Macro Strategy – Watch US data – Nordea
(pdf)
We expect
that retail sales will suffer from lower motor vehicle sales and lower gasoline
receipts as gasoline prices dropped 4% in December, and hence come down a
notch. In terms of the Empire survey we see it reaching 5 which would be better
than consensus. Out tomorrow is also US PPI data, and we expect a continued
downside trend with a trough in the next few months.
Trade entrails – MacroScope
/ Reuters
An exercise
in divination using the entrails of last week’s U.S. international trade report shows
signs of a move with larger implications than just the gaping deficit that
caught analysts wrong-footed: the possibility of a persistent burden on the
American economy caused by Japanese and German imports, like in the 80s.
ASIA
Chinese Official Hints
at Easier Access to Mainland Markets – Marc
to Market
Q1 Outlook: Policymakers play make-believe as
business wilts – TradingFloor
Steen
Jakobsen: The outlook for businesses and the middle class remains uncertain at
best and very worrisome at worst as we await the final bill from the US fiscal cliff. Our old theme of
supporting the micro economy is still our main message for 2013.
Q1 Macro Outlook: Doldrums revisited – TradingFloor
Steen
Jakobsen: The macroeconomic outlook for Q1 requires dealing with binary events
like the US fiscal cliff and the Italian
election. Global growth and its outlook will again be very path dependent on
the macro mistakes we have come to expect from policymakers.
Q1 FX Outlook: Low volatility will not linger – TradingFloor
John J
Hardy: US fiscal restraint, the reshoring phenomenon,
Fed thresholds hampering further easing and market volatility will see a more
durable recovery in the US dollar in Q1. The pound will make a comeback against
the euro while the yen will weaken further.
Q1 Equity Outlook: Mean reversion to dominate
in 2013? – TradingFloor
From an
asset allocation perspective, equities should always be part of a core
portfolio reflecting investors’ neutral positions during the business cycle. So
this outlook will concentrate on what we think will happen to equities overall
and what opportunities will exist in 2013 – rather than whether or not you
should have equities in your portfolio.
As we do
not expect a runaway pick-up in global activity we tend to focus on commodities
with reduced or restricted supply and those thriving in an environment of ample
liquidity.
OTHER
Summary Of Key Events
In The Coming Week – ZH
Calendar by GS - includes European auctions
Morning Briefing (Asia): Global Markets Brace For Economic
Data – BNY
Mellon
Thinking a
little further about Chinese attitudes towards the JPY.