We got the
first “EUR is too strong” message from Europe. Remember the crisis weeks, when on an almost
daily basis someone was talking the prices up (or down)? The European economy
is not performing, and the numbers are very clear on that. The recovery in US
will not flow to Europe if the EURUSD remains at current levels, but unless the ECB starts
printing just like the othersl, the euro will remain strong – unless the crisis erupts in
full mode again. So I think we’re in a Catch-22 situation:
Either you get a
serious financial crisis going on again, so that the ECB will have to print for
Spain and perhaps others...
...or we get a serious recession,
driving down the EUR against JPY and USD, but not before the recession
reignites the financial crisis…
It would be
so much easier for the ECB to just print now, but… it’s not kosher!
Previously on MoreLiver’s:
Roundups and
Commentary
News – Between
The Hedges
Markets – Between
The Hedges
Recap – Global Macro Trading
The Closer – alphaville / FT
EUROPE
Juncker Warns EUR Exchange Rate “Dangerously
High” – ZH
Pictet's look at European Industrial Production
Stats – ZH
Good news
out of the euro zone: the euro area ran a higher than expected trade surplus in
November of last year thanks to a surge in exports. The bad news? The November
surplus was just under €14 billion in an economy with annual output of nearly
€10 trillion.
Mario Draghi's premature canonization – Free exchange
/ The Economist
I find it
shocking how readily we all seem to be accepting the ECB’s inaction on
euro-zone economic weakness. Some perspective is in order.
The great European bank heist reversal – alphaville
/ FT
LTRO
repayment chat is speeding up the closer we get to the fateful day at the end
of January when Euro-banks might actually start sending back once cheap cash to
the central bank. How much will be repayed, by whom and when are the questions
that need to be answered.
Greater differentiation should be the EU’s new
normal – europp /
LSE
Currently
an exception in the EU’s structure, normalising differentiation may give more
weight to global forums, and address some of the democratic tensions now
present in the EU.
UNITED STATES
FEDERAL
RESERVE
Rosengren: Economy
Responding to Stimulus – WSJ
Rosengren: Fed
Shouldn’t Stop Buying Bonds Until Unemployment Drops Substantially – WSJ
Plosser:
Policy Will Need to Be Curtailed Sooner Than Anticipated – WSJ
Kocherlakota:
Monetary Policy Not Aggressive Enough – WSJ
'Monetary
Policy is Currently Not Accommodative Enough' – Economist’s
View
Secrets of the crisis revealed – Wonkblog
/ WP
The Federal
Reserve keeps transcripts of its meetings to set monetary policy, and releases
them with a five year delay. It does not announce in advance when they will be
released, but if the past is a guide, any day now we will be getting full
transcripts of the 2007 meetings of the Federal Open Market Committee.
DEBT
CEILING
After the Debt Ceiling is increased ... – Calculated
Risk
I'm
convinced the house will fold soon on "paying the bills" (the sooner
the better for everyone), but we might see a government shutdown at the end of
March.
Debt ceilings and downgrades: who cares? – alphaville
/ FT
MACRO
NUMBERS
CoreLogic:
House Prices up 7.4% YoY in Nov, Largest increase since 2006 – Calculated
Risk
CoreLogic:
Home Prices Jump 7% in November – PragCap
Retail
Sales OK, but Headwinds Coming – WSJ
Retail
Sales Rose More Than Forecast in December – BB
Firmer
consumer spending – Reuters
Another
Positive For December's Economic Profile – The
Capital Spectator
Beat
Despite Electronics And Appliance Sales Drop; Empire Fed Misses Big – ZH
Increased
0.5% in December – Calculated
Risk
This
was above the consensus forecast of a 0.3% increase, and suggests the initial
"soft" reports for December were too pessimistic.
ASIA
The Setting Sun – Japan’s Forgotten Debt
Problems – EconoMonitor
Japan has an average debt maturity of 6
years, shorter than Spain, Italy and France. Around 60% of its debt must be
refinanced in the next 5 years. This will expose Japan to the discipline of market
investors at a vulnerable moment. Once the problems emerge, they will be
difficult to contain.
OTHER
Yield Forecast Update - ECB removes its easing
bias – Danske
Bank (pdf)
FX Forecast Update - January: Euro gains to
continue in H1 13 –
Danske
Bank (pdf)
Emerging Markets Briefer - January 2013 – Danske
Bank (pdf)
361 Capital Weekly Research Briefing – The
Reformed Broker