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EUROPE
The Eurozone’s
Crossroad – Project
Syndicate
Heading into 2014,
financial markets are quiet and Europe’s
politicians are relieved, but the fundamental problems that have driven the
euro crisis for the last four years remain. That is why complacency is
misguided – and why the current respite should be used to address the
eurozone's permanent architecture.
What euro crisis
watchers should look for in 2014 – Wolfgang
Münchau / FT
Emphasis shifts from policy choices to their consequences
UNITED STATES
Looking Up in 2014? – Project
Syndicate
Martin Feldstein: The US
economy will continue to face considerable risks in 2014, owing to the effects
of higher interest rates and uncertainty about taxes. But the US now has a better chance of achieving
significantly higher real GDP growth than at any time since the downturn began.
Five Challenges for
the Federal Reserve in 2014 – WSJ
A look at five
challenges the Fed--especially Janet Yellen, the presumptive successor to
Chairman Ben Bernanke--will face next year.
The U.S. economy is picking up steam going into the New
Year—but not enough, apparently, to nudge up the nation’s population that much.
Preliminary: 2014
Housing Forecasts –
Calculated
Risk
5 Questions on the
Economy to Be Answered in 2014 – WSJ
Will businesses
finally shed their caution? * Will Washington's tentative truce continue? * Will the Fed's path out of bond buying get
bumpy? * Will housing adjust easily to higher interest rates? * Will the rest
of the world cooperate?
Questions for 2014:
Downside Risks – Calculated
Risk
How much will housing inventory increase in 2014? – Calculated
Risk
Housing Credit: Will we see easier mortgage lending in
2014? – Calculated
Risk
What will happen with house prices in 2014? – Calculated
Risk
How much will Residential Investment increase? – Calculated
Risk
Monetary Policy: Will the Fed end QE3 in 2014? – Calculated
Risk
Will too much inflation be a concern in 2014? – Calculated
Risk
What will the unemployment rate be in December 2014? – Calculated
Risk
How many payroll jobs will be added in 2014? – Calculated
Risk
How much will the economy grow in 2014? – Calculated
Risk
ASIA
China was hardly lacking in policy pronouncements in the final months of
2013. Given the likely tradeoffs between strategy and tactics – that is,
between long-term reforms and short-term growth – can Chinese policymakers
really accomplish all of their objectives?
In the weeks since the
Communist Party’s Third Plenum there have been some noises – if not quite a
drumbeat – that suggest there might be movement towards reform of state
companies.
On Monday, the Reserve
Bank of India released its semi-annual Financial Stability Report which assesses
risks to India’s economy and financial sector. Here are five key areas where the RBI
forsees potential risks for India in 2014.
An audit shows local
government debt at a level that requires action.
Japanese employers
will fail in the next fiscal year to heed Prime Minister Shinzo Abe’s goal of
wage increases that outpace inflation, highlighting risks that the nation’s
recovery will stall, surveys of economists show.
After a tense 2013,
don’t expect the Asia-Pacific to be any less fraught next year.
WSJ'S CENTRAL BANK SPECIAL
What Will Central
Banking Look Like in 2014? – WSJ
Inflation is slowing
in the developed world but not clearly tamed in developing economies. Growth is
highly uneven across the globe and the next big shift in capital flows unknown.
Against that backdrop, central banks are charting
different courses.
European Central Bank
— 2014 Outlook – WSJ
The European Central
Bank has shown it can conduct crisis management with the best of them, using a
verbal commitment to buy government bonds of stressed countries to stabilize
southern European debt markets and preserve the euro.
Federal Reserve —
2014 Outlook – WSJ
The U.S. Federal
Reserve enters a year of leadership transition and debates over how to wind
down some of its easy money policies as the economy strengthens in 2014.
For Bank of Japan Gov. Haruhiko Kuroda, 2013 was a good year. Prime
Minister Shinzo Abe picked him in the spring to lead the central bank in its
mission to turn around falling prices.
China’s central bank needs to get a mix of offense and defense right in 2014.
On the offense, People’s Bank of China Governor Zhou Xiaochuan was brought back for a
third term by China’s top leaders, despite Mr. Zhou having reached the bank’s retirement
age of 65. Mr. Zhou’s mission: to put in place a reform agenda that stalled
under China’s former leaders.
The Bank of England
enters 2014 looking out over an economy finally picking up speed after several
years in the slow lane. With unemployment falling faster than the central bank
predicted, the item at the top of officials’ agenda will be whether to tweak
BOE Gov. Mark Carney’s flagship “forward guidance” policy.
Australia’s central bank governor Glenn Stevens heads
into 2014 with few tools left to spur the resource-rich economy as a long
mining boom fades, other than jaw-boning the local currency.
The key question for
the Bank of Canada in 2014 is whether it will cut interest rates to counter low
inflation.
Poland's monetary policy council will watch for the right moment in 2014 to
begin tightening credit to prevent faster growth from stoking higher inflation.
Hungarian National
Bank — 2014 Outlook – WSJ
Hungary will sustain its easy money policies in 2014 as long as financial
markets permit, aiming to juice a feeble recovery and help the government's
economic policy.
The Bank of Russia has
shown surprising resistance to calls for easier monetary policies to bolster
waning economic growth, and is expected to keep doing so as it focuses on
fighting inflation and combating money laundering and tax evasion.
Denmark’s central bank is an anomaly in the central bank world in that its
mandate is simply to keep the Danish currency, the krone, trading within a
specified band against the euro, even though Denmark has no intention of joining the euro currency
union.
Norges Bank — 2014
Outlook – WSJ
Norway’s central bank has spent the last 18 months delaying the timing of
future interest rate hikes. There is little to suggest that 2014 is going to be
radically different.
The coming year will
be another one in which the world’s oldest central bank, must balance its
concerns about high levels of household borrowing and low inflation.
Swiss National Bank —
2014 Outlook – WSJ
The Swiss National
Bank will likely hold interest rates near zero for a third consecutive year as
the central bank tries to mute demand for the country’s currency without
stoking a real estate bubble.
Indonesia’s central bank is facing a dilemma: whether to
raise rates further -- slowing the economy -- or allow its currency to fall
further.
South Korea’s central bank expects its export-dependent
economy to do better in 2014 as global growth strengthens. But there’s one
major concern: a weaker yen.
Raghuram Rajan’s big
challenge in 2014 will be building on the gains he’s scored since taking the
helm of India’s central bank last fall.
New Zealand’s central bank has held interest rates steady
for nearly three years. Now, rising costs of housing and a swiftly improving
economy could prompt it to raise rates as soon as January.
OTHER
When will the Fed
start to worry about supply constraints in the US * Will China bring excess
credit growth under control? Will the ECB confront the
zero lower bound?
Fourteen Investment
Risks for 2014 – WSJ
What will happen in 2014? The Chinese economy will slow; the price of
oil will sink; Germany will slide into
recession; the UK will remain intact
and the internet will begin to Balkanise
Expect plenty of
nervousness in the forex markets in the first quarter of 2014, that's according
to Saxo's John Hardy. With the Fed due to taper its bond buying programme soon,
the markets could be distorted by the odd weak data point.
Great dollar rally of
2014 as Fukuyama's History returns in tooth and claw – The
Telegraph
China and Japan are on a quasi-war
footing, one misjudgement away from a chain of events that would shatter all
economic assumptions
5 Things To Ponder:
The “2014 New Year’s” Edition – PragCap
Five predictions for
financial markets in 2014 – Anatole
Kaletsky / Reuters
Podcast: MoneyBeat’s
2014 Predictions – WSJ
5 Things To Ponder:
The "2014 New Year's" Edition – ZH
The tricks of trade –
weak global growth isn’t the only problem – FT
10 tech trends to
look out for in 2014 – FT