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EUROPE
Wanted:
Crusaders for 'More Europe' – WSJ
Simon Nixon: Political leaders facing voters who are more disillusioned with
the European project.
Public backing for EU
crashes in wake of eurozone crisis – The World / FT
A Gallup poll, published on
Wednesday, showed what a devastating impact the eurozone’s crisis has had on
popular attitudes to the European Union. Nor is the collapse of confidence in
the EU limited purely to countries that have been required to slash wages and
benefits in return for international financial aid.
Europe’s Institutional Mismatches Will
Create More Turbulence in 2014 than in 2013 – Bruegel
Europe’s institutional mismatches will not all be
successfully resolved in 2014. But one can expect, and perhaps hope, that they
will become clearer and start being debated more openly and broadly.
Analysis:
Euro zone - reasons to be wary in 2014 – Reuters
EU elections, bank stress, German court, reform zeal, deflation.
Is Europe Growing Together or Growing Apart? – Bank of Finland
While a core group of countries may be developing together, there appears
to be at least seven identifiable groups of countries with different growth
dynamics…These results provide awkward implications for policy, particularly
for those who thought that simply having a union would draw countries closer
together (endogenous OCA criteria)
Periphery business
cycle monitor – Danske Bank
Euro area periphery data continue their improvement and in line with
this sovereign spreads have tightened further.
UNITED STATES
Summers Calls for U.S. Fiscal Stimulus – WSJ
Economists Spar Over U.S. Recovery – WSJ
Economists John Taylor and Larry Summers exchanged pointed words
Saturday about the best approach to spurring the economic recovery.
FEDERAL RESERVE
A
Weekend of Fedspeak – Tim Duy’s Fed Watch
Policymakers don't want to undershoot the recovery, but I don't sense
they want to overshoot either. That points
toward cautious withdrawal of accommodation.
Pencil in somewhat stronger growth in 2014. Pencil in a steady reduction in the pace of
asset purchases until the program winds down at the end of the year. Pencil in an extended period of low
rates. But also recognize that the tide
of monetary policy is now receding
The Fed had no idea if the taper would terrify markets – WaPo
Fed Discusses Tool That May Eventually Help It Set
Rates – WSJ
Minutes try to reassure; plus an interesting par about
financial vulnerabilities – alphaville / FT
Minutes suggest it will be difficult to strengthen
forward guidance further – Danske Bank
ASIA
Will
the reforms speed growth in China? – mpettis
I would argue that if China’s GDP continues to
grow annually at above 7% in 2014 and 2015, this will be precisely because Beijing did not implement
the reforms. Successful execution of the reforms, in other words, is exactly
why growth rates will fall sharply.
Shadow Banking Risks
Exposed by Local Debt Audit: China Credit – BB
China’s audit of local governments exposed an increased reliance on shadow
banking, swelling the risk of default on 17.9 trillion yuan ($3 trillion) of
debt.
Did Soros Just
Predict a China Crash? – BB
George Soros probably shouldn't expect any warm invitations to Beijing -- not with the
much-reviled short seller warning of a giant Chinese crash.
China Tells Banks to Improve Disclosures in Shadow-Lending
Fight
– BB
China’s banking regulator told lenders to publish data including
off-balance-sheet assets and interbank liabilities as the government steps up
scrutiny of the shadow-finance industry.
MARKETS
January
Sentiment Summary – Short Side of Long
Managers exposure towards equities resembles group think * Retail
investors continue to pile into global stock markets * Nasdaq speculators
continue to maintain elevated bullish bets * Volatility Index is coiling into a
compressed decision point…* Household exposure to stocks has risen to levels of
2007 top * Bund funds are experiencing a 7th consecutive monthly outflow *
Speculators are once again pressing Treasuries with shorts * Funds continue to
shun commodities as downtrend persists * Agricultural exposure is at one of the
lowest levels in years… * Speculator are holding net long positions on the US
Dollar * Hedge funds remain bearish on the overall PMs sector * Silver’s
sentiment is now at one of the lowest levels in decades
Is
the equity market really overvalued? – TradingFloor
The spectacular bull
market in equities last year has got the last standing bears out of their caves
pushing the notion that markets are overvalued. Our view is that equity
valuations have just normalised and they will continue up in 2014.
7+1
FX trades of 2014 – Nordea
Scandies to parity: Short NOKSEK * Canada back to Earth: Long
USDCAD * Safe haven no more: Long GBPCHF * Terms of trade: Short EURPLN * Too
much tightening priced in: Long AUDNZD * LatAm rebalancing: Long MXNBRL * Least against most fragile: Long INRTRY
* Too low: Long FX volatility
Deutsche
Bank Offers Up Forex Wisdom for 2014 – WSJ
ECONOMICS
Central
Banks Split on Stimulus in 2014 as Fed Tapers – BB
The erosion of the mostly
synchronized stimulus that supported the world economy for the past six years
has investors anticipating a stronger U.S. dollar and weaker Treasuries.
Shadow
Banking – BB
The scale of it is almost unfathomable: over $70 trillion worldwide. The
Financial Stability Board says it poses “systemic risks” to the global
financial system. It’s growing at phenomenal rates in China and India and booming in
Western banking capitals as well.
Academics Who Defend Wall St. Reap Reward – NYT
Major players on Wall Street and elsewhere have been aggressive in
underwriting and promoting academic work.
Financial and
Sovereign Debt Crises: Some Lessons Learned and Those Forgotten – IMF
R&R: Extreme Debt
Means 1930s-Style Defaults – BI
R&R are wrong about
the EZ’s debt structure and the costs of mutualisation – Yanis Varoufakis
FINNISH
"Valuutan erottaminen valtiosta oli valtava
virhe" – TalSa
Professori
Randall Wray uskoo, että eurokriisissä on kyse valtion ja valuutan
erottamisesta. Hän haluaisi isoja muutoksia valuuttaunionin rakenteisiin.
Rahapolitiikan itsenäisyyden tärkeys pitää ymmärtää
Latvian vuoro yrittää: muuttuuko paperi
kullaksi? – Jan
Hurri / TalSa
Euro on kuin
harkkomuotti, jonka avulla EU-maat yrittävät valaa paperirahaa kultarahan
veroiseksi vakauden ankkuriksi. Länsimaisten valuuttojen klassinen kultakanta
kesti kymmeniä vuosia mutta kariutui sata vuotta sitten ensimmäiseen
maailmansotaan. Euro on nyt 15-vuotias ja viidettä vuotta velkakriisin kourissa
– mutta ei hajalla. Vuoden alussa rahakoe laajeni Latvian verran.
Päivänpaiste sokaisee velkamyrskyn silmässä –
Jan
Hurri / TalSa
Eurokriisi näyttää
tyyntyneen kuin paha myrsky olisi ohi. Kriisin oireet ovatkin rauhoittuneet –
mutta syyt ovat ennallaan tai entistä pahempia: talous on heikompi ja
velkataakka raskaampi kuin ennen kriisiä. Euroalue onkin ennemmin myrskyn
silmässä kuin suojassa.
Huippuekonomisti Krugman: Euroon liittyminen
oli Suomelle virhe –
HS