W/E: Weekly Support (updated!)
EUROPE
German Foreign
Minister welcomes discussion on EU Treaty Change – Open
Europe
Why the Eurozone
output gap could be a chasm – alphaville
/ FT
The ECB and the European Commission are wrong to think that the Euro
area output gap is modest or that the growing unemployment rate is structural,
given there is so little wage pressure in the region.
Why German-style
labour reform isn’t for everyone – The
World / FT
“The policy recommendation from Germany for the rest of continental
Europe should not be the Hartz reforms,” they conclude, “… but reforms that
would target the system of industrial relations by decentralising bargaining to
the firm level, while keeping workers’ representatives involved to [ensure]
that employees benefit again when economic conditions improve.”
One certainly could have made a fortune plowing into 10-year Portuguese
bonds. Does that mean Portugal is out of the woods?
I don't think so, and neither does Tortus Capital hedge fund manager David
Salanic.
European banks have
$3 trillion of exposure to emerging markets – Reuters
EUROPEAN CENTRAL BANK
ECB preview: Another
refi rate cut – Danske
Bank
At the ECB meeting last month, Mario Draghi described two scenarios that
would lead to action. We saw both of these triggers materialize in January. Therefore,
we expect the ECB to ease again on Thursday
Are further falls in
inflation putting more pressure on the ECB to act? – Open
Europe
The data suggests to us that the ECB will wait until its March meeting
and its updated inflation forecasts to make a judgement – but then again it went
a month earlier than expected in November. As for how, the most likely tools
remain some form of targeted LTRO and/or purchases of bank loans but both
programmes would require significant work and have numerous shortcomings
Euro zone inflation
falls again; economists base ECB rate cut calls on déjà vu – MacroScope
/ Reuters
Only two of 76 analysts in a Reuters poll conducted before news on
Friday that January euro zone inflation fell to 0.7 percent said the ECB would
trim its refinancing rate below 0.25 percent this week. Now a few more say they
will. While many economists say the decision is a close call, most lack
conviction over whether it will do any good.
ECB to reveal
strategy for bank health checks by end-March – Reuters
The ECB kept the euro zone's top lenders on tenterhooks as it promised
to reveal the strategy for its unprecedented review of bank balance sheets by
the end of March, giving only scant detail on Monday.
UNITED STATES
Markets Tumble. How
Will the Fed React? – Tim
Duy’s Fed Watch
The Fed is once again
in a familiar place. They try to pull back on policy, and markets tumble.
Tightening has repeatedly proved to come too early; one wonders if the
Fed would have had to keep doing more if they didn't keep promising to do less.
If history is any guide, they will eventually reverse course. But
that same history would suggest that they need to see conditions deteriorate
further before they act.
Fed’s Lacker Sees Continued Reduction in Bond Purchases – WSJ
Welcome Janet: Worst February Start For Stocks In 32 Years – ZH
Goldman Summarizes Today's "Serious Pain In Risk Assets" – ZH
Is the Stock Market Cheap? – dshort
CoreLogic: House Prices up 11% Year-over-year in December – Calculated
Risk
ANOTHER FISCAL CHAOS?
Wonkbook: Will
there be another debt-ceiling fight? – WaPo
US could start
defaulting on debt 'very soon' warns Lew – The
Telegraph
US Treasury Secretary calls on Congress to raise debt ceiling
immediately to prevent the issue from harming the economic recovery
Citigroup, And Former
Fed, Economist To Take Top Treasury Post – ZH
ASIA
RBA Moves to Neutral
as It Signals Comfort With Aussie Level – BB
Australia’s central bank
signaled the end of a two-year easing cycle and foreshadowed stronger economic
growth, sending the nation’s currency higher.
USDJPY banging on key support as AUD jumps on RBA shift – TradingFloor
Japanese Stocks In Freefall - TOPIX Almost -5% To 4-Month Lows; Down 15%
In 2014 – ZH
EMERGING
Emerging Markets Play
an Unsettling Tune – WSJ
This bout of volatility was triggered by two fundamental, and
long-lasting, shifts: the “tapering: in the Federal Reserve’s bond-buying
program; and concerns over China’s economy and
banking system.
Emerging markets risk
repeating eurozone blunder of synchronised tightening – The
Telegraph
Where have seen this
screenplay before? A string of countries tighten policy at the same time – some
drastically – in order to prevent capital flight and show investors how tough
they can be.
Capital controls or
cooperation? – Pieria
It is not beyond the bounds of possibility that, faced with currency
collapse and/or unsustainable rises in debt burdens, some countries may resort
to direct restrictions on capital movements. Would this be an appropriate
course of action?"
It’s the hot money,
stupid
– alphaville
/ FT
All of which begs one question. Should some of the blame associated with
what happens when false friends leave be directed to those who sent them your
way to begin with?
Don't confuse a
temporary shock with a trend in emerging markets – TradingFloor
EM equities down 11 percent since October * Developing countries
embracing technology * Strategic view remains with long equities
Frontier markets have
dodged the EM bullet – TradingFloor
Not all equity markets are bleeding in tandem with the rout in emerging
market equities. Few people are talking about how frontier markets have
actually dodged the EM bullet but some it has to do with less access for
foreign capital.
Frontier markets have
dodged the EM bullet – TradingFloor
Emerging markets are the talk of the street today but few people seem to
be discussing how frontier markets have dodged the bullet and are 1.1 percent
higher year-to-date (see table) compared to the sharp declines in developed and
emerging markets.
Brazil’s exports overall may in fact be improving, but thanks in no small part
to selling raw stuff to China. That’s not a hugely secure prospect at this
point.
Emerging-Market Rout Seen Enduring on Low Real Rates – BB
Citi Fears The Emerging Market Volatility "May Just Be The
Beginning" – ZH
Contagion from emerging markets to global stocks: SocGen’s Juckes – MarketWatch
Latin American Currencies Plunge To 2003 Lows, Argentine BONARs Shrink –
ZH
OTHER
Goldman Warns Global
Slowdown Getting "More Serious" – ZH
The January reading and the latest revisions to previous months paint a
significantly softer picture of global growth and the GLI now locates the
global industrial cycle clearly in the ‘Slowdown’ phase.
Sentiment an equity market risk: II % Bears dropped to 14.1% = too few
bears * Put-call ratios are complacent & contrarian bearish
Interesting Stock
Market Charts – Short
Side of Long
Despite optimism, the Dow has made no progress in 8 months * Five out of
nine major stock market sectors have broken down * Stock market breadth has
started to deteriorate rapidly * Yes, markets can go down… even when CBs
endlessly print! * Emerging Markets peaked in October and have lead the sell
off * Retail investors aren’t bothered as cash levels remain super low * Stock
market has only been more expensive a handful of times
FINNISH
Elinkeinoelämä ja euron puolustus – Tyhmyri
mutta nythän
on jo jonkun aikaa kuulunut elinkeinoelämän ääniä euroa vastaan
Unionin korruptiokustannuksista puolet
Italiassa - 60 miljardia – Verkkouutiset
Asuntolainoille on tulossa 90 prosentin
lainakatto – IL
VM: Asuntolainoille on tulossa lainakatto -
näin se vaikuttaisi eri ihmisiin – IS
VM ehdottaa kompromissilainakattoa – TalSa
Asunnonostajilla pari vuotta aikaa
valmistautua – YLE
FK huolissaan ensiasunnon ostajista –
"ASP-ikärajat aikansa eläneitä" – Verkkouutiset
EU: Suomen torjuttava korruptiota julkisissa
hankinnoissa – IL
EU moittii Suomen hyvä veli-verkostoja – IL
Demarivaikuttajat kinaavat –"Oikeassahan
Rinne on" – Verkkouutiset
Presidentti Niinistö: Velan varaan ei voi
jättäytyä pysyvästi –
Verkkouutiset