- European Bonds Surge on Slowing German Inflation, Ukraine Tumult (BBG)
- Ukraine tensions hit shares (Reuters)
- Debating Geithner’s Appearances in 2008 Transcripts (Hilsenrath)
- Tensions in Asia Stoke Rising Nationalism in Japan (WSJ)
- GM Investigated Over Ignition Recall Linked to 13 Deaths (BBG)
- Smartphone wars shift from gadgetry to price (Reuters)
- Some Companies Alter the Bonus Playbook (WSJ)
- London’s Subterranean Luxury Manors Lure New Breed of Lenders (BBG)
- Japan No Country for Old Farmers as 7-Eleven Takes Plow (BBG)
- Dream of U.S. Oil Independence Slams Against Shale Costs (BBG)
- Facebook CEO Raises Dealmaker Profile With $19 Billion Takeover (BBG)
- WhatsApp’s Founder Goes From Food Stamps to Billionaire (BBG)
- U.S. Feels Putin's Sharp Elbows in Ukraine (WSJ)
- PBOC Drains Cash as Overnight Rate Slides to Lowest in 10 Months (BBG)
- Fed Puts Rate Increase on the Radar (Hilsenrath)
- Banks Flouting Bonus Rules in Denmark Set to Be Named by FSA (BBG)
- Work Set to Resume on Upgrading Panama Canal (WSJ)
- Euro-Area Recovery Loses Pace as Manufacturing Weakens (BBG) - uh, what recovery?
- Ukraine Exposes EU Policy Disarray (WSJ)
A recent article at the BBC discusses the findings of a report by EU Home Affairs commissioner Cecilia Malmstroem on corruption in the EU. According to the report, the cost of corruption in the EU amounts to €120 billion annually. We would submit that it is likely far more than that (in fact, even Ms. Malmstroem herself concurs with this assessment). This is of course what one gets when one installs vast, byzantine bureaucracies and issues a veritable flood of rules and regulations every year. More and more people are needed to administer this unwieldy nightmare of red tape, and naturally the quality of the hires declines over time due to the sheer numbers required. And that is merely what they actually know about...One gets an inkling of how big the problem may really be when considering the case of Greece.
The most notable event in this traditionally quiet post-payrolls week is Janet Yellen's Humphrey Hawkins testimony before Congress set for mid-week. In terms of economic data releases, the US retail sales (Exp. 0.05%) is on Thursday and consumer sentiment survey is on Friday (consensus 80.5). We also have IP numbers from Euro Area countries and the US. Most recent external account statistics are released from Japan, China, India and Turkey. It is also interesting to track CPI data in Germany, Spain and India, given the ECB and RBI currently face diverging inflation challenges and may be forced into further action. Finally, we have Q4 GDP data from the Euro Area economies (Friday).
- Yellen's first test (Reuters)
- Let weak banks die, says eurozone super-regulator (FT)
- Yellen, Carney Face Explaining Policy as Benchmarks Near (BBG)
- Commerzbank Said Seeking Debt Buyers in $6.8 Billion Spain Exit (BBG)
- Junk Yield Premiums Soar on China’s Looming First Default (BBG)
- Millions Trapped in Health-Law Coverage Gap (WSJ)
- Mandel Tops Best-Earning Hedge Funds for Clients in 2013 (BBG)
- Swiss Brace for Sour EU Relations After Immigration Vote (BBG)
- Detroit Bankruptcy Talks to Resume (WSJ)
As if we didn’t know it already! The Western world is the ultimate destination for corruption, pulling a swift one and swiping the valuables from the inside pocket of the guy’s pants standing in front of you as he keeps his beady eye on the economy.
The key events this week are have non-farm payrolls (consensus 181K) and unemployment rate (consensus 6.7%). There is also going to be a number of speeches given by Fed policymakers. Production surveys from the US (ISM) and other parts of the world are due Monday. We also get trade balance updates from the English-speaking economies - US, UK, Australia and Canada. Finally, keep track on inflation data from Italy and Turkey: the latter is important to track given current high correlation among 'fragile' EM currencies.
After last week's economic fireworks, this one will be far more quiet with earnings dominating investors' attention: US financials reporting this week include JPM and Wells Fargo tomorrow, BofA on Wednesday, GS and Citi on Thursday, BoNY and MS on Friday. Industrial bellwethers Intel (Thurs) and General Electric (Fri) are also on this week’s earnings docket. On the macro front, this coming week we have two MPC meetings - both in LatAm. For Brazil consensus expects a 25bps hike in the policy rate. For Chile consensus forecasts monetary policy to remain on hold. Among the data releases, one should point out inflation numbers from the US (CPI and PPI), Eurozone, the UK and India. We also have three important US producer and consumer surveys - Empire Manufacturing, Philadelphia Fed (consensus +8.5), and U. of Michigan (consensus 83.5). Among external trade and capital flow stats, we would emphasize US TIC data, as well as current account balances from Japan and Turkey. Finally, the accumulation of FX reserves in China is interesting to track as it provides an indication of CNY appreciation pressure.
No surprises here: hours after we reported that youth unemployment in Spain soared to fresh record highs (surpassing the already nosebleeding number of jobless people under 25 in Greece), here comes Gallup with a poll showing the approval rating of the (unelected) EU Leadership across the peripheral countries. And while there was a slight uptick in approval among respondents in Italy - the country that has so far benefited the most from the Italian central banker at the helm of the ECB - the EU's lack of approval just rose to all time highs in the two countries that continue to see their youth employment hopes crushed by the European experiment, with approval in Spain sliding to 27% (from 55% in 2010), while Greece, plunged to only 19%, which makes one wonder: just who has an interest in keeping Greece in Europe?
When it comes to political assassinations, 2014 is starting off with a bang, literally. Moments ago news broke that following an explosion in Prague, the Palestinian ambassador to the Czech Republic has just been killed.
"You're Simply Continuing To Feed The Wolves Of Wall Street" - One Victim's Open Letter To The Kings Of HollywoodSubmitted by Tyler Durden on 12/28/2013 10:22 -0500
"So here's the deal. You people are dangerous. Your film is a reckless attempt at continuing to pretend that these sorts of schemes are entertaining, even as the country is reeling from yet another round of Wall Street scandals. We want to get lost in what? These phony financiers' fun sexcapades and coke binges? Come on, we know the truth. This kind of behavior brought America to its knees. And yet you're glorifying it -- you who call yourselves liberals. You were honored for career excellence and for your cultural influence by The Kennedy Center, Marty. You drive a Honda hybrid, Leo. Did you think about the cultural message you'd be sending when you decided to make this film? You have successfully aligned yourself with an accomplished criminal, a guy who still hasn't made full restitution to his victims, exacerbating our national obsession with wealth and status and glorifying greed and psychopathic behavior. And don't even get me started on the incomprehensible way in which your film degrades women, the misogynistic, ass-backwards message you endorse to younger generations of men. But hey, listen boys, I get it. I was conned too. By. My. Own. Dad! I drove a white Range Rover in high school, snorted half of Colombia, and got any guy I ever wanted because my father would take them flying in his King Air."
Whether your tipple of choice is a warm dark ale or a clear cool liquor, the price of alcohol is soaring (but there is still no inflation anywhere remember - especially in Europe) and so is demand. From watered-down beer in the UK to rubbing-alcohol split scotch in New Jersey, stealth inflation is growing. So who is most responsible for this demand-pull (and cost-push) driven inflation in alcohol? Germany and Czech Republic (beer) and Russia (liquor) are topping the charts in per-capita demand and it seems the Italians, not content with spending less on gifts are also not drinking much...
Key events in the week ahead with implications for early 2014.
A recent report released by U.S. computer security firm FireEye revealed that Chinese hackers had accessed computers at the foreign ministries of five European countries. The report concluded that these “seemingly unrelated cyberattacks” could actually be “part of a broader offensive fueled by shared development and logistics infrastructure.” The laundry list of hacking targets mirrors the recent avalanche of accusations leveled at the U.S. National Security Agency (NSA). As we move further into the 21st century, the U.S. and China will be the major rule-makers for the new global order. As such, the U.S. and China will together help define what is acceptable behavior in the cyberspace. There have already been calls for the U.S. and China to discuss limits on hacking activities and to define clear “rules of the road” for cyberspace. Unfortunately, it seems that (though neither would admit it) the U.S. and China have very similar ideas on cyberspace — anything goes.
The following Top Ten Market Themes, represent the broad list of macro themes from Goldman Sachs' economic outlook that they think will dominate markets in 2014.
- Showtime for the US/DM Recovery
- Forward guidance harder in an above-trend world
- Earn the DM equity risk premium, hedge the risk
- Good carry, bad carry
- The race to the exit kicks off
- Decision time for the ‘high-flyers’
- Still not your older brother’s EM...
- ...but EM differentiation to continue
- Commodity downside risks grow
- Stable China may be good enough
They summarize their positive growth expectations: if and when the period of stability will give way to bigger directional moves largely depends on how re-accelerating growth forces the hands of central banks to move ahead of everybody else. And, in practice, that boils down to the question of whether the Fed will be able to prevent the short end from selling off; i.e. it's all about the Fed.