European Central Bank

• Obama to focus on middle class in State of Union address (Reuters) - all 4 of them?
• European Stocks Buoyed by ECB Hopes (WSJ)
• China's 2014 economic growth misses target, hits 24-year low (Reuters)
• Federer on Swiss Franc Shock: "Does It Mean I've Got to Win Now?" (BBG)
• First-time buyers help Christie’s reach record sales (FT)
• So it was the NSA? U.S. Spies Tapped North Korean Computers Prior to Sony Hack (BBG)
• Why Chinese Developer Kaisa's Default Risk Has Money Managers Spooked (BBG)
• Morgan Stanley Misses Estimates on Drop in Bond-Trading Revenue (BBG)

Since the creation of the Federal Reserve in 1913, the dollar has lost over 97 percent of its purchasing power, the US economy has been subjected to a series of painful Federal Reserve-created recessions and depressions, and government has grown to dangerous levels thanks to the Fed’s policy of monetizing the debt. Yet the Federal Reserve still operates under a congressionally-created shroud of secrecy. No wonder almost 75 percent of the American public supports legislation to audit the Federal Reserve.

The Bundesbank, Germany’s powerful central bank, announced very publicly this morning the further repatriation of some of it’s gold being held in foreign locations – namely in Paris and New York with the Bank of France and the Federal Reserve.

Everyone loves a good conspiracy theory debate. Regardless of whether you argue for it, or against, there are times when suddenly the ramifications for plausible truth are realized that overshadow the conspiracy. This is where the plot of truth can get far more sinister than the imagined conspiracy ever could.

Next week will be crucial for Super Mario...

Since the European sovereign-debt crisis erupted in 2009, everyone has wondered what would happen if a country left the eurozone. The risks created by the SNB’s decision – as transmitted through the financial system – have a fat tail - and the consequences will not be limited to Switzerland. After years of wondering whether the exit of a small, fiscally weak country like Greece could undermine the euro, policymakers will have to deal with an even bigger shock stemming from the exit of a small, fiscally strong country that is not even a member of the European Union.

After yesterday's report that two Greek banks had suffered sufficiently material deposit withdrawals to force them to apply for the unpopular and highly stigmatizing Emergency Liquidity Assistance program with the ECB, now the other two of Greece's largest banks have also succumbed to reserve depletion after the Greek bank run appears to have gone viral. As Greek Capital.gr reports, now all four Greek banks have requested ELA assistance from the ECB.

DRAGHI PRESENTED QE PLAN TO SCHAEUBLE, MERKEL, SPIEGEL SAYS

Once again the clear preference for holding Swiss Francs over Euros was evident today as EURCHF re-collapsed from over 1.02 to under 0.9750 now. Overnight news from Greece suggesting bank runs are under way was then added to as Bloomberg reports, Greece is set to run out of cash by mid-year if it can’t break the deadlock over its rescue program, according to two international officials. Now, in the final "FU" to Greece, following Wolfgang Schaeuble's earlier comments that Greece does not have a debt problem, Der Spiegel reports after the European close that ECB QE will not include Greek bonds due to their low rating... but will see national central banks buying own-country debt.

"The first lesson is never trust a central banker when he or she makes a commitment or gives guidance..."

"In our portfolios with currencies, we have been short the CHF on the grounds that it was an expensive currency which we expected would experience capital outflows as European growth normalized. We were surprised by the sudden removal of the peg. Although the CHF real effective exchange rate is lower than during the European crisis of 2011, it has actually appreciated in recent months. We exited a substantial portion of our CHF short today and are monitoring the situation closely."

The bad news is that as we also speculated, and as Greek officials tried to cover up as usual, the Greeks have resumed doing what they do best any time their country is facing a grand crisis: walking to the bank and withdrawing what little deposits they have left. Or rather running to the bank. Which brings us back to the topic of the Emergency Liquidity Assistnace, which as Kathimerini reported moments ago, at least two Greek systemic banks have reportedly resorted to, indicating that the liquidity situation in Greece is once again as dire as it was in the depth of the European collapse.

Success, we’re constantly told, breeds success. And success breeds stability. The way to avoid failure is to copy successful people and strategies. The way to continue succeeding is to do more of what has been successful. This line of thinking is so intuitively compelling that we wonder what other basis for success can there be other than 'success'? As counter-intuitive as it may sound, success rather reliably leads to failure and destabilization. Instead, it’s the close study of failure and the role of luck that leads to success. In the macro-economic arena, we think it highly likely that the monetary and fiscal policies of the past six years that are conventionally viewed as successful will lead to spectacular political and financial failures in 2015 and 2016. How can success breed failure? It turns out there are a number of dynamics at work.

And to think so many otherwise very bright people still don't get it.

• U.S. Index Futures Decline on Commodities Slump, Growth Concerns (BBG)
• Al Qaeda claims French attack, derides Paris rally (Reuters)
• Charlie Hebdo With Muhammad Cover on Sale With Heavy Security Precautions (BBG)
• How an Obscure Tax Loophole Brought Down Obama's Treasury Nominee  (BBG)
• ECB’s bond plan is legal ‘in principle’ (FT)
• Charlie Hebdo fallout: Specter of fascist past haunts European nationalism (Reuters)
• DRW to acquire smaller rival Chopper Trading (FT)
• Oil fall could lead to capex collapse: DoubleLine's Gundlach (Reuters)

Gold has surged 7.2% already in January, outperforming gold in dollars which is up 4.8%, and building on the 12% gains seen in 2014. Market participants are increasing allocations to gold in order to hedge a ‘Grexit’ and risks posed by euro money printing.