One of the bigger stories overnight is Hilsenrath's latest communication from the Fed which once again simply paraphrases the status quo opinion, namely which is that the Fed will taper by another $10 billion on January 29, reducing the total monthly flow to $65 billion. "The Federal Reserve is on track to trim its bond-buying program for the second time in six weeks as a lackluster December jobs report failed to diminish the central bank's expectations for solid U.S. economic growth this year, according to interviews with officials and their public comments." Of course, should the Fed not do that, as the Hilsenrath turned to Hilsen-wrath after all those Taper rumors in September ended up being one giant dud, one can once and for all completely ignore the WSJ reporter, who will have lost all his Fed sources and is now merely an echo chamber of consensus. What is notable is that the result of the latest mouthpiece effort, the USD is stronger, which means USDJPY is higher, which means US equity futures are flying.... on less QE to be announced. We eagerly await for this particular correlation pair to finally flip. The other big story, of course, is the already noted well-telegraphed in advance PBOC liquidity injection ahead of the Chinese Lunar New Year, and ahead of a potential January 31 Trust default which will certainly shake the foundations of the Chinese shadow banking system to the core. Not helping nerves was last night's announcement by Zhang Ming, a researcher and director of the international investment department at the Chinese Academy of Social Sciences, that "trusts and shadow banking will see defaults this year, and this is a good thing." Let's circle back in 6 months to see just how good it is.
With the 1% of the 1% due to engorge Davos with their high-thinking centrally-planned solutions to the world's oh-so-foreseeable problems, the FT takes a look back at a "world above it all" from 1914. Then too, Margaret McMillan notes, they would have been puzzling over how to cope with their fast-changing, troubled world. They would have worried – as they do today – about the future; concerned that the pattern of economic boom and bust was dangerously unstable; and warning that society might splinter as inequality grew and the middle classes were squeezed. One thing that would not have troubled Davos that January 100 years ago was the possibility of a major war. Europe had just come through two dangerous wars in the Balkans, which surely showed that the international order could cope with crises. And so they would have gone their separate ways confident that they would all meet again in 1915.
With China increasingly in the news involving some new diplomatic or geopolitical escalation, a new territorial claim, the launch of a brand new aircraft carrier, or just general chatter of military tensions surrounding the aspirational reserve currency superpower, it is time for yet another update of the complete "military and security developments involving the people’s republic of China", courtesy of the annual report to Congress discussing precisely this issue.
This is who we are pinning the hopes and dreams of Obamacare's success on?
But fear not, dear poor people of the world, for Lloyd Blankfein, Mark J. Carney, Mario Draghi, Haruhiko Kuroda, Christine Lagarde, Jacob Lew, Shimon Peres, Larry Fink, David Cameron, Shinzo Abe, Marissa Meyer, and many others are there fighting for you. Fighting all the way...