Renaissance

Since 2004, interest in 'stocks' and 'bonds' has plunged by more than 50%. Despite a renaissance for bonds in 2008, and stocks in 2009, the 'Great Rotation' appears to be 'out of investing'. Google Trends also shows that, as expected, 'Bonds' have been more popular than 'Stocks' since the crash - a development the Fed is so desperately trying to reverse, by imposing ever stricter central planning, ironically the reason why most have "just said no" to an authoritarian, inefficient, and farcical policy instrument formerly known as the market. Is it any wonder so many retail brokerages, commission-takers, and asset-gatherers are advertising day-in, day-out and constantly reassuring with the "it'll all be 'ok' in the long-run meme"?

When the soon to be ex-Pope carts in the U-Haul for the final trip out, in the off chance he decides to raid the Vatican of all Renaissance masterpieces, elsewhere known as IOR collateral, here is one possible New Normal replacement.

As the European parliament attempts to create a budget and Draghi repeats how the temporary lull in European growth is merely a prelude to a growth renaissance in the second half of the year (not to be confused with the verbatim lie rehashed by European dignitaries in 2012, 2011, 2010 and 2009), it appears a few leaks of truthiness are seeing daylight in the disunion. In a shockingly frank interview, the CEO of Saxo Bank describes the Euro's recent rally as illusory and that "the whole thing is doomed," as the continent is not supported by a fiscal union. As Bloomberg reports, Lars Seier Christensen says he would be a "seller of the EUR at anything near 1.40," noting that "right now we’re in one of those fake solutions where people think that the problem is contained or being addressed, which it isn’t at all." Confirming that the only thing holding the farce together is political not economic efforts, he sums the situation up perfectly: "people have been dramatically underestimating the problems."

"I went through the January data one last time with a fine tooth comb. I fail to see what got everyone so excited, beyond the upward revisions to the back data. That only proves that productivity has been weaker than initially thought. And the income from those upward job revisions has probably already been spent. But as I highlighted yesterday, the broad-term trends are slowing down and doing so discernibly."

An uncomfortable reflection...

With the Dell LBO potentially heralding the renaissance of re-leveraging risk transfer from equity-holders to credit-holders, Goldman's screen among investment grade and high-yield companies attempts to uncover the names most likely to engage in shareholder-friendly (or more specifically bond-holder unfriendly) events. From quantitative screens on cashflow, leverage, and cash to stock 'cheapness', industry suitablity, and management reputation, the following 47 names warrant further attention (in both CDS and equity markets).

Count on technology to bring the world into a new Oil [and Gas] Renaissance.

So much for the US trade renaissance. After posting a better than expected October trade deficit of ($42.1) billion, November saw the net importer that is the US revert to its old ways, with a massive deficit of some $48.7 billion - the worst number since April, far more than the $41.3 billion in expectations, which makes it the biggest miss to expectations since June 2010, driven by a $1.8 billion increase in exports to $182.6 billion, and a surge in imports which rose from $222.9 billion to $231.3 billion. Specifically "The October to November increase in imports of goods reflected increases in consumer goods ($4.6 billion); automotive vehicles, parts, and engines ($1.5 billion); industrial supplies and materials ($1.3 billion); foods, feeds, and beverages ($0.6 billion); capital goods ($0.4 billion); and other goods ($0.1 billion)." And with this stark reminder that the US has to import the bulk of its products, something which a weak USD does nothing to help, expect a bevy of lower Q4 GDP revisions, as this number may push Q4 GDP in the sub-1% category.

More than half a decade has passed since the recession that triggered the financial panic and the Great Recession, but the condition of the world continues to be summed up by what The Spectator's Michael Lind calls ‘turboparalysis’ - a prolonged condition of furious motion without movement in any particular direction, a situation in which the engine roars and the wheels spin but the vehicle refuses to move. By now one might have expected the emergence of innovative and taboo-breaking schools of thought seeking to account for and respond to the global crisis. But to date there is no insurgent political and intellectual left, nor a new right, for that matter. Why has a global calamity produced so little political change and, at the same time, so little rethinking? Part of the answer, has to do with the collapse of the two-way transmission belt that linked the public to the political elite. But there is a deeper, structural reason for the persistence of turboparalysis. And that has to do with the power and wealth that incumbent elites accumulated during the decades of the global bubble economy. But it is coming...

Yet another headscratcher in the endless litany of Baffle with BS data, this time from the ADP Private Payrolls report, traditionally a laughing stock when it comes to its NFP forecasting powers (we will spare readers the correlation scatterplot which shows a 0 correlation), which not only revised its November print from 118K to 148K (just so it mysteriously coincides with the November NFP number of 146K), but saw the December private jobs number surge to 215K on expectations of a 140K print. The primary reason for the spike, a +39K surge in construction jobs, supposedly in the aftermath of Sandy, as well as some +53 job additions in trade, transportation and utilities. Also, how ADP gets +14K financial jobs in the peak financial layoffs month (to avoid year end bonuses of course), is anyone's guess. And while we should worry about that unemployment rate rapidly approaching the 6.5% Bernanke QE4EVA threshold end (don't worry, tomorrow we will find that the labor participation rate mysteriously has started to grow again to actually push the unemployment rate higher now that the Obama re-election is no longer an issue), we definitely should not worry about America's manufacturing renaissance, as the country lost yet another 11,000 manufacturing jobs - the 6th month in a row with mfg job declines (sorry Ohio, better luck next time).

For the fourth year in a row we continue our tradition of summarizing what you, our readers, found to be the most relevant, exciting, and actionable news of the year, determined simply by the number of page views. Those first eager for a brief stroll down memory lane of prior years can do so at their leisure, by going back in time to where the top articles of 2009, 2010 and 2011 are recapped. With that out of the way, here is what readers found to be the most popular posts of the past 365 days..

Even if the US economy really takes off in 2013, don`t look for oil and gasoline demand to overtake supply in the equation.

Year-to-date, the EuroStoxx 50 (Europe's Dow) is the best performing of the major asset classes of the developed world - besting the S&P 500 by over 300bps now. What is perhaps more interesting than this apparent dirty/clean shirt bet is that the S&P 500 was outperforming Gold by more than 850bps last week. It appears that since reaching that 2-sigma 'richness' that stocks and gold have begun to converge back to a more normal 'average' spread for the year. Gold remains +6.4% for the year versus 12% for the S&P (with recent historical vol considerably higher in stocks than gold) but the question is - is the long Gold, short Stocks pair due for a renaissance?

How does one of the best strategists view the world as we close the page on 2012, and look toward 2013? Find out with the help of these 35 charts.