Japan

Europe, US Risk Off After Greece Rejects European Ultimatum, Ukraine Peace Talks Falter

In the absence of any notable developments overnight, the market remains focused on the rapidly moving situation in Greece, which as detailed over the weekend, responded to Europe's Friday ultimatum very vocally and belligerently, crushing any speculation that Syriza would back down or compromise, and with just days left until the emergency Eurogroup meeting in three days, whispers that a Grexit is imminent grow louder. The only outstanding item is what happens to the EUR and to risk assets: do they rise when the Eurozone kicks out its weakest member, or will they tumble as UBS suggested this morning when it said that "the escalation of tensions between the Greek government and its creditors is so far being shrugged off by investors, an attitude which is overly simplistic and ignores the risk of market dislocations" while Morgan Stanley adds that a Grexit would likely lead to the EURUSD sliding near its all time lows of about 0.90.

Albert Edwards' On The Next Shoe To Drop: The Realization That Core Inflation In The US And Europe Are The Same

"The next shoe to drop will be the realisation that the US recovery is stalling and outright deflation is as big a threat there as it is in the eurozone. Indeed my former esteemed colleagues Marchel Alexandrovich and David Owen pointed out to me that if US core CPI is measured in a similar way to the eurozone (i.e. ex shelter), then US core CPI inflation is already pari passu with the eurozone ? despite the former having enjoyed a much stronger economy!"

Chinese Imports Crash & Worst January Export Plunge Since 2009 Sends Trade Surplus To Record High

Chinese imports collapsed 19.9% YoY in January, missing expectations of a modest 3.2% drop by the most since Lehman. This is the biggest YoY drop since May 2009 and worst January since the peak of the financial crisis. Exports tumbled 3.3% YoY (missing expectations of 5.9% surge) for the worst January since 2009. Combined this led to a $60.03 billion trade surplus in January - the largest ever. But apart from these massive imbalances, everything is awesome in the global economy (oh apart from The Baltic Dry at record lows, Iron Ore near record lows, oil prices crashed, and the other engine of the world economy - USA USA USA - imploding).

Global Economy Will Shrink By $2.3 Trillion In 2015

The world is going to be about $2.37 trillion smaller in 2015 than most expected at the start of the year as a consequence of the USD strengthening. This is not insignificant, as it represents 3.2% of last year’s estimated global GDP. For perspective, that would be as if an economy of the size between Brazil’s and the UK’s would have just disappeared.

Guest Post: How Vaccine Hysteria Could Spark A Totalitarian Nightmare

At the end of the day, the issue here is one of freedom, and freedom is the freedom to choose – even if we make a bad choice. The argument that I must vaccinate my children for the good of the community is not only scientifically questionable, it is an unethical precept. It is the argument all dictators and totalitarians have used. “Comrade, you must work tirelessly for the good of the collective. You must give up your money and property for the good of the collective, and now … you must allow us to inject your children with what we deem is good for the collective.” If American’s don’t stand up against this, then we are lost. Because we have lost ownership of ourselves. Our bodies are no longer solely ours – we and our children are able to be commandeered for the “greater good.”

China’s Monumental Debt Trap - Why It Will Rock The Global Economy

Needless to say, Greece is only the poster child. The McKinsey numbers above suggest that “peak debt” is becoming a universal condition, and that today’s Keynesian central bankers and policy apparatchiks are only pushing on a giant and dangerous global string. So now we get to ground zero of the global Ponzi. That is the monumental pile of construction and debt that is otherwise known on Wall Street as the miracle of “red capitalism”. In truth, however, China is not an economic miracle at all; its just a case of the above abandoned Athens stadium writ large.

"We Just Need To Print More Money" Bank Of Japan's New Board Member Clarifies Endgame

The Abe administration nominated a major proponent of reflationary monetary policy to the central bank’s board, buttressing Governor Haruhiko Kuroda’s efforts to save the nation from the dread of deflation. As Bloomberg reports, economist Yutaka Harada, who will replace Ryuzo Miyao, has said Japan can beat deflation by printing money in a 2013 book "Reflationary Policy Revives Japan’s Economy." So far that is not working so try harder... “The nomination is a good news for Kuroda... he will keep a majority on the board and win what he wants." Why such good news? As deputy director at the finance ministry’s Policy Research Institute, Harada exclaimed, "we just need to print money."

5 Things To Ponder: Intriguing Erudition

"Conditions in the global economy are clearly abnormal. The policymaker response to those conditions is extraordinary, with minimal focus on an all-out push for higher growth. Instead, the primary focus is on boosting “inflation” with repeated doses of bondbuying, stock-buying and super-low interest rates"

"A trait you'll see among the world's best investors is the willingness -- even desire -- to talk about their mistakes. They analyze what went wrong, why they were mistaken, and how they can learn from their errors so they don't repeat them. Everyone makes mistakes, but they seem to grasp what most of us have a hard time admitting: It's your (and my) fault."

Frontrunning: February 6

  • RadioShack files for bankruptcy; Sprint to take over some stores (Reuters)
  • Kansas To Issue Bonds and Invest Proceeds to Boost Pension Returns (WSJ)
  • Merkel to Make Last Push With Putin as Pessimism Prevails (BBG)
  • Islamic State in Syria seen under strain but far from collapse (Reuters)
  • Texas Swagger Fades Fast as Oil Town Squeezed Hard by OPEC (BBG)
  • SEC probes Blackberry options trading ahead of Reuters report about Samsung talks (Reuters)
  • Spanish Bonds Underperform Italy’s as Podemos Gains Popularity (BBG)
  • Steelworkers Union Rejects Offer From Refiners (WSJ)
  • Brazil January Inflation at Fastest Pace in Nearly 12 Years (BBG)