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Monday, January 14

14th Jan - US Close



Previously on MoreLiver’s:                  

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Roundups and Commentary
Markets – Between The Hedges
The Closer – alphaville / FT

Roundup – A View From My Screens
Tomorrow’s Tape: Retail Sales – WSJ
US: – ZH

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EUROPE
The Year Ahead in the Eurozone: Lower Risks, Same ProblemsEconoMonitor
Nouriel Roubini: Underlying all this is the issue of the loss of external competitiveness associated with external current account deficits that private foreign investors are unwilling to finance. Some internal devaluation is ongoing, leading to a reduction in unit labor costs, but that process is recessionary and occurring too slowly. Thus, though financial conditions have improved and tail risks have lessened, the fundamental problems of the euro zone remain.

Risk on and Draghi's list!TradingFloor
Unless we see a significant deterioration in any of ECB president Mario Draghi’s list of ‘reasons to be cheerful in financial markets’ then the EUR is likely to stay supported, irrespective of the disappointing growth projections.

  UK
Britain Sleepwalking out of the European UnionPIIE
Last November, the British Labor leader, Ed Milliband, claimed that Britain is “sleepwalking” out of the European Union. Unfortunately, his assessment appears accurate.

Lost illusions on Europepresseurop
In his forthcoming speech on Europe, due on January 18, UK Prime Minister David Cameron must take account of the Conservative Party’s eurosceptic mood, but above all speak for the country rather than the party and keep Britain in Europe, argues a Financial Times editorial.

UNITED STATES
  MARKETS
What I Am Thinking About As Markets Resolve IssuesThe Big Picture
We are now entering one of those periods of time when a broad variety of market factors resolve themselves for better or worse. When this happens, markets can suddenly shift in either direction. We can see an acceleration to the upside, or a significant trend reversal.

Treasury yields capped by public sector purchasesSober Look
Treasury yields have risen at the start of the new year but have since stalled. 1.9% yield seems to be the ceiling on the 10-year note for now.

Important Charts Updated!The Short Side of the Long
The other side of the bond market that measures inflation expectations via TIP vs Treasury spread, also known as break evens, disagrees. We seem to be overheating and could be signalling a top for majority of risk assets including S&P 500.

  FED
Fed's Williams expects growth to pickup, Concerned about policy "uncertainty" – Calculated Risk
Fed’s Williams: Bond Buying Likely to Continue Into Late 2013 – WSJ
Fed’s Evans: Conditions to Raise Rates Could be in Place by 2015 – WSJ
Fed’s Lockhart: Wrong to Call Current Policy ‘QE Infinity’ – WSJ

  MACRO DATA
Macro Strategy – Watch US dataNordea (pdf)
We expect that retail sales will suffer from lower motor vehicle sales and lower gasoline receipts as gasoline prices dropped 4% in December, and hence come down a notch. In terms of the Empire survey we see it reaching 5 which would be better than consensus. Out tomorrow is also US PPI data, and we expect a continued downside trend with a trough in the next few months.

Trade entrailsMacroScope / Reuters
An exercise in divination using the entrails of last week’s U.S. international trade report shows signs of a move with larger implications than just the gaping deficit that caught analysts wrong-footed: the possibility of a persistent burden on the American economy caused by Japanese and German imports, like in the 80s.

ASIA
Chinese Official Hints at Easier Access to Mainland MarketsMarc to Market

SAXO’S QUARTERLY OUTLOOKS
Q1 Outlook: Policymakers play make-believe as business wiltsTradingFloor
Steen Jakobsen: The outlook for businesses and the middle class remains uncertain at best and very worrisome at worst as we await the final bill from the US fiscal cliff. Our old theme of supporting the micro economy is still our main message for 2013.

Q1 Macro Outlook: Doldrums revisitedTradingFloor
Steen Jakobsen: The macroeconomic outlook for Q1 requires dealing with binary events like the US fiscal cliff and the Italian election. Global growth and its outlook will again be very path dependent on the macro mistakes we have come to expect from policymakers.

Q1 FX Outlook: Low volatility will not lingerTradingFloor
John J Hardy: US fiscal restraint, the reshoring phenomenon, Fed thresholds hampering further easing and market volatility will see a more durable recovery in the US dollar in Q1. The pound will make a comeback against the euro while the yen will weaken further.

Q1 Equity Outlook: Mean reversion to dominate in 2013?TradingFloor
From an asset allocation perspective, equities should always be part of a core portfolio reflecting investors’ neutral positions during the business cycle. So this outlook will concentrate on what we think will happen to equities overall and what opportunities will exist in 2013 – rather than whether or not you should have equities in your portfolio.

Q1 Commodity Outlook: Opportunity may knock if economy picks upTradingFloor
As we do not expect a runaway pick-up in global activity we tend to focus on commodities with reduced or restricted supply and those thriving in an environment of ample liquidity.
 
OTHER
Summary Of Key Events In The Coming WeekZH
Calendar by GS - includes European auctions



Morning Briefing (Asia): Global Markets Brace For Economic DataBNY Mellon

Thinking a little further about Chinese attitudes towards the JPY.