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07 января, 19:50

The Only Man In Europe Who Makes Any Sense

Submitted by Raul Ilargi Meijer via The Automatic Earth blog, Since the new year will bring yuuge and bigly changes to us all (I truly hope both the year and the changes will leave you happy), I thought I’d start off by ‘reduxing’ two articles that contain further ‘reduxes’, Russian doll style. I do this because the man the articles are about is set to play a large role in those changes, certainly where Europe is concerned. And since the changes in Europe will be weally weally bigly, they will impact the entire world. That is to say, we must seriously doubt if the EU -or rather, what’s left of it post-Brexit-, will live to see January 1 2018 in one piece. This is hardly an exaggeration, as you may be inclined to think. As I said recently, in Europe it’s not and-and, it’s if-or: with elections in Germany, France, Holland and probably Italy coming up, they don’t all have to turn out ‘badly’ for the pro-EU camp, if just one of them goes against the EU, it may well be game over. Therefore Beppe Grillo, leader of the Five Star movement, is a man to keep an eye on. And not just for that. The first item below, a 1998 video, is an addition to my original article from November 14 2014, and it makes clear, once more, that Beppe is no fool. Nor is he a right wing nut, or anything remotely like that. Beppe actually understands what money is, much much better than any of the politicians and economists that rule the old continent. That makes him a threat to them. Below that video from 1998, my November 14 2014 article, which in turn cites a 2013 article. I know some things will look dated, but you’ll get it, I’m sure. I hope you also get why I repost it all: 2017 has begun. *  *  * Beppe Grillo: Whom does the money belong to? Who does its ownership belong to? To the State, fine, so to us, we are the State.   You know that the State doesn’t exist, it is only a legal entity. WE are the state, the money is ours.   Then tell me one thing: if the money belongs to us, why do they lend it to us? From November 14 2014: That says quite something, that title. And it’s probably not entirely true, it’s just that I can’t think of any others. And also, I’m in Europe myself right now, and I still have a European passport too. So there’s two of us at least. Moreover, I visited Beppe Grillo three years ago, before his 5-Star Movement (M5S) became a solid force in Italian politics. So we have a connection too. Just now, I noticed via the BBC and Zero Hedge that Beppe not only expects to gather far more signatures than he said he would recently (1 million before vs 4 million today) for his plan to hold a referendum on the euro, he also claims to have a 2/3 majority in the Italian parliament. Well done. But he can’t do it alone. Martin Armstrong thinks the EU may have him murdered for this before they allow it to take place. Which is a very good reason for everyone, certainly Europeans, to come out in support for the only man in Europe who makes any sense. I know many Italians find Beppe too coarse, but they need to understand he’s their only way out of this mess. The smear campaigns against him are endless. The easier ones put him at the same level as Nigel Farage and Marine Le Pen, the more insidious ones paint him off as a George Soros patsy. There’ll be a lot more of that. And given the success of this year’s anti-Putin campaign in Europe, and the ongoing pro-Euro one, it’s going to take a lot not to have people believe whatever they are told to. Just take this to heart: since Italy joined the euro, its industrial production has fallen by 25%. How is that not a disaster? Meanwhile, the eurozone economy is in awful shape, and the longer that lasts, the more countries like Italy will be disproportionally affected and dragged down further. There’s a reason for that numbers such as that: it’s not like Germany and Holland lost 25% of their production. The eurozone must end before it starts to do irreversible damage, and before it turns Europe into a warzone, a far more real and imminent risk than anyone dares suggest. The first bit here is from Zero Hedge, and then after that I will repost a lengthy piece about Beppe that I first published on February 12, 2013. Italy’s Grillo Rages “We Are Not At War With ISIS Or Russia, We Are At War With The ECB” Next week, Italy’s Beppe Grillo – the leader of the Italian Five Star Movement – will start collecting signatures with the aim of getting a referendum in Italy on leaving the euro “as soon as possible,” just as was done in 1989. As Grillo tells The BBC in this brief but stunning clip, “we will leave the Euro and bring down this system of bankers, of scum.” With two-thirds of Parliament apparently behind the plan, Grillo exclaims “we are dying, we need a Plan B to this Europe that has become a nightmare – and we are implementing it,” raging that “we are not at war with ISIS or Russia! We are at war with the European Central Bank,” that has stripped us of our sovereignty.     Beppe Grillo also said today: It is high time for me and for the Italian people, to do something that should have been done a long time ago: to put an end to your sitting in this place, you who have dishonoured and substituted the governments and the democracies without any right. Ye are a factious crew, and enemies to all good government; ye are a pack of mercenary wretches, and would like Esau sell your country for a mess of pottage, and like Judas betray your God for a few pieces of money. Is there a single virtue now remaining amongst you? A crumb of humanity? Is there one vice you do not possess? Gold and the “spread” are your gods. GDP is you golden calf.   We’ll send you packing at the same time as Italy leaves the Euro. It can be done! You well know that the M5S will collect the signatures for the popular initiative law – and then – thanks to our presence in parliament, we will set up an advisory referendum as happened for the entry into the Euro in 1989. It can be done! I know that you are terrified about this. You will collapse like a house of cards. You will smash into tiny fragments like a crystal vase.   Without Italy in the Euro, there’ll be an end to this expropriation of national sovereignty all over Europe. Sovereignty belongs to the people not to the ECB and nor does it belong to the Troika or the Bundesbank. National budgets and currencies have to be returned to State control. They should not be controlled by commercial banks. We will not allow our economy to be strangled and Italian workers to become slaves to pay exorbitant interest rates to European banks.   The Euro is destroying the Italian economy. Since 1997, when Italy adjusted the value of the lira to connect it to the ECU (a condition imposed on us so that we could come into the euro), Italian industrial production has gone down by 25%. Hundreds of Italian companies have been sold abroad. These are the companies that have made our history and the image of “Made in Italy”. As Martin Armstrong asks rather pointedly… Since the introduction of the euro, all economic parameters have deteriorated, the founder of the five-star movement in Italy is absolutely correct. The design or the Euro was a disaster. There is no fixing this any more. We have crossed the line of no return. Beppe is now calling for referendum on leaving euro. Will he be assassinated by Brussels? It is unlikely that the EU Commission will allow such a vote. And then here’s my February 2013 article; it seems silly to try and rewrite it. There is nobody in Europe other than him who understands what is going on, and is willing to fight for it. Grillo is a very smart man, a trained accountant and an avid reader of anything he can get his hands on. The image of him as a populist loud mouthed good for little comedian is just plain false. It was Grillo who exposed the Parmalat scandal, and the Monte Dei Paschi one. Never forget what political and behind the veil powers he’s up against in his country, and how they seek to define the image the world has of him. What Beppe Grillo does takes a lot of courage. Not a lot of people volunteer to be smeared and insulted this way, let alone run the risk of being murdered. Those who do deserve our support. Beppe Grillo Wants To Give Italy Democracy In the fall of 2011, The Automatic Earth was on another European lecture tour. Nicole Foss had done a series of talks in Italy the previous year, and there was demand for more. This was remarkable, really, since a knowledge of the English language sufficient to understand Nicole’s lectures is not obvious in Italy, so we had to work with translators. Certainly none of this would have happened if not for the limitless drive and energy of Transition Italy’s Ellen Bermann. In the run-up to the tour I had asked if Ellen could perhaps set up a meeting with an Italian I found very intriguing ever since I read he had organized meetings which drew as many as a million people at a time for a new – political – movement. Other than that, I didn’t know much about him. We were to find out, however, that every single Italian did, and was in awe of the man. A few weeks before arriving, we got word that he was gracious enough to agree to a meeting; gracious, because he’d never heard of us either and his agenda was overloaded as it was. So in late October we drove the crazy 100+ tunnel road from the French border to Genoa to meet with Beppe Grillo in what turned out to be his unbelievable villa in Genoa Nervi, high on the mountain ridge, overlooking – with a stunning view – the Mediterranean, and set in a lovely and comfortable sunny afternoon. I think the first thing we noticed was that Beppe is a wealthy man; it had been a long time since I had been in a home where the maids wear uniforms. The grand piano was stacked with piles of books on all sorts of weighty topics, politics, environment, energy, finance. The house said: I’m a man of wealth and taste. I don’t speak Italian, and Beppe doesn’t speak much English (or French, German, Dutch), so it was at times a bit difficult to communicate. Not that it mattered much, though; Beppe Grillo has been a super charged Duracell bunny of an entertainer and performer all his life, and he will be the center of any conversation and any gathering he’s a part of no matter what the setting. Moreover, our Italian friends who were with us – and couldn’t believe they were there – could do a bit of translating. And so we spent a wonderful afternoon in Genoa, and managed to find out a lot about our very entertaining host and his ideas and activities. Beppe had set up his Five Star movement (MoVimento Cinque Stelle, M5S) a few years prior. He had been organizing V-day “happenings” since 2007, and they drew those huge crowds. The V stands for “Vaffanculo”, which can really only be translated as “F**k off” or “Go f**k yourself”: the driving idea was to get rid of the corruption so rampant in Italian politics, and for all sitting politicians to go “Vaffanculo”. At the time we met, the movement was focusing on local elections – they have since won many seats, have become the biggest party on Sicily (after Beppe swam there across the Straits of Messina from the mainland) and got one of their own installed as mayor of the city of Parma. Grillo explained that M5S is not a political party, and he himself doesn’t run for office. He wants young people to step forward, and he’s already in his sixties. Anyone can become a candidate for M5S, provided they have no ties to other parties, no criminal record (Beppe does have one through a 1980 traffic accident); they can’t serve more than two terms (no career politicians) and they have to give back 75% of what they get paid for a public function (you can’t get rich off of politics). I found it surprising that our friends at Transition Italy and the general left were reluctant to endorse Grillo politically; many even wanted nothing to do with him, they seemed to find him too coarse, too loud and too angry. At the same time, they were in absolute awe of him, openly or not, since he had always been such a big star, a hugely popular comedian when they grew up. Grillo offered to appear through a video link at Nicole’s next talk near Milan, but the organizers refused. It was only the first sign of a lot of mistrust among Italians even if they all share the same discontent with corrupt politics. Which have made trust a major issue in Italy. This may have to do with the fact that Grillo is a comedian in the vein of perhaps people like George Carlin or Richard Pryor in the US. On steroids, and with a much wider appeal. Rough language, no holds barred comedy turns a lot of people off. Still, I was thinking that they could all use the visibility and popularity of the man to get their ideas across; they preferred anonymity, however. By the way, the Five Stars, perhaps somewhat loosely translated, stand for energy, information, economy, transport and health. What we found during our conversation is that Beppe Grillo’s views on several topics were a little naive and unrealistic. For instance, like so many others, he saw a transition to alternative energy sources as much easier than it would realistically be. That said, energy and environment issues are important for him and the movement, and in that regard his focus on decentralization could carry real benefits. Still, I don’t see the present naive ideas as being all that bad. After all, there are limits to what people can do and learn in a given amount of time. And Beppe certainly has a lot to do, he’s leading a revolution, so it’s fine if the learning process takes some time. Ideally, he would take a crash Automatic Earth primer course, but language will be a barrier there. I hope he finds a way, he’s certainly smart and curious enough.   When his career took off in the late 70’s, early 80’s, Beppe Grillo was just a funny man, who even appeared on Silvio Berlusconi’s TV channels. Only later did he become more political; but then he did it with a vengeance. Grillo was first banned from Italian TV as early as 1987, when he quipped about then Prime Minister Bettino Craxi and his Socialist Party that if all Chinese are indeed socialists, who do they steal from? The ban was later made permanent. In the early 90’s, Operation Clean Hands was supposed to have cleaned up corruption in politics. Just 15 years later, Beppe Grillo started the Five Star movement. That’s how deeply engrained corruption is in Italy, stretching across politics, business and media. We are- almost – all of us living in non-functioning democracies, but in Italy it’s all far more rampant and obvious. There’s a long history of deep-seated corruption, through the mafia, through lodges like P5 and Opus Dei, through many successive governments, and through the collaboration between all of the above, so much so that many Italians just see it as a fact of life. And that’s what Beppe Grillo wants to fight. Ironically, he himself gets called a neo-nazi and a fascist these days. To which he replies that perhaps he’s the only thing standing between Italy and a next bout of fascism. I’ve read a whole bunch of articles the past few days, the international press discovers the man in the wake of the general elections scheduled for February 24-25, and a lot of it is quite negative, starting with the all too obvious notion that a clown shouldn’t enter politics. I don’t know, but I think Berlusconi is much more of a clown in that regard than Grillo is. A whole lot more of a clown and a whole lot less funny. Beppe is called a populist for rejecting both right and left wing parties, a neo-nazi for refusing to block members of a right wing group from M5S, a Jew hater in connection with the fact that his beautiful wife was born in Iran, and a dictator because he’s very strict in demanding potential M5S candidates adhere to the rules he has set. Oh, and there are the inevitable right wing people calling him a communist. There are of course tons of details that I don’t know, backgrounds, I’m largely an outsider, willing to be informed and corrected. And this would always be much more about the ideas than about the man. Then again, I did talk to the man in his own home and I don’t have the impression that Grillo is a fraud, or part of the same system he purports to fight as some allege, that he is somehow just the existing system’s court jester. He strikes me as being too loud and too embarrassing for that. And too genuinely angry. Moreover, I think Italy is a perfect place for a nasty smear campaign, and since they can’t very well murder the man – he’s too popular – what better option than to make him look bad?! If anything, it would be strange if nobody did try to paint him off as a demagogue, a nazi or a sad old clown. Photo: AFP: Marcello Paternostro After being banned from TV, Grillo went on the build one of the most visited blogs/websites in the world, and the number one in Europe. Ironically, he is now in some media labeled something of a coward for not appearing in televised election debates. But Beppe doesn’t do TV, or – domestic – newspapers. For more than one reason. Because he was banned from TV, because of the success of the internet campaign, and because Silvio Berlusconi incessantly used “lewd” talk shows on his own TV channels to conduct politics, Beppe Grillo insists his councilors and candidates stay off TV too, and he has his own unique way of making clear why and how: When a female Five Star member recently ignored this and appeared on a talk show anyway, Grillo said “the lure of television is like the G-spot, which gives you an orgasm in talk-show studios. It is Andy Warhol’s 15 minutes of fame. At home, your friends and relations applaud emotionally as they share the excitement of a brief moment of celebrity.”. Of course Beppe was labeled a sexist for saying this. The internet is central to Grillo’s ideas. Not only as a tool to reach out to people, but even more as a way to conduct direct democracy. Because that is what he seeks to create: a system where people can participate directly. Grillo wants to bring (back) democracy, the real thing, and he’s long since understood that the internet is a brilliant tool with which to achieve that goal. One of his spear points is free internet access for all Italians. Which can then be used to let people vote on any issue that can be voted on. Not elections once every four years or so, but votes on any topic anytime people demand to vote on it. Because we can. Since we had our chat in that garden in Genua, Beppe Grillo and M5S have moved on to bigger pastures: they are now set to be a major force in the general elections that will establish a new parliament. Polls differ, but they can hope to gain 15-20% of the vote (Grillo thinks it could be even much more). The leader in the polls is the Socialist Party, and then, depending on which poll you choose to believe, M5S comes in either second or third (behind Berlusconi). What seems certain is that the movement will be a formidable force, carrying 100 seats or more, in the new parliament, and that they could have a lot of say in the formation of any new coalition government. In the run-up the elections, Beppe has now traded his home for a campaign bus, going from town to town and from one jam-packed campaign event to the next on what he has labeled the Tsunami Tour, in which he, in his own words, brings class action to the people. As was the case in the local elections, Beppe Grillo says he wants “normal” people (“a mother of three, a 23-year-old college graduate, an engineer [..] those are the people I want to see in parliament”) to be elected, not career politicians who enrich themselves off their status and influence, and who he labels “the walking dead”, and though he acknowledges his candidates have no political experience, he says: “I’d rather take a shot in the dark with these guys than commit assisted suicide with those others.” In the same vein, another one of his lines is:“The average age of our politicians is 70. They’re planning a future they’re never going to see”. On his immensely popular website beppegrillo.it, which has quite a bit of English language content, Grillo has some nice stats and tools. There is a list of Italian parlimentarians and Italian members of the EU Parliament who have been convicted of crimes. At this moment there are 24; their number has come down, but still. There is also a great little thing named “Map of Power of the Italian Stock Exchange” that graphically shows the links various politicians have with various corporations. I remember when Grillo proudly showed it to us, that after clicking just 2-3 politicians and 2-3 businesses, the screen was so full of lines depicting connections it had become an unreadable blur. In between all the other activities, Beppe was instrumental 10 years ago in exposing the stunning $10 billion accounting fraud at dairy and food giant Parmalat before it went bankrupt, as well as the recent scandal at the world’s oldest bank, Monte Dei Paschi Di Siena, which will cost a reported $23 billion. Corruption is everywhere in Italy, which has a large political class that is all too eager to share in the spoils. Mr. Grillo was trained as an accountant, and he understands what he’s talking about when it comes to dodgy numbers. What he needs is the power to act.   Apart from the strong stance that Grillo and M5S take against corruption and for direct representation, critics say they have few clear policy objectives, that they don’t even know what they want. Being a movement instead of a party doesn’t help. But then, these critics think inside the very old system that M5S wants to replace with one that is far more transparent and direct. It’s more than obvious that existing powers have no interest in incorporating the possibilities for improvement offered by new technologies, but it should also be obvious that people, wherever they live, could potentially benefit from a better functioning political system. There will be many who say that no such thing can be achieved, but perhaps it not only can, but is inevitable. All it could take is for an example to show that it can work. One might argue that the only reason our current systems continue to exist in all their opaqueness is that those who stand to profit from them are the ones who get to vote on any changes that could be applied. What Beppe Grillo envisions is a system in which every one can vote directly on all relevant issues, including changes to the system itself. It’s about class action, about taking back power from corrupt existing politics. Italy looks like a good testing ground for that, since its systemic rot is so obvious for all to see. But in other western countries, just like in Italy, it could return the power where it belongs: in the hands of the people. Radical ideas? Not really, because when you think about it, perhaps it’s the technology itself that’s radical, not the use of it. And maybe it’s the fact that we’re so stuck in our existing systems that keeps us from using our new technologies to their full potential. Just like it keeps us from restructuring our financial systems and our energy systems for that matter. We continue to have systems and institutions guide our lives long after they’ve ceased to be useful for our present day lives, as long as we’re snug and warm and well-fed. And we do so until a real bad crisis of some sort comes along and makes it absolutely untenable, often with a lot of misery and blood thrown into the equation. Beppe Grillo wants to break that chain. And he’s got a recipe to do it. It may not be perfect or foolproof, but who cares when it’s replacing something that no longer functions at all, that just drags us down and threatens our children’s lives? Who cares? Well, the Monti’s and Berlusconi’s and Merkel’s and Obama’s and Exxon’s and BP’s and Monsanto’s of the world do, because it is the old system that gave them what they have, and they don’t want a new one that might take it away. Our so-called democracies exist to please our leaders and elites, not ourselves. And we’re unlikely to figure that one out until it’s way too late. Unless the Italians do our work for us and vote for the Cinque Stelle in huge numbers.

04 января, 14:42

Risk On: 2017 Stock Rally Continues As Global Inflation Accelerates

Following another day of upbeat economic data, with growing signs that inflation on both sides of the Atlantic is accelerating, investors rediscovered their faith in the Trumpflation rally, pushing global stocks and US equity futures higher, fuelling a second day of 2017 equity gains ahead of today's release of the Fed's December minutes. The dollar slumped and the euro moved further above $1.04 after data showed French consumer confidence hit its highest for nine years and businesses across the euro zone ended 2016 by ramping up activity at the fastest pace for five-and-a-half years. This followed similarly upbeat reports this week on U.S., UK, Chinese and Japanese business activity. “The year has started with a stream of good macro stories which has justified a risk on position with investors,” Andrew Milligan, head of global strategy at Standard Life Investments told Bloomberg. He favors stocks and bonds of developed countries poised to benefit from a reflating U.S. economy that will boost the dollar over emerging markets. The Eurozone composite Purchasing Managers’ Index climbed to 54.4 in December from 53.9 in November, IHS Markit said on Wednesday. That’s the highest in 67 months and above a Dec. 15 estimate. Strength in both the manufacturing and service sectors was due in part to a weaker euro, London-based Markit said in a statement. Economic expansion was signaled across the “big-four” nations, with Spain leading the way, followed closely by Germany. Figures also showed that euro zone December inflation hit its highest since September 2013, which helped support a rise in oil, commodity prices and bond yields. Consumer prices rose 1.1% from a year earlier, following a 0.6% gain in November, according to Eurostat on Wednesday. That’s above a median forecast of 1 percent in a Bloomberg survey of economists. Core inflation, which excludes volatile items such as energy and food, increased to 0.9 percent last month. The data follow the ECB’s decision to prolong quantitative easing to guarantee a sustained pickup in inflation in a year that could see economies hit by political uncertainty. Surprisingly strong accelerations of headline rates in Germany and Spain, mainly driven by a surge in the cost of oil, may strengthen the central bank’s focus on weakness in underlying price pressures as it assesses policy in coming months. The unexpectedly strong acceleration in both regional and national inflation rates follows a 12.6 percent surge in Brent crude last month. ECB President Mario Draghi said in December that price growth remained weak, even as Executive Board member Benoit Coeure told Boersen-Zeitung last week that inflation could face upside risks. Bundesbank President Jens Weidmann, one of the ECB’s most hawkish officials, has argued in favor of a swift unwinding of stimulus once price growth allows, while Ifo President Clemens Fuest said in an interview published Tuesday the central bank may want to consider ending asset purchases as early as March. "This latest data could mark the beginning of the end to ECB's bond-buying program and expansive monetary policy as it edges closer to their inflation target of two percent," Xtrade's Chief Market Analyst, Paul Sirani, said. Looking at global stocks, the MSCI All-Country World Index rose for a second day to trade 0.3 percent higher, and its index of major Asian shares excluding Japan rose for a seventh consecutive day, gaining 0.3%. In Europe, The Stoxx Europe 600 Index was little changed, dragged down by declines on retailers. One of the biggest movers on major European bourses was UK retailer Next. Its shares fell as much as 14 percent after cutting its annual profit forecast and forecasting a difficult year ahead. The stock has lost nearly 40 percent over the past year. Japan’s Topix index and Nikkei 225 Stock Average both gained at least 2.4 percent, the best first day of trading since 2013. U.S. futures pointed to a higher opening of between 0.1 percent and 0.2 percent on Wall Street, priming the Dow Jones for another test of the 20,000-point mark. In currencies, the potential for further U.S. rate hikes this year ensured profit-taking on the dollar's run on Tuesday was limited to just 0.15 percent against a basket of currencies. The dollar's strength in Asian trading helped Japan's exporter-heavy stock market rally toward its biggest daily increase for almost two months. The euro rose 0.3 percent to $1.0435, and the dollar gave up earlier gains against the yen to trade little changed at 117.75 yen. Euro zone inflation expectations are moving closer to the European Central Bank's target of just below 2 percent, offering some welcome relief to ECB policymakers who for years have struggled to lift growth and inflation. In rates, U.S. Treasury notes due in 2026 edged lower, with the yield rising one basis point to 2.457 percent.  German and UK yields were flat at 0.26 percent and 1.32 percent, respectively. Germany's 10-year yield had hit a two-week high of 0.29 percent on Tuesday. The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies declined one basis point to 69 basis points. A gauge of swaps on high-yield companies fell two basis points to 280 basis points, the lowest since July 2015. Investors will now turn their attention to the minutes of the Federal Reserve's policy meeting last month when it raised rates. "What is important is the Fed's view on inflation, especially after the (strong) ISM manufacturing survey data yesterday," said Naeem Aslam, analyst at Think Markets. "Improvement in input prices is going to have an impact on final products which would, in turn, move the scale on inflation, upon which the Fed can no longer be reticent," he said. Market Snapshot S&P 500 futures up 0.2% to 2256 Stoxx 600 down less than 0.1% to 366 FTSE 100 down less than 0.1% to 7177 DAX down 0.1% to 11572 German 10Yr yield up less than 1bp to 0.27% Italian 10Yr yield down 2bps to 1.85% Spanish 10Yr yield down 1bp to 1.41% S&P GSCI Index up 0.4% to 392.2 MSCI Asia Pacific up 1.3% to 137 Nikkei 225 up 2.5% to 19594 Hang Seng down less than 0.1% to 22134 Shanghai Composite up 0.7% to 3159 S&P/ASX 200 up less than 0.1% to 5736 US 10-yr yield up 1bp to 2.46% Dollar Index down 0.19% to 103.01 WTI Crude futures up 0.7% to $52.71 Brent Futures up 0.7% to $55.85 Gold spot up 0.6% to $1,165 Silver spot up 0.7% to $16.40 Top Global News Ford, Toyota Form Telematics Bloc to Stymie Google and Apple: Mazda, PSA, Fuji and Suzuki join to ensure connectivity choice J&J Judge Slashes $1 Billion Verdict Over Pinnacle Hip Implants: Judge found punitive-damage award was constitutionally flawed Tesla Deliveries Miss Forecasts Again on Production Delays: Model S maker cites production challenges related to Autopilot Bloomberg’s Winning Economic Forecasters Lay Out 2017 Calls: Most-accurate predictors of inflation, unemployment and growth explain their outlook for this year Trump Tariff on GM Would Violate NAFTA. That May Not Stop Him: U.S. trade deal with Mexico and Canada forbids tariffsQualcomm’s Newest Smartphone Chip Aimed at PC Breakthrough: Snapdragon 835 will enable thinner handset with larger battery Blackstone Said to Near Deal to Buy Sesac: WSJ reports company in advanced talks to buy Sesac, citing unidentified people familiar.Trump Says His Briefing on ‘So-Called’ Russia Hacking Is Delayed China Said to Consider Options to Back Yuan, Curb Outflows Qualcomm’s Newest Smartphone Chip Aimed at PC Breakthrough Nikkei’s Financial Times Buys GIS Planning to Expand Services Manhattan Home Prices Fall as Sellers Concede to Slowing Market In Asia, equity markets traded mostly positive following gains on Wall Street, where strong data underpinned sentiment despite a slump in oil markets. Nikkei 225 (+2.5%) outperformed with gains of over 2.0% as the index played catch-up to yesterday's advances on return from holiday with JPY weakness also benefiting exporters. Furthermore, the index also benefited from firm domestic manufacturing PMI data and rhetoric from PM Abe that he will continue to make the economy a priority and there will be no snap election. ASX 200 (+0.1%) stalled at 19-month highs, with weakness in real estate capping gains in the index. Shanghai Comp. (+0.8%) and Hang Seng (-0.1%) traded indecisive with cautiousness seen after another weak liquidity operation by the PBoC which effectively drained CNY 140bIn in liquidity today, while HSBC shares outperformed after the bank increased its 3-month CNH deposit rate in Hong Kong to 2.85%. 10yr JGBs traded lower despite a JPY 1.12tIn bond buying operation by BoJ as participants sought riskier assets on return to the market, while the yield curve steepened amid underperformance in the super-long end. Top Asian News China Said to Consider Options to Back Yuan, Curb Outflows: Authorites may order state-owned firms to sell dollars India Sets Date for Polls Seen as Referendum on Modi’s Note Ban: Country’s most populous state heads to polls from Feb. 11 KFC’s Return to Malaysian Bourse Heralds Rebound in Deal Volumes: Fundraising from Malaysian IPOs is poised to rebound from the lowest in 16 years Tencent Shares Losing $35 Billion Shows Depth of China Gloom: Technology giant has tumbled 13% from September record Indonesia Temporarily Suspends All Military Ties With Australia: Move threatens to undermine improved relations between sides European bourses have failed to remain afloat despite the spate of better than expected Eurozone PMI readings support by Germany and France. While the FTSE 100 continues to hover around record highs, however the index has been dragged lower by Next (-11%) after the company cut their profit guidance. Elsewhere, financials continue their strong start to the year with major financial names among the notable outperformers in Europe. European Eco Data (FR) Dec. Consumer Confidence 99, est. 99 (SP) Dec. Unemployment MoM Net (’000s) 86.8, est. -50 (SP) Dec. Markit Services PMI 55.5, 54.7 est. (SP) Dec. Markit Composite PMI 55.5, est. 55 (IT) Dec. Markit/ADACI Services PMI 52.3, est. 52.6 (IT) Dec. Markit/ADACI Composite PMI 52.9, est. 53 (FR) Dec. Markit Services PMI 52.9, est. 52.6 (FR) Dec. Markit Composite PMI 53.1, est. 52.8 (EC) Dec. Markit Services PMI 53.7, est. 53.1 (EC) Dec. Markit Composite PMI 54.4, est. 53.9 (UK) Dec. Markit/CIPS Construction PMI 54.2, est. 52.5 (EC) Dec. CPI Estimate YoY 1.1%, est. 1% (EC) Dec. CPI Core YoY 0.9%, est. 0.8% (IT) Dec. CPI EU Harmonized MoM 0.4%, est. 0.2%     (IT) Dec. CPI EU Harmonized YoY 0.5%, est. 0.3% Top European News Hard Brexit Looms Large With Resignation of U.K.’s EU Envoy: Rogers says negotiating expertise ‘in short supply’ in London Euro-Area Inflation Outpaces Expectations as Oil Prices Surge: Consumer prices rise 1.1%, core inflation increases to 0.9% CEZ Sees No Impact on 2017 Earnings From Czech Currency Cap Exit: Czech central bank plan to exit its currency-cap regime after 1Q will have “practically no impact” on CEZ’s 2017 earnings, CFO Martin Novak says Swedish Six-Hour Workday Runs Into Trouble: It’s Too Costly: Swedes looking forward to a six-hour workday just got some bad news: the costs outweigh the benefits. In currencies, the U.S. Dollar Index was 0.3 percent lower after touching its highest level since at least 2005. Across FX markets, the USD index has continued to run out of steam against its major counterparts with the US 10yr yield below 2.5% and USD/JPY moving further away from 118.00. Elsewhere, AUD/USD hovers at intra-day highs having tripped stops through 0.7250 while near term resistance resides at 0.7280. EUR/GBP has failed to find any firm direction with price action likely to be magnetised around 0.8500 amid a large vanilla option expiry worth lbln. Additionally, Eurozone inflation continued its upward momentum in December, accelerating at the fastest pace since 2013, however limited reaction had been observed given that the figures were largely in-line with consensus. The rand strengthened 1.4 percent as of 10:40 a.m. in London while the ruble added 0.3 percent in its second day of advances.  Citigroup strategists said in a Jan. 3 note to clients that “Russia and South Africa could be outperformers” in developing Europe, “but it might still be a bumpy ride for EMFX as the relatively hawkish FOMC signal from mid-December permeates.” In commodities, crude oil futures climbed as much as 1.2 percent in New York after tumbling 2.6 percent Tuesday, before returning to broadly unchanged. Dampened sentiment has been due to concerns surrounding cooperation among other oil producing nations, while some note that Libya and Nigeria who are exempt from cuts have already made progress on increasing production. Elsewhere, Gold continues to remain in modest positive territory with prices in close proximity to 3-week highs while Copper rebounded of its worst levels overnight amid a mostly positive risk tone in the Asia-Pacific region. US Event Calendar 7am: MBA Mortgage Applications, Dec. 30 8:55am: Redbook weekly sales 2pm: FOMC Meeting Minutes, Dec. 14 4:30pm: API weekly oil inventories * * * DB's Jim Reid concludes the overnight wrap It hasn’t taken long for markets to dust off the holiday cobwebs and start acclimatizing to 2017. The good news is that unlike the freefall sparked by China’s equity markets this time last year, the mood in 2017 is so far so good with some decent data out of the manufacturing sector helping to set the early pace. Indeed after the generally positive data in Europe on Monday, the UK manufacturing PMI was yesterday reported as surging to 56.1 in December (vs. 53.3 expected) from 53.6 and to the highest in two and a half years. In the afternoon we then learned that the ISM manufacturing reading in the US had risen to 54.7 in December (vs. 53.8 expected) and the highest since December 2014. The details revealed that the new orders component surged to 60.2 from 53.0 in the month prior too which is particularly noteworthy in light of the recent strength for the US Dollar. To put in perspective this component printed at 48.8 in December 2015. Meanwhile the final manufacturing PMI for the US last month was revised up a tad to 54.3 (from 54.2). It’s worth noting that Greece is the only developed nation with a manufacturing PMI below 50 but even that reading (49.3) is still at a four-month high. Equity markets were generally firmer across the board yesterday as a result with the Stoxx 600 closing +0.70% and the S&P 500 kicking off 2017 with a +0.85% gain. European Banks (+2.84%) have also started the year in style with the catalyst yesterday appearing to be the news that the Basel Committee had postponed a meeting due for this weekend to consider a contentious reforms package, fuelling expectations that some of the proposals could potentially be watered down. Meanwhile the US auto sector was also in focus after Ford announced that they were to scrap plans for a $1.6bn expansion in Mexico and instead create new jobs in Michigan following proposals by President-elect Trump to slap tariffs on foreign made vehicles. That news also came as Trump turned to social media to criticize General Motors for production of vehicles in Mexico. The Peso (-1.82%) was a notable underperformer in FX as a result. If that wasn’t enough then a complete reversal for Oil also added another dimension to yesterday’s session. WTI Oil peaked at $55.24/bbl in the early morning, or over 2% higher, before then plummeting some 5% from those early highs to close -2.59% on the day at $52.33/bbl. Natural Gas also tumbled -10.66% for the biggest one-day decline since February 2014. While forecasts for milder weather in the US this month were attributed to the decline for the latter, there didn’t appear to be an obvious catalyst for the sharp swing in Oil aside from the continued strength for the Greenback. Meanwhile the rates market was an interesting microcosm of the volatility that we expect this year. Yields initially surged in Europe supported by the early gains for Oil and then later on by the bumper inflation report in Germany where headline CPI jumped +1.0% mom in December (vs. 0.6% expected) and so helping the YoY rate to hit +1.7% from +0.7% in November and the highest since July 2013. The wider Euro area CPI report is due today and a similar jump, assuming it can be maintained, will surely give the ECB some food for thought. Anyway the data helped 10y Bund yields jump +7.7bps to 0.258% while yields in the periphery were anywhere from +9.0bps to +20.8bps higher. The Treasury market opened in similar fashion with that US data also helping matters and 10y Treasury yields peaked at 2.516% (after opening at 2.445%) before the energy complex went into reverse. Treasury yields completely unwound that move higher and finished unchanged by the closing bell. A reminder that today we’ll also get the FOMC minutes from that December meeting where we’re expecting the tone to reflect the moderately more hawkish nature of the statement. Ahead of this sentiment has remained fairly buoyant in the Asia session this morning where bourses in Japan in particular have reopened in style. The Nikkei and Topix have surged +2.14% and +2.17% respectively with financials leading the way while there are also gains in China with the Shanghai Comp +0.39% and CSI 300 +0.42%. The Kospi and ASX are little changed along with the Hang Seng while credit indices are generally tighter in Asia Pac. US equity index futures are also up modestly while Oil has rebounded about half a percent. Moving on. Yesterday we got the latest ECB CSPP breakdown as of the end of December. The numbers took on added interest with the addition of the primary and secondary market split too. With regards to holdings, the ECB announced total holdings of €51.07bn which works out as net purchases settled during the month of €3.89bn, albeit with an unsurprising slowdown into year end. In terms of the split, of the total holdings currently, €6.93bn or 13.6% were made in the primary market and €44.14bn or 86.4% were made in the secondary market. Interestingly while the overall primary market purchases (in percentage terms) were ramped up from June to October, they have held relatively steady over the months of November and December although this may also reflect the slowdown in the new issue market into the end of the year. Meanwhile there were some interesting developments on the Brexit front in the UK yesterday too with the announcement that Britain’s ambassador to the EU, Sir Ivan Rogers, had unexpectedly resigned just a couple of months out from the UK’s formal resignation from the EU and prior to the end of his official tenure in October. Various reports suggested that Rogers was one of most experienced EU negotiators and was heavily criticized last year by Conservative eurosceptics. His resignation letter – obtained by the FT - stated that ‘serious multilateral negotiating experience is in short supply’ and that ‘we do not yet know what the government will set as negotiating objectives for the UK’s relationship with the EU after exit’. No obvious reason was provided for his early resignation although Rogers did confirm that it would make more sense to have a team in place which see’s Britain through the entire Brexit process. The news could come as a bit of a blow to the ‘Soft’ Brexit camp though and clearly comes at a crucial time in talks so it’ll be interesting to see if there is any further fallout following this announcement. Looking at the day ahead, this morning in Europe we’ll get the remaining December PMI’s (services and composite prints) including the final revisions for the Euro area, Germany and France as well as a first look at the data for the periphery. Also due out this morning is the CPI report for the Euro area where headline inflation is expected to have ticked up to +1.0% yoy from +0.6%. The UK will also release the November money and credit aggregates data while in France we’ll get the latest consumer confidence print. Over in the US this afternoon the lone data release is the December vehicle sales data while later on this evening we’ll get the FOMC minutes from the December meeting.

03 января, 23:05

Текст: Бундесбанк вытаскивает свое золото из Нью-Йорка и Парижа быстрее, чем планировалось ( Вульф Рихтер )

Источник 25.12.2016 Мера, направленная на «создание доверия» после огромного переполоха. «В 2016 году мы снова вернули в Германию существенно больше золота, чем первоначально планировалось; к настоящему времени почти половина золотых запасов находится в Германии», заявил президент Бундесбанка Йенс Вайдман (Jens Weidmann) немецкому таблоиду Bild в рамках того, что стало ежегодным рождественским интервью о золоте - чтобы усп...

03 января, 20:28

Hans Tietmeyer, 1931-2016

Central Banking Bundesbank president played key roles in Germany and Europe Former Bundesbank president played key roles in German reunification, European single currency and reform of international financial regulation

03 января, 16:21

German Inflation Unexpectedly Hits Three Year High, Driven By Rising Energy, Food Prices

In what may be both good and bad news for the ECB,  German inflation jumped more than expected in December, hitting the highest level in more than three years, according to preliminary data. German consumer prices, harmonized with other European countries (HICP), rose by 1.7% on the year, more than double the November increase of 0.7%, the German Federal Statistics Office said. This was the highest annual inflation rate since July 2013 and stronger than the consensus forecast of 1.5%; it was just shy of the ECB's inflation target of 2.0% On a non-harmonized basis, German annual inflation picked up to 1.7 percent after 0.8 percent in November; prices rose 0.7% on the month, also higher than the 0.6% expected by consensus. Rising energy prices and higher food costs were the strongest drivers behind the overall increase, a breakdown of the non-harmonized data showed. The surge in energy prices will only lead to more inflationary pressure now that the lowest prices of 2016 have been "anniversaried." "These are really strong inflation figures," DZ Bank economist Michael Holstein said, adding that negative base effects of past oil price drops were now fading out. Therefore, German inflation is likely to reach the ECB's target of nearly 2 percent in the coming months, he said.  The data means that the wider euro zone figure, due on Wednesday, will probably come in stronger than expected as well. A strong recovery in German inflation would give conservatives like Bundesbank's President and ECB rate-setter Jens Weidmann more scope to argue for winding down the ECB's bond-buying program more quickly, Reuters notes. For Mario Draghi it will be good news in the he can claim victory over deflation; on the other hand it will mean an even faster arrival of more tapering and potentially rate hikes, a process which would likely lead to the next deflationary slide following a spike in bond yields which price out ECB bond market intervention. Still, price pressures elsewhere in the euro zone remain more muted than in Germany, she added, pointing to French annual HICP inflation only creeping up to 0.8 percent in December after 0.7 percent in November. "Accordingly... we doubt that this will lead the ECB to reconsider its policy support," McKeown said. Meanwhile, while rising prices may be good news for the ECB from a pan-euro zone perspective, they do not necessarily bode well for the German economy. It has been relying on private consumption, a booming construction sector and government spending for growth. "Indeed, a temporary energy-related rise in inflation this year will dent real incomes growth, which is a key reason why we expect the economic recovery to slow," McKeown said. The German government expects the economy to have grown by 1.8 percent in 2016 and predicts growth to slow to 1.4 percent this year, mainly due to fewer workdays and weaker exports. Still, economists expect Germany's labor market to remain robust in 2017. In other news, the Federal Labour Office said on Tuesday that unemployment fell more than expected in December, keeping the jobless rate at a record low. "The strong increase in employment that has been going on for a long time slowed since the summer months, but demand for new workers remains at a high level," said Frank-Juergen Weise, head of the Federal Labour Office. The seasonally adjusted jobless total fell by 17,000 to 2.638 million, the Labour Office said. That was more than three fold the 5,000 consensus forecast. The adjusted unemployment rate remained at 6.0 percent, the lowest level since German reunification in 1990. In 2016 as a whole, a record 43.4 million people were employed in Germany - 1 percent more than in 2015 and the tenth consecutive year that the workforce expanded. "Job creation should continue this year," said Joerg Zeuner of KfW bank. "The expected rise in unemployment due to immigrants has so far not materialized."

02 января, 22:11

What Keeps Goldman Up At Night About 2017

With 2016 still fresh in most investors' minds, and questions about 2017 pressing, here is a summary, courtesy of Goldman's Allison Nathan, of where Goldman believes we closed out 2016, what is in store in the coming year, and ultimately, "what keeps Goldman up at night" about 2017. 2016, and a peek at 2017 2016 was chock-full of surprises, both in markets and in politics. Ironically, though, 9 of the 12 themes we thought *might* be Top of Mind in 2016 effectively made it into our reports this year (our highest batting average yet!). We continue our year-end tradition of taking stock of our 2016 themes, updating/revisiting our favorite graphics for each issue, and highlighting what to look for in 2017. The year began with a perfect storm of worries that had become all too familiar already in 2015. Oil prices plunged and fears of faltering growth and a sharp depreciation of China’s currency escalated, driving disruptive sell-offs in credit and other risk assets. Confidence in global growth faltered, particularly after an anemic US GDP report for Q1. But oh, how the world has changed. Today, the price of crude oil is almost exactly double its January low in the wake of announced production cuts by OPEC and key non-OPEC producers (Russia). We expect WTI oil prices to move higher to a peak of $57.50/bbl in 1H17 as the cuts push the oil market into deficit and whittle down the current large inventory surplus. But we also expect shale producers to respond to the higher prices, implying limited upside from there. The rebound in oil prices led to a remarkable turnaround in credit markets, with HY Metals & Mining and E&Ps returning 49% and 36%, respectively, YTD; default rates normalizing; and spreads no longer pricing recession risk. We expect a further moderate compression of spreads in 2017 given expectations of a generally positive macro environment, gradual improvement in credit fundamentals, and, of course, our somewhat rosier oil outlook. And fears about China have generally receded into the background as Chinese policymakers continued an ambitious stimulus program that helped stabilize growth. A more dovish tilt by the Fed in response to the tightening of financial conditions caused by the Q1 sell-off also assuaged market fears. But we warn that China risk is not far from the surface. Capital outflow pressures have resumed amid the renewed strengthening in the US dollar. And policies that re-ignited growth in the short-term have just increased concerns about the future, particularly as credit growth has climbed. These potentially destabilizing trends merit watching next year, despite our mainline view of orderly currency moves and a continued bumpy deceleration in Chinese growth. (Side note: Meeting growth targets will be paramount next year amid China’s leadership transition.) It was not long after the market left China, oil, and credit concerns in the dust that political uncertainty took center stage—a place where it has solidly remained since. Brazil had its president impeached amid one of the country’s longest recessions/depressions on record; French primaries established an unexpected presidential candidate in former Prime Minister François Fillon; and Italy will enter the new year with an interim government following the resignation of Matteo Renzi. And we’ve not forgotten about one of the biggest political shocks of the year (decade, century?!): the UK’s vote in favor of Brexit. The now infamous Article 50, which needs to be activated to formally start the UK’s withdrawal process, still has not been triggered, and likely won’t be before March. Meanwhile, UK and EU priorities for their future relationship remain at odds, leaving market participants closely watching “soft Brexit”/”hard Brexit” swings in the headlines. That said, UK growth has proved remarkably resilient, and assets have held up with the exception of sterling, which is 10% weaker than before the referendum. Next year, we expect a formal start to Brexit talks, a moderation in UK growth, and further declines in sterling as uncertainty over Brexit sinks in. While it was hard to trump (sorry, we couldn’t resist!) the shock of Brexit, we dare say that Donald Trump defying almost all polls and betting markets to win the US Presidential election did just that. Trump’s cabinet and policy leanings are still being sorted out, but there appears to be potential for significant change ahead, be it in taxes, or environmental policy. There is no question that the policies of the new administration and their market implications will be Top of Mind throughout 2017. The unexpected election outcome also super-charged the narrative around two themes already in train: the global trade slowdown and reflation. Trump’s protectionist rhetoric—and the considerable executive power he will have on trade policy—do not bode well for global trade growth, which had already slowed considerably in recent years, or for some multilateral trade deals on the table (think the Trans-Pacific Partnership or TPP). Although we are keeping an eye on potential protectionist measures (a particular risk for EM Asia and Mexico, but also a likely drag on US growth), we otherwise see signs of a moderate improvement in trade ahead. Key to watch: how countries respond to the apparent shelving of the TPP (e.g., bilateral vs. multi-lateral trade talks). On reflation, we expect fiscal expansion and some further tightening in the labor market to sustain inflationary momentum in the US alongside moderately stronger growth, with US 10- year yields expected to end 2017 at 2.75%. This should be good news for equity markets at first: We expect the S&P 500 to rise to 2400 through 1Q2017, but then see the index settling to 2300 by year-end as rates rise further and investors recalibrate their policy outlooks. We still caution that equities are vulnerable should rates move too much, too fast, given stretched valuations following years of exceptionally low rates. Lastly, despite recent market optimism about fiscal expansion providing more stimulus, central bank policy will never be too far from investors’ minds next year. (And let’s not forget that ECB and BOJ asset purchases in fact enable more fiscal spend, so the lines between monetary and fiscal policy continue to blur.) We expect an acceleration of divergence as the Fed follows last week’s hike with three more in 2017 while the ECB and BOJ continue their asset purchases under new and apparently more sustainable parameters. Between this divergence, Trump, China, and a number of important European elections, 2017 is sure to be yet another interesting year for markets. We provide hints on our best guesses for 2017 themes  throughout the piece (think green). * * * CHINA RIPPLE EFFECTS Where we stand now: Broader concerns about China risk derailing global growth and markets proved somewhat short-lived. After the S&P 500 hit its low for the year on February 11, two days after we published, better economic data and a sense that the Fed would react to global concerns—confirmed by the dovish March FOMC meeting—helped improve market sentiment. Political events in the western hemisphere have since broadly taken center stage in global markets, leaving China concerns in the background. But the reality is that growth—on some level—did take a hit; for example, US GDP growth came in at an anemic 1.1% annualized in 1H2016, owing in part to weakness in the industrial sector and energy-related activity but largely due to tighter financial conditions primarily in the wake of China concerns. China growth itself also remained relatively weak in 1H as measured by the GS China Current Activity Indicator, which declined towards 4% in 1Q and began to climb slowly thereafter. Stabilizing growth in China has helped push China to the background of investor concerns. In order to stabilize growth and meet official GDP targets, China’s policymakers continued to pursue an ambitious stimulus plan begun in early 2015 that entailed pausing fiscal reforms, sharply cutting interest rates, loosening housing policies, and increasing credit growth. The result: GDP growth looks set to meet the target of 6.5%-7% for 2016, and producer prices are rising after years of deflation. But policies that re-ignited growth in the short-term just increase concern about the future, especially in terms of credit. We estimate that total credit growth adjusted for muni bond issuance accelerated from 13% yoy in 1Q15 to 17% yoy as of 2Q16, and to 20% yoy when including shadow lending not captured in official statistics. In short, the potential credit problems in China have not receded, and indeed have likely grown given the very fast pace of credit expansion. Policymakers have taken note of these potentially destabilizing dynamics and have refocused on risk management; indeed, China’s recent Central Economic Work Conference to plan for next year’s economic policy included strong statements on controlling financial risks. Risk management measures employed in recent months include increasing short-term repo rates, reining in off-balance sheet exposures such as wealth management products, and rolling out measures to try to curb home price appreciation. Fiscal policy also seems likely to tighten at least slightly in coming months. But any  tightening will likely prove short-lived given that meeting growth targets will remain critical in 2017—a year of leadership transition. Our RMB view has also become more negative, presenting risk to the US dollar and S&P 500. When we published at the height of market anxiety around China, we were relatively constructive on the RMB, arguing that a large, one-off devaluation was unlikely and envisioning only a “mild” trade-weighted depreciation (against the CFETS basket, the CNY has depreciated 4.5% since then). But capital outflow pressures have remained, particularly in the context of US dollar strength. Despite the government’s official focus on a trade-weighted currency basket, higher $/CNY fixings are still a powerful signal that can easily re-ignite capital flight, as households and firms anticipate a faster pace of depreciation. Indeed, the PBOC’s FX reserves fell US$69bn to US$3,052bn in November, the largest decline since January. The US election has reinforced these dynamics given the strengthening dollar and potential for trade frictions, motivating tighter restrictions on capital flows. Global markets have so far taken these developments in stride, but the risk of a repeat of related equity market volatility remains, which could impact the pace of Fed tightening and dollar strength. What to look for in 2017 (and beyond): A potential resurgence in Chinese growth fears early next year, but more broadly, a continued bumpy deceleration. We expect sequential GDP growth to decelerate into 1Q17 to c.5.5% annualized on recent tightening measures. But we expect a rapid pivot back to stimulus should the growth target look at risk, especially given next year’s leadership transition.  Continued concerns about China credit growth. Although policymakers have introduced tightening measures to reduce the risk of asset price bubbles, China’s reliance on credit growth, which undermines financial stability, remains a key risk. RMB downside, posing potential risk to the stronger US dollar and global stock markets. We forecast a $/CNY fix of 7.00, 7.15 and 7.30 in 3, 6 and 12 months, respectively, and long $/CNY is one of our 2016 Top Trades. The pace of capital outflows and the evolution of the fix warrant monitoring; in our view, as long as the fix simply offsets dollar strength and capital outflows are contained, global risk appetite should hold up. China remains a key risk to watch. Update: RMB weaker, but with less fear * * * CREDIT TREMORS Where we stand now: US credit markets staged a remarkable turnaround after the turbulent start to 2016. US IG and HY spreads currently stand in the 56th and 31st percentiles since 1985, compared to 88th and 87th at the end of February, just before we published. With spreads no longer pricing high risk of recession, credit is now mostly a carry play. Commodity-exposed sectors, which were at the center of investor concerns, have outperformed sharply. HY Metals & Mining and Energy have returned 49% and 36%, respectively, this year, compared with a -2% and -15% return as of late February. We remain tactically bullish on HY Energy; given the GS forecast for WTI oil prices to rise to $57.50/bbl 1H17, we expect the sector to generate excess returns, although we are likely in the latter stages of this trade. In contrast, we do not think the outperformance of HY Metals & Mining can be sustained given tight valuations and challenging fundamentals. Credit markets have generally moved “over the commodities hump” that was driving defaults and technicals. HY defaults appear to be normalizing, driven by improvement in commodity-exposed sectors. Our central thesis fordefaults earlier this year was “what happens in commodities stays mostly in commodities.” Indeed, there has been little contagion from Energy and Metals & Mining to the broader credit markets. The 12-month trailing issuer-weighted HY default rate rose from 3% at the start of 2016 to 5.6% as of the end of the October—but ex-Oil & Gas and Metals & Mining, it has hovered near post-crisis lows at around 1.9%. HY defaults have shown tangible signs of improvement in recent months, with a decline in the dollar amount of defaulted bonds and a change in composition toward non-commodity-related sectors. Similarly, downgrades have slowed and shifted away from commodities. Of the $1.3 tn of bonds downgraded in 2016, 42% were in Energy and Metals & Mining, with the lion’s share occurring in Q1. However, within the most vulnerable rating buckets today, Energy and Metals & Mining issuers have no bonds outstanding on downgrade watch. Instead, the biggest pocket of downgrade risk is currently in retail. After a disappointing first quarter, the trend in credit quality appears to be slowly improving. IG and HY net leverage has stabilized, although it remains high by historical standards, and interest coverage ratios have remained healthy, especially when excluding Energy and Metals & Mining. Moreover, ROAs and revenue growth have rebounded slightly from the recession-like levels reached in Q1; while far from spectacular, this is nonetheless a welcome development What to look for in 2017 (and beyond): Moderate compression of spreads, with US IG and HY cash spreads tightening by end-2017 to 111 and 430bp, respectively. We see a generally positive macro environment for credit going forward, with the top-down drivers of credit risk appetite remaining fairly supportive while bottom-up balance sheet fundamentals continue to gradually improve. Further declines in default rates and downgrades. We expect the HY default rate to fall to 4% by end-2017. Further improvement in leverage, earnings, and revenue growth. Watch US tax reforms, as a lower statutory corporate tax rate would be a tailwind for earnings and credit quality. More dispersion across sectors driven by the incoming administration’s policy agenda. We are constructive on IG Banks and Energy as well as HY Building Products (key beneficiaries of easier fiscal policy); neutral on IG and HY Healthcare and Pharma and IG Cable/Media; and negative on HY Media, HY and IG retail, HY and IG Technology, and HY Metals and Mining. The risk of an inflation shock. While our base case is for credit spreads to resist rising rates, as they did in previous hiking cycles, this will depend on a credit-friendly mix of growth and inflation. With the US economy already effectively at full capacity, the risk that high inflation dominates the growth impulse from easier fiscal policy merits watching. No inflection in the credit cycle yet. Although market participants will likely shift their attention from commodity exposure to the potential for a negative turn in the credit cycle, we do not expect an inflection in 2017. Key to this view is the strong “business cycle” component in the behavior of HY defaults coupled with low US recession risk. When the cycle does eventually inflect, we expect credit losses to mean revert faster than in the 2001/2002 and 1990/1991 cycles, given higher levels of interest coverage today relative to those periods * * * POLICY STIMULUS: RUNNING ON EMPTY? Where we stand now: We have seen little evidence that central banks (CBs) are “running on empty” but considerable evidence that they are recalibrating their policies to make them more effective and sustainable. Asset purchase programs: Both the ECB and BOJ have effectively begun to reduce or position themselves to reduce their pace of asset purchases, apparently with an eye to increase the sustainability/longevity of QE, leaving the market scratching its head on whether these shifts constitute a “taper” (although both CBs deny that they are): ECB: On December 8, the ECB announced a nine-month extension of the Asset Purchase Programme (APP) until end-2017 (from March 2017) at a reduced pace of €60bn a month (from €80bn a month), which is lower than we expected. But the ECB emphasized that it sought to maintain “a sustained market presence” and suggested the APP could continue longer if necessary. The ECB also introduced greater flexibility in the pace of purchases, but said reducing the monthly pace below €60bn is “far, far away.” BOJ: On September 21, the BOJ announced QQE with Yield Curve Control, whereby it would target 0% for 10-year JGB yields. The BOJ is maintaining a ¥80tn/year expansion of asset purchases for now, although it effectively abandoned its previous monetary base target, which could be construed as “stealth tapering” required to increase QQE’s sustainability. Negative interest rates: Japan and all of the European economies that had negative policy rates have left them unchanged (so no forays into deeper negative territory). We think the ECB is likely to resist pushing rates more negative, whereas any further accommodation by the BOJ would likely take the form of rate cuts in the absence of better choices. The focus on outright monetary financing, aka, “helicopter money,” has ebbed as governments have maintained an outwardly cautious stance on the slippery slope of financing deficits with money creation. In particular, the market’s hope for explicit monetary financing in Japan, where we argued it could be effective and mechanically easier to implement than in the Euro area, were dashed when the BOJ’s September “Comprehensive Assessment” included no hint of it. But the line between monetary and fiscal policy remains blurred as fiscal expansion gains ground, often with the help of CB policies. Fiscal easing is now in train in almost every major developed country (see here and here) and of course potentially super-charged in the US under Donald Trump. There is increasing conviction that CB asset purchases have provided headroom for fiscal expansion via lower debt servicing costs, although concerns about rising deficits remain. What to look for in 2017 (and beyond): Monetary policy divergence: Still-easy monetary policy in Europe and Japan, and more rate hikes in the US. ECB: We maintain that the ECB will continue its APP through 2018, progressively reducing the pace of purchases from €60bn per month after December of next year. We do not expect a rate hike until end-2019, later than the market expects. BOJ: We believe that the BOJ is unlikely to ease further in 2017 unless it needs to counter sharp yen appreciation. Fed: We forecast three hikes during 2017, putting the funds rate range at 1.25-1.50% by the end of next year. Further fiscal expansion (in some cases substantial), which will support growth. Euro area: We expect a fiscal easing of 0.5% of GDP in 2017 and 0.2% of GDP in 2018, driven by greater fiscal space from improving budget balances (i.e., low interest payments and positive growth) and the ECB’s APP. Political considerations ahead of elections in France and Germany may also play a role. Growth impact in 2017/2018: 0.4pp/0.2pp, respectively. Japan: We expect to see spending under the economic stimulus package announced this summer to come into play from 2017. Growth impact in 2017: 0.4pp. US: We expect a scaled-down version of the fiscal proposals of President-elect Trump and the Republican House leadership, with a net easing of $200bn per year or 1% of GDP, consisting mostly of individual and corporate tax cuts. Growth impact in 2017/2018: 0.3pp/0.5pp, respectively. Outright helicopter money still not taking off; but the very blurred line between monetary and fiscal policy persisting. * * * FINANCIAL CONDITIONS Where we stand now: Financial conditions—the state of financial variables such as interest rates, equity prices, and credit spreads—have eased in much of the world since Q1, as markets stabilized from the sharp sell-off in risk assets in early 2016. In the US, the easing through mid-year was considerable; even after the recent sharp rise in bond yields and the resumption of dollar strength, our US Financial Conditions Index (FCI) remains roughly 100bp easier than its tightest level in January. Other developed markets have experienced significant easing as well, driven largely by currency moves—specifically, sterling depreciation following the UK’s referendum on EU membership in June and sharp yen depreciation against the dollar since the US election. In emerging markets (EM), financial conditions remain easy by historical standards. Financial conditions have in turn become a boost to growth rather than a drag, in line with our expectations. Indeed, we think the improvement in recent sequential growth indicators—both global GDP and our Current Activity Indicator (CAI)—reflects in large part the improved FCI impulse. In developed economies, the impulse has turned from very negative (-1.5pp) in 1H16 to slightly positive today. In EM, the impulse has stayed positive and is currently contributing roughly 1pp to growth. This positive impulse is a key reason for our improved outlook for global growth in 2017. In the absence of sharp risk-off moves in global markets, the Fed’s focus has shifted from financial conditions and international developments back to US inflation and unemployment. In its December post-meeting statement, the FOMC indicated that its 25bp rate hike was justified by “realized and expected labor market conditions and inflation.” What to look for in 2017 (and beyond): Further support to global growth from the FCI impulse—provided financial conditions remain around current levels. (Recall that the FCI impulse depends primarily on the year-on-year change in financial conditions rather than the current level of the FCI.) How central banks outside the US insulate themselves from rising US rates and the resulting tightening in financial conditions. We expect continued easy policy from both the ECB and the BOJ. Risks from rising yields, a stronger dollar, and a potential shift in risk sentiment. While we expect bond yields to rise more gradually from here (reaching 2.75% by end-2017), we are forecasting a roughly 7% appreciation of the trade-weighted dollar over the same period. Aside from tightening US financial conditions, a stronger dollar poses noteworthy risks to EMs: EMs with fixed exchange rates will find themselves effectively importing tighter financial conditions from the US, while those with flexible exchange rates could struggle with the rising value of their dollardenominated debt. Financial conditions could also tighten if the recent rally in US equities—driven by optimism about growth and policy under the incoming Trump administration—fades mid-year as we expect. China’s influence on global financial conditions. As we have highlighted, prior “China risk” episodes tightened US financial conditions enough to shift the Fed in a more dovish direction. As the dollar appreciates, China will have to fix $/CNY higher to keep the trade-weighted CNY stable, which in the past caused capital flows to pick up amid global risk-off sentiment. Our base case is for the forthcoming dollar appreciation to be orderly, but an escalation of China fears and a spillover into risk sentiment are key risks to that view. * * * POLITICAL UNCERTAINTY Where we stand now: Political uncertainty reached new highs with the UK’s vote to leave the EU and the election of Donald Trump. The UK Economic Policy Uncertainty (EPU) Index, a news-based measure, spiked to a record 1,142 in July, more than 8.5x the average since the creation of the index (1997) through 2015. (Our own measure of uncertainty also spiked, but to lower levels.) US EPU rose sharply in November to 255, the highest level on record outside of September 11th and the 2011 debt ceiling crisis. Uncertainty has weighed less than expected on UK activity. The UK economy has proved remarkably resilient, with any weakening related to the referendum confined to narrow areas of the economy (and offset by momentum in other sectors, notably consumer-facing ones). We had lowered our 2016 UK growth forecast to 1.5% after the vote but now expect growth of 2.1%. In the US, significant uncertainty over the president-elect’s future policies and governing style has failed to weigh on market sentiment, as risk assets have rallied on the expectation of greater fiscal stimulus and tax reform. Spikes in equity volatility around political events have been fairly short-lived. After the UK referendum, the VIX closed at 25.8, in the 84th percentile since 1990, but by mid-July it had stabilized in the 12-13 range. The VIX reached 22.5 prior to the US election—about five points higher than the typical level around past presidential elections—but has since receded to 11.7. There has been no shortage of political risks elsewhere, particularly in Europe. Established parties failed to establish a parliamentary majority in Spanish national elections in June. Center-right PP was ultimately able to form a minority government, keeping Prime Minister Mariano Rajoy in office, but its coalition with the liberal Ciudadanos party holds only 169 of 350 seats. Spain’s larger political risk, Catalonia, remains unresolved. French center-right primaries resulted in a win for former Prime Minister François Fillon against expectations and polling predictions. Fillon advocates strict controls on immigration and heightened national security, which should help erode support for the Eurosceptic Front National. On the left side of the political spectrum, President François Hollande has chosen not to seek reelection, while Manuel Valls has resigned as Prime Minister to run. The left-wing parties appear increasingly divided, raising the odds that the Front National reaches the second round in next year’s elections. In Germany, despite reduced popularity, Angela Merkel has confirmed her intention to seek a fourth term as Chancellor. The right-wing populist Alternative fur Deutschland (AfD) has made a strong showing in recent German regional elections. In Italy, voters rejected constitutional reforms in a referendum on December 4, prompting Matteo Renzi to resign as Prime Minister (former Foreign Minister Paolo Gentiloni has since been appointed in Renzi’s place). The “no” camp achieved a larger-than-expected majority, particularly in regions where the anti-establishment 5 Star Movement had previously gained ground. However, the high turnout suggests that the share of the Italian electorate that supports Renzi remains high, increasing the chances of elections in 2017. What to look for in 2017 (and beyond): Heightened political risk during a busy European election season. Elections set for 2017 include the general election in the Netherlands (March 15), the presidential election in France (second round on May 7), and the federal election in Germany (September)—all countries where right-wing populist political movements have recently gained in popularity. In France, we expect François Fillon to face off and defeat Front National leader Marine le Pen in the second round. We think the German elections will result in a repeat of the “grand coalition” among mainstream parties, given that other parties do not consider AfD an acceptable partner. In Italy, we expect the government to focus on domestic issues including the approval of a new electoral law and the banking system recapitalization in 1H17. As such, we expect elections no sooner than June; when they do take place, we expect to see Renzi compete against the 5 Star Movement. Continued policy uncertainty around the world. Market participants will seek clarity on Brexit negotiations as well as the new US administration’s policies (see pgs. 18 and 24). China will undergo a leadership transition next year, with a majority of the Politburo and Standing Committee expected to step down. And, amid ongoing tensions between Spain’s national government and Catalonia, the region has promised to hold an independence referendum in September. * * * "BREXIT MEANS BREXIT" Where we stand now: The start of UK-EU negotiations remains on hold pending UK Prime Minister Theresa May’s activation of Article 50, which she has said she will do before the end of March 2017. The UK Supreme Court is currently determining whether May needs parliamentary approval (i.e., via primary legislation) to proceed. Parliament recently voted in favor of triggering Article 50, but the decision was on a non-binding motion (whereas the Supreme Court ruling may require a piece of primary legislation). European leaders have confirmed that no negotiations will be held until the article is triggered. UK and EU priorities for Brexit remain at odds, leading market participants to acknowledge the risk of a “hard Brexit.” In May’s speech at the Conservative Party conference in October, she emphasized (1) controlling immigration and (2) excluding the UK from the jurisdiction of the European Court of Justice. In our view, these priorities are incompatible with single market membership. Indeed, Michel Barnier, the EU Commission’s chief Brexit negotiator, recently reiterated the EU’s pledge to the “four freedoms”—free movement of goods, persons, capital, and services—of the single market. Against expectations, growth in the UK has remained remarkably steady at around 2.0% yoy. Activity has weakened in some relatively narrow areas of the economy, like commercial real estate and construction, but this has been offset by other sectors, particularly consumer-facing ones that have benefitted from the easing in financial conditions. The BOE has faced a challenging tradeoff between supporting growth and containing inflation. The bank eased policy in August with a 25bp rate cut, a reactivation of QE, and a term funding program for banks. By November, however, the BOE had dropped its easing bias out of caution about an inflation overshoot. CPI inflation has so far averaged 1.0% yoy in Q4. Even after recent support to the trade-weighted sterling, the currency remains 10% weaker than before the referendum. This depreciation has reflected—in our view—expected deterioration in the UK's access to foreign export markets, as well as the effects of uncertainty on investment spending. Sterling remains sensitive to Brexit-related headlines. The impact of the referendum has not yet stymied the performance of UK equities. In fact, the FTSE 100 has been the best-performing European index year-to-date in local currency, and has performed in line with Euro STOXX 50 in common currency. Much of this is due to the FTSE 100’s large share of companies with international sales exposure, which have benefitted from sterling's fall. As expected, our basket of UK domestic stocks (GSSTUKDE) has underperformed sharply. What to look for in 2017 (and beyond): An official start to negotiations, though uncertainty on timing and tone remains high. Our base case is for May to activate Article 50 by the end of 1Q17. Legal and political uncertainties, however, skew the risks toward a later date. For example, if the Supreme Court rules that Parliament must approve Article 50’s activation, May could call a spring election in order to solidify her mandate, likely delaying the activation until June or July. Ultimately, we expect the negotiations to result in a UK-EU FTA that applies to goods but not services, and a loss of the UK’s rights to financial passporting. A moderation of UK growth to 1.4% in 2017 and 2018 owing to the effect of uncertainty on business investment and a deterioration in the UK’s terms of trade, which will erode consumers’ real incomes through rising import prices and higher consumer price inflation. (We forecast CPI inflation averaging 1.7% yoy for 2017 and 2.9% for 2018.) All told, we expect the level of UK GDP to be around 2.2% lower in three years’ time than it would have been without Brexit. Complementary support from UK monetary and fiscal policy, as BOE QE enables a slower fiscal adjustment than otherwise. We expect the BOE to resist upward pressure on bond yields by adding to its stock of asset purchases by £50bn (most likely later in 2017 rather than as an uninterrupted extension of the current QE program, which expires in February). Given slower growth and looser fiscal policy, we forecast the UK’s current account and fiscal deficits to narrow gradually, from around 5% of GDP in 2016 to around 4% in 2018 for the current account and from 3.9% to 3.0% for the fiscal deficit. Further sterling depreciation. We maintain that sterling is not yet “cheap” and will likely fall further on the political uncertainty tied to the Brexit process. We forecast GBP/$ at 1.20, 1.18, and 1.14 in 3, 6, and 12 months, respectively. Continued pressure on UK domestic-facing stocks, as a weaker currency and higher import prices harm their margins. * * * TRADE TRENDS Where we stand now: The election of Donald Trump has amplified concerns about a rollback of free trade, particularly given US presidential discretion over trade policy. As president, Trump will have the authority to withdraw from bilateral and multilateral trade agreements, and to raise tariffs without congressional approval. In past statements, Trump has called for imposing tariffs on imports from Mexico and China of 35% and 45%, respectively. The Trump administration will likely face pressure to move policy in this direction, though the exact measures it will take remain uncertain. News reports have indicated that Trump intends to grant his nominee for Secretary of Commerce, Wilbur Ross, greater responsibility for trade policy (which is normally handled by the US trade representative or USTR). Ross expressed support for the Trans-Pacific Partnership (TPP) in 2015 but has since criticized the deal. Trump has yet to appoint the head of USTR. More broadly, progress on several free trade agreements has been difficult, and the TPP looks all but dead. Japan’s parliament approved the TPP in November, but the deal cannot come into force without US participation. Leaders in Congress confirmed after the US election that they would not consider it during the lame-duck session, a period previously viewed as the TPP’s last chance for approval for the foreseeable future. Given the limited and gradual boost to US and Japanese growth from TPP, we do not expect shelving the deal to have a major impact on the outlook for either economy. The EU and Canada signed the Comprehensive Economic and Trade Agreement (CETA) in October, though not without significant obstacles; after seven years of talks, CETA nearly failed due to opposition from the parliament of Belgium’s Wallonia region, and parts of it still need approval before entering into force. The deal removes nearly all import duties on bilateral trade, grants EU firms access to Canadian investment markets, and allows EU bidding on Canadian public contracts. The US and EU concluded a 15th round of talks on the Trans-Atlantic Trade and Investment Partnership (TTIP) in October; progress has been slow-going, to say the least. Beyond politically-motivated trade trends, recent industrial transport indicators suggest an acceleration of growth in container grade (i.e., trade in manufactured goods). For example, recent sea- and air-freight data are showing positive volume growth and momentum. China-outbound container load factors in November were the highest since 2Q10/1Q12 and air cargo is growing in the high single digits in the EU/US/Asia. However, we maintain that structural headwinds are likely to continue to hold back the growth in global trade more broadly (though we do not find much evidence for the argument of “peak trade”). What to look for in 2017 (and beyond): Concrete steps on trade by the incoming US administration. We think any tariff increases are unlikely to be applied across the board, as goods trade flows differ significantly by country and product. The effects of US tax policy on importers, exporters, and trade flows. The House Republicans’ tax proposal includes a destination-basis cash flow tax, which would reduce the tax rate for net exporters and increase it for net importers. In theory, this would make US imports less competitive (reducing demand for imports) and US exports more competitive (increasing demand for exports). Dollar appreciation would likely provide only a partial offset to this effect, leading to higher net US exports (among other consequences). We think Congress is more likely to ultimately move away from the proposal. Pursuit of bilateral and regional trade agreements, particularly as an alternative to the TPP. In particular, the Regional Comprehensive Economic Partnership (RCEP) being promoted in Asia by China looks set to gain momentum. In contrast, the TPP will likely remain shelved, while the busy European election calendar makes much progress on the TTIP unlikely. China’s push for market-economy status under the WTO, which would limit other countries’ use of tariffs in anti-dumping cases against China. The US and EU have resisted the change to China’s status. Signs of improvement in global trade—with upside in services trade and a continued recovery in container trade— although the potential for increased trade barriers poses downside risks to these views. * * * CENTRAL BANK CHOICES AND CHALLENGES Where we stand now: Central banks in the major developed economies have continued to shift the parameters of their easing programs, apparently in an effort to address both sustainability issues and concerns about some costs associated with their policies (e.g., the impact on the financial sector). As noted on pg. 10, on December 8 the ECB announced an extension of its Asset Purchase Programme (APP) and a reduction in its pace of purchases, thereby increasing the program’s sustainability/flexibility. It also announced that from January 2017, the shortest residual maturity of bonds eligible for purchase will be lowered to one year, relative to two years previously. Also, Euro area members’ national central banks will be allowed to purchase bonds yielding below the deposit rate (currently -40bp) if they deem it appropriate. We expect these changes to encourage steepening of the EUR yield curve. In some ways, the ECB’s moves echoed the BOJ’s shift earlier this fall to QQE plus Yield Curve Control in an effort to prolong its program and reduce the negative impacts of a flattened yield curve on the banking system. The BOJ has since managed to keep 10-year yields around its 0% target, but had to intervene in the market in mid-November to maintain the steepness in the curve it desires (via offering unlimited purchases of 2 and 5-year bonds at fixed rates) amid the sharp global bond sell-off in the wake of the US election. The outright or implied reduction in asset purchases, increased flexibility regarding QE programs, and global bond sell-off have all but eliminated concerns about scarcity of German bunds (for now), and reduced them for JGBs. On our estimates, the combined impact of the ECB’s aforementioned policy changes will allow the German Bundesbank to continue purchasing German government securities at least until the end of 2018. For JGBs, the story has not changed as much, but the shift to targeting 10-year yields has afforded the BOJ more flexibility to respond to market conditions and redistribute purchases accordingly. The increase in bond yields has also helped lessen concerns about JGB scarcity, but could of course reverse. The increase in bond yields has begun to lessen concerns about pressure on bank margins and, in turn, lending incentives, from depressed long-dated rates and flatter curves. Although higher yields are exactly the reverse of what central bank policies were trying to achieve, as long as they are driven by more optimistic views on growth, this is generally viewed as a positive development. Indeed, the outlook for banks has grown substantially more optimistic if stock prices are any indication; the S&P 500 financial sector index is up 26% since June 30. The increase in bond yields has also reduced the other major concern about central banks’ easing programs: the asset-liability mismatch for long-duration investors. For example, the increase in German  yields since the July trough has reduced pension deficits in the Europe STOXX 600 by an estimated $US215 bn. What to look for in 2017 (and beyond): A continuation of ECB asset purchases through 2017 followed by a gradual taper. To the degree that German bund scarcity becomes an issue, we see a soft move away from capital-key-weighted purchases to allow for a smooth implementation of the purchase program. Potential difficulty for the BOJ in sustaining the 0% target on 10-yr bond yields, especially if 10-year US Treasury yields rise above 3% (our forecast is 2.75%). Look for (1) the BOJ to try to stick with the target in 2017, allowing deviation of more than 10bp (the market’s current view) from the target and adjusting asset purchase operations as needed; and (2) broader questions to arise on whether longer-dated yields can and should be controlled. Ongoing concerns about asset-liability mismatch, though these should diminish as bonds yields rise. A continuation of cautious optimism on banks given the run-up in rates and steepening yield curve. * * * US PRESIDENTIAL PROSPECTS Where we stand now: In his own words, election forecaster (and interviewee in our piece) Larry Sabato saw his “crystal ball shattered”: Republicans swept the presidency and Congress. Despite national polls and betting markets favoring Hillary Clinton heading into Election Day, Donald Trump secured 306 electoral votes to Clinton’s 232. At the same time, Clinton won the popular vote, 48.3% to Trump’s 46.2%. Republicans held majorities of 52-48 in the Senate and 241-194 in the House. Exit polls confirmed the importance of demographics to the election outcome. As expected, non-white voters voted overwhelmingly for Clinton, while Trump carried the non-college-educated white vote by a margin of 66% to 29%. Far more surprising, however, was that a majority of college-educated whites also voted for Trump—48% to Clinton’s 45%—despite pre-election polling averages indicating an 8pp lead with this demographic in Clinton’s favor. As expected, the focus has swung sharply to Trump’s cabinet appointments. You don’t need us to list them all here, but many of the key appointments come from the business world (think Steven Mnuchin for Treasury Secretary, Wilbur Ross for Commerce Secretary, and Gary Cohn for Director of the National Economic Council, not to mention Rex Tillerson for Secretary of State). Policy priorities have also become a key focus. Top on the list seem to be healthcare, taxes, and infrastructure, although trade policy could also see some changes. Reform of the Affordable Care Act (ACA) looks more likely than a repeal. Reform might include a continuation of tax-creditbased subsidies to purchase insurance in the individual market and a continuation of increased Medicaid expenditures. Tax reform could include changes in the treatment of capital investment and the deductibility of corporate interest expense, taxation of foreign income, and statutory tax rates. An infrastructure spending program could be financed as part of tax reform, or by new financing schemes involving tax credits, tax-preferred debt, loan guarantees, or other mechanisms to incentivize public-private partnerships. Trade policy could potentially involve more protectionist measures, though any tariff increases are unlikely to be applied across-the-board, and would likely target “usual suspect” sectors or countries/products with the largest trade imbalances. So far, US risky assets like what they see. An initial sharp sell-off in risk markets on election night lasted a nano-second, as investors quickly re-focused on the growth prospects under a Trump administration. The S&P 500 is up about 6% since just prior to the election, and cyclicals have strongly outperformed defensive/bond-proxy stocks. Rates have sold-off, meanwhile, as investors have digested the prospect of higher inflation as a result of a likely fiscal expansion as well as potential trade tariff increases. Ten-year Treasury yields stand today at 2.5% versus 1.8% just prior to the election, while the US  dollar has reached the highest levels (on a trade-weighted basis versus G10 currencies) in nearly 14 years. EM assets took a hit amid the appreciation of the US dollar and rise in core bond yields. EM investors are now closely watching whether stronger US growth and inflation bring about more Fed tightening and the degree to which protectionist policies are implemented by the new administration. What to look for in 2017 (and beyond): Policy clarifications, announcements, and implementation. We expect the first 100 days to be focused on confirmation of presidential nominees, repeal/reform of the ACA, and fiscal policy (tax and infrastructure). Some tailwinds to growth and inflation in 2017, but more in 2018 as the lagged effects of eventual tax and spending legislation take hold. However, trade restrictions could provide an offset to this boost. We expect US growth of 2.2% in 2017 and 2018, and US core PCE of 2.0% and 2.1% in 4Q17 and 4Q18, respectively. Whether recent market optimism will wane. We expect optimism around Trump will push the S&P to 2400 through 1Q17 before settling to 2300 by year-end as investors recalibrate policy outlooks. Continuation of the US dollar “reset” as divergence in activity and inflation reinforced by the election drives rate differentials in favor of the dollar. We forecast the USD TWI to appreciate 7% versus G10 currencies in the next 12 months. EM assets continuing to recover. The risk of protectionism is most acute for EM Asia and Mexico, but look for opportunities to position in the high-yielding commodity countries. * * * OPEC AND OIL OPPORTUNITIES Where we stand now: OPEC delivered a bullish announcement on November 30 that included OPEC and non-OPEC cuts. OPEC agreed to cut 1.2 mmb/d from October levels to 32.7 mmb/d for six months starting in January. The deal achieved a broad consensus with exemptions for Libya, Nigeria, and Indonesia, a reported modest growth allowance for Iran, and a 4.6% cut across other producers. Saudi Arabia said it would step up even further than its agreed cut if necessary. (This is in line with our view that it is in Saudi Arabia’s interest to cut production in order to manage the near-term inventory surplus, but not to try to increase prices, which would likely prove futile in the New Oil Order; more on this below...) Non-OPEC producers announced on December 11 an agreement to reduce their 1H17 output by c.560 mb/d, slightly smaller than the 600 mb/d cut announced on November 30. Although Russia is expected to contribute 300 mb/d of this cut, details suggest Russia’s share will be closer to 200 mb/d, implying that the agreement will only reduce non-OPEC production in 1H17 by c. 460 mb/d, (and technically 100 mb/d less than that because some of these “cuts” are natural decline rates). Oil prices have surged. Brent crude oil prices currently stand at about $55/bbl, nearly 18% above their level of roughly $46/bbl shortly before OPEC’s November 30 announcement. We maintain that a potential ramp up in Libyan production and a stronger dollar will likely limit further near-term price upside. There will be little evidence of production cuts until mid-to-late January, which we believe will be the next catalyst for another upside move in prices, to a peak of $59.00/bbl for Brent crude oil, and 57.50/bbl for WTI crude oil. Further, shale production already seems to be responding to higher prices. At the current US horizontal oil rig count, US shale production is already on track to sequentially grow from 1Q17 onward. New rig activity continues to rise, with a total of 194 oil rigs added since late May and 12 horizontal oil rigs added in the week ended December 16 alone. “Shale scale winners” in the US Exploration & Production (E&P) space still look well positioned. Our updated productivity analysis for FY 2015 data and wells drilled in 1Q16 shows productivity gains are trending at or above our 3%-10% range in the Permian Basin (TX/NM), Bakken (ND), and DJ Basin (CO) and modestly below expectations in the Eagle Ford (TX). We continue to believe shale productivity gains allow for substantial US production growth at oil prices of $50-$60/bbl and that E&P companies reaping these production gains are not being sufficiently rewarded. What to look for in 2017 (and beyond): Brent crude oil prices peaking at $59.00/bbl in 1H17 as cuts are implemented, pushing the market into deficit in 1Q17, which should shift the market into backwardation by the summer. Given that the expected backwardation should boost commodity index returns, we have shifted to an overweight commodities allocation for 3 and 12 months. Key: OPEC compliance to cuts and whether non-OPEC delivers on its contribution. We expect 84% compliance to the 1.6 mb/d country level announced cuts (which are lower than the 1.8 mb/d headline cuts) from October 2016 IEA crude production levels given that compliance to cuts outside of Gulf Cooperation Council (GCC) producers (Saudi, Kuwait, UAE, Qatar, Bahrain and Oman) has historically been poor. We expect Russia will freeze production at current levels. Greater-than-expected compliance to the announced cuts, or more Saudi cuts than announced, pose upside risk to our forecast (full compliance = $6/bbl upside to our forecast). Limited oil price upside beyond the high-$50/bbl range, as prices in this range lead to increased production from US shale and other lower-cost producers, and as legacy projects continue to ramp up. Key: Shale production growth in 2017. We expect US shale production to decline by 80 kb/d in 2017 (but increase 100 kb/d if we assume the well backlog is gradually tapped). Should greater compliance to OPEC/non-OPEC result in the upside to oil prices described above, the higher prices would likely bring on more shale, presenting upside risk to our production forecast, which could offset the cuts. In short, the New Oil Order lives. A continuation of lower correlation between oil prices, the US dollar and risky assets. The breakdown of the dollar/oil correlation will remain important in breaking the vicious cycle between a stronger dollar, weaker commodity prices and pressure on EM. * * * THE RETURN OF REFLATION Where we stand now: Since we just published on December 7, not much has changed! The FOMC raised the fed fund rates by 0.25% at its December meeting to a range of 0.50-0.75%, acknowledging the rise in realized inflation and noting that inflation expectations in the bond market had increased “considerably.” US PPI inflation came in firmer than expected, but CPI core inflation the reverse. We estimate that the CPI and PPI reports imply an increase of just +0.05% (mom) in core PCE inflation in November, to be reported later this week. The relatively moderate gain in core inflation may temper concerns that Fed policy has fallen behind the curve. Bond yields have continued to edge higher, with ten-year Treasury yields at 2.5%. Ten-year breakeven inflation stands at about 1.9%. What to look for in 2017 (and beyond): US inflation reaching the Fed’s target. We expect both core and headline PCE inflation to reach 2.0% by year-end 2017. Rising wages and healthcare costs are expected to lead the pick-up, while rent inflation could moderate. However, we expect Euro area inflation to remain muted, with core CPI inflation of 0.7% in 2017, and inflation remaining below the ECB’s target at least through the end of our forecast period in 2020. Three further rate hikes from the Fed in 2017 as inflation continues to rise in a tight labor market, putting the funds rate range at 1.25-1.50% by the end of the year. In light of the low level of the unemployment rate and with the prospect of fiscal easing, we expect the FOMC to see more balanced risks to the outlook compared to 2016. Policies under the new administration that could affect inflation trends, namely, the magnitude of fiscal expansion (we assume a fiscal package worth 1.0% of GDP) and any protectionist trade measures (we estimate a 10% increase in US tariffs on average would add 0.6pp to the level of core PCE). Higher US Treasury yields and inflation breakevens. We expect US 10-year yields to end 2017 at 2.75%, and we suggest long US and Europe inflation as a Top Trade for 2017. Outperformance of cyclicals versus defensives (at least in the early part of the year). More specifically, in Europe, we expect an outperformance of banks and underperformance of consumer staples. And in the US, we favor domestic-facing cyclicals, including financials and transportation (for investors concerned about rising inflation we also suggest they buy stocks with low labor costs (GSTHLLAB) and sell stocks with labor costs (GSTHHLAB). And if bond yields continue to rise alongside inflation expectations, weak balance sheet stocks (GSTHWBAL) may underperform strong balance sheet stocks (GSTHSBAL). Weaker equity valuations on rising bond yields. After years of exceptionally low interest rates pushing up equity valuations, these valuations are now vulnerable to rising yields. Although some rise in bond yields in conjunction with growth could prove positive for equity returns, there is a limit. We maintain that the tipping point when rising bond yields turn negative for stock returns may be when US 10-year yields surpass 2.75% or 10-year German Bund yields rise to 0.75- 1.00%.The vulnerability of valuations is a key reason why we continue to expect “fat and flat” equity returns in Europe and see an expected rise of the S&P 500 (to 2400 through 1Q17 and down to 2300 by year-end) to be driven by higher earnings rather than multiple expansion.

29 декабря 2016, 15:26

Frontrunning: December 29

Russia's Putin says Syrian government, opposition sign ceasefire deal (Reuters) Snap’s IPO Pitch to Tout Service as ‘the Next Facebook’ (WSJ) What History Has to Say About the Economy Trump Will Inherit (BBG) - zero mentions of the word "debt" Trump tax reforms could depend on little-known 'scoring' panel (Reuters) Debbie Reynolds Dies a Day After Daughter Carrie Fisher (BBG) Inside the 37-Year Standoff Over Iran’s Frozen U.S. Dollars (WSJ) China Would Outlast U.S. in Trade War, Billion-Dollar Fund Says  (BBG) U.S. appeals court rejects SEC's use of administrative law judges (Reuters) U.S. set to announce response to Russian election hacking: sources (Reuters) GOP Readies Swift Obamacare Repeal With No Replacement in Place (BBG) China warns U.S. against allowing stopover for Taiwan's Tsai (Reuters) Not Everyone Wants to Shop on Amazon (WSJ) London House-Price Growth Lags Behind U.K. for First Time Since 2008 (BBG) Fortune Teller of Mosul Falls Silent, Wary of Islamic State (WSJ) Cord-Cutters Dropping Cable Force Networks to Make Hard Choices (BBG) New York Times surpasses 100 million views on Facebook Live (Reuters) China Turns to $503 Billion Rail Expansion to Boost Growth  (BBG) Duterte says once threw man from helicopter, would do it again (Reuters) No Expiration Date on 9-Year S&P 500 Bull Run  (BBG) Singapore Defaults Seen as Bellwether for 2017 Asia Distress (BBG)   Overnight Media Digest WSJ - President-elect Donald Trump said Sprint Corp will move thousands of jobs back to the U.S. - a development he suggested was triggered by the "spirit and the hope" surrounding his election. http://on.wsj.com/2isEUbW - Takata Corp is nearing a settlement with federal prosecutors to resolve allegations of criminal wrongdoing in the Japanese automotive supplier's handling of rupture-prone air bags linked to numerous deaths and injuries, said people familiar with the discussions, with an agreement expected early next year. http://on.wsj.com/2isAfGU - Ford Motor Co's dealer group emailed an advertisement Tuesday to prospective buyers in the U.S. urging them to purchase a work truck, large sport-utility vehicle or van before the end of the year to take advantage of potentially substantial tax breaks. Citing the Internal Revenue Service's Section 179 deduction, which was recently retooled and made permanent, Ford suggests customers "could get a big tax break for your business." http://on.wsj.com/2isOoUz - Surging online orders and last-minute shoppers helped retailers make up for a slow start to the holiday-shopping season, fueling hopes that higher wages, the rising stock market, and lower food and gas prices prompted Americans to spend more. http://on.wsj.com/2isBgPd - High-end handbag and apparel maker Kate Spade & Co is exploring a sale of the company, according to people familiar with the matter, after coming under pressure from an activist shareholder. http://on.wsj.com/2isxoOt - Brazilian state-run oil company Petróleo Brasileiro SA said it agreed to sell certain noncore business assets for $587 million, amid its efforts to raise cash and reduce debts. http://on.wsj.com/2isyNo5 - Health-care diagnostics company Alere Inc is taking steps to get Medicare billing privileges reinstated for its Arriva Medical LLC diabetes unit, challenging the actions of the Centers for Medicare and Medicaid Services. http://on.wsj.com/2isCHgI   FT Former Bundesbank president and one of the architects of the European single currency, Hans Tietmeyer, died at the age of 85. President of the Bundesbank from 1993 to 1999, Tietmeyer had a critical role in preparations for European monetary union and the establishment of the European Central Bank. European industrial equipment supplier Loxam SAS raised its offer for Britain's Lavendon Group Plc on Wednesday to 442 million pounds ($540.57 million), or 260 pence per Lavendon share. British online clothes retailer Boohoo.com Plc said it would buy certain intellectual property assets from Nasty Gal Inc, a U.S.-based retailer that filed for bankruptcy last month, for $20 million. Lloyds Banking Group Plc is planning to set up a subsidiary in Germany or the Netherlands if the UK leaves EU without retaining access to its single market, according to two people familiar with the matter.   NYT - U.S. Secretary of State John Kerry accused Prime Minister Benjamin Netanyahu of Israel on Wednesday of thwarting peace in the Middle East. http://nyti.ms/2isFXsE - Even before Kerry issued his scathing critique of Israeli policies on Wednesday, President-elect Donald Trump essentially told Netanyahu to ignore it. http://nyti.ms/2hPqJgg - Actress Debbie Reynolds died Wednesday aged 84, a day after the death of her daughter, the actress Carrie Fisher. http://nyti.ms/2hPtCxT - With threats like cord cutting and declining television viewership, 2016 was not a lucrative year for cable television giants like TBS, Discovery, Univision and ESPN. http://nyti.ms/2igklQo - In a move that promises to raise new questions about electronic privacy, detectives investigating a murder in Arkansas are seeking access to audio that may have been recorded on an Amazon Echo electronic personal assistant. http://nyti.ms/2ijEQhz - Hans Tietmeyer, the central banker who led Germany's transition from the deutsche mark to the euro despite reservations about a single European currency, died on Tuesday aged 85. http://nyti.ms/2iGWQiw - The president and chief executive of Dentsu, one of the world's largest advertising firms, said he would resign to take responsibility for the death of an employee, as well as the larger problem of dangerously long work hours at the agency that has been laid bare in its wake. Matsuri Takahashi, a young employee at Dentsu told friends on Twitter of enduring harassment and grueling long hours on the job, in the months before she jumped to her death from a company dormitory last Christmas. http://nyti.ms/2hPwHxL   Canada THE GLOBE AND MAIL ** Pacific NorthWest LNG is looking at lower-cost options as it mulls whether to spend billions of dollars to build a liquefied natural gas terminal in British Columbia amid a global glut of LNG. https://tgam.ca/2iI1UXR ** Little more than a month before the Super Bowl, Bell Media is launching an appeal of new rules to allow U.S. television commercials to run on Canadian airwaves during the big game, adding a fresh legal challenge to a recent chorus of lobbying and public relations efforts to change the policy. https://tgam.ca/2iI5mC3 ** British Columbians are deeply concerned about the overdose crisis and want to see improved access to addiction treatment - but, faced with an unprecedented number of drug deaths in the province, they're also willing to consider more radical options such as the legalization of hard drugs. https://tgam.ca/2iHXNuO NATIONAL POST ** Aboriginal leaders in northwestern British Columbia cautiously welcomed reports that Malaysia's state-owned oil company Petronas is considering changes to its $27 billion Pacific Northwest LNG project near Prince Rupert to alleviate environmental concerns. http://bit.ly/2iI7NEA ** A tiny Vancouver-based mining company, MGX Minerals Inc , is betting Alberta's energy sector could benefit from the rise of electric vehicles by harvesting its oilfield wastewater for lithium carbonate, which is used to make batteries for electric vehicles. http://bit.ly/2iI5jWA ** British Columbia Member of Parliament Peter Julian is registered as the first and only contestant in the New Democratic Party leadership race, but even he hasn't committed to run. Julian registered on Dec. 21, according to Elections Canada's website, and is accepting donations from supporters. http://bit.ly/2iHZhFo   Britain The Times * Ministers are preparing to tackle overpriced electric car charging amid fears that it can cost as much to run a green vehicle as a conventional diesel. Rules will be introduced early next year to make roadside pricing for electricity more "consistent and transparent", so that motorists are not driven away from buying environmentally friendly cars. http://bit.ly/2hOGp3p * Whitehall is investigating the nuclear regulator after the Times revealed that several serious accidents had been dismissed as posing no safety risk. http://bit.ly/2hpTShp The Guardian * 36 child asylum seekers who previously lived in the Calais refugee camp have issued a legal challenge to the home secretary. They claim Amber Rudd acted unlawfully in the way she handled their applications. Of the 36, 28 have had their applications refused, while another eight are awaiting decisions from the Home Office. http://bit.ly/2ifruAq * Online fashion retailer Boohoo.com Plc is lining up to buy the rights to the Nasty Gal fashion label after the U.S. internet business fell into bankruptcy last month. http://bit.ly/2htQbKz The Telegraph * The bid battle for cherry-picker supplier Lavendon Group Plc stepped up again on Wednesday with European industrial equipment supplier Loxam SAS raising its offer for the UK business. http://bit.ly/2is63vC * Prime Minister Theresa May will put plans to pull out of the European Court of Human Rights at the heart of her campaign for the 2020 general election campaign, after ministers conceded that reform plans have been delayed by Brexit. http://bit.ly/2hq5pNs Sky News * Britain's ambassador to the United States, Kim Darroch, has attempted to mend fences with Donald Trump after the President-elect backed Nigel Farage for the job. http://bit.ly/2hxAeol * New research reveals the government has misled the public by claiming it provided "new money" for social care, according to Labour's Andy Burnham. The former health secretary, who is now Labour candidate for mayor of Greater Manchester, claims one in three councils is facing cuts in government funding next year. http://bit.ly/2ifzzVF The Independent * Former cabinet minister Michael Gove has stoked Brexit anger after arguing that the discredited claim that leaving the European Union would mean 350 million pounds-a-week ($428 million-a-week) more for the NHS is still trustworthy. http://ind.pn/2iiZM8B

29 декабря 2016, 13:04

Германия ускорила вывоз золота из хранилищ ФРС США

Источник: Expert Online Власти Германии ускорили процесс вывода золотого запаса страны из-за рубежа. За 2016 год в ФРГ из хранилищ Федерального резервного банка Нью-Йорка (входит в структуру ФРС) и ЦБ Франции было возвращено 200 тонн драгметалла, сообщает Finanz со ссылкой на немецкое издание Bild. Это «существенно больше, чем планировалось», сообщил глава Бундесбанка Йенс Вайдман, не уточнив, с чем связана спешка. По словам Вайдмана, теперь почти половина золотого запаса ФРГ, составляющего 3,4 тысячи тонн, находится внутри страны. В 2015-м году Бундесбанк репатриировал 210 тонн, в 2014-м — 119,7 тонны, в 2013-м — 36,6 тонны. Читать далее »Прочесть полный материал можно в моём блоге.

29 декабря 2016, 13:00

Германия ускорила вывоз золота из хранилищ ФРС США

Источник: Expert Online Власти Германии ускорили процесс вывода золотого запаса страны из-за рубежа. За 2016 год в ФРГ из хранилищ Федерального резервного банка Нью-Йорка (входит в структуру ФРС) и ЦБ Франции было возвращено 200 тонн драгметалла, сообщает Finanz со ссылкой на немецкое издание Bild. Это «существенно больше, чем планировалось», сообщил глава Бундесбанка Йенс Вайдман, не уточнив, с чем связана спешка. По словам Вайдмана, теперь почти половина золотого запаса ФРГ, составляющего 3,4 тысячи тонн, находится внутри страны. В 2015-м году Бундесбанк репатриировал 210 тонн, в 2014-м — 119,7 тонны, в 2013-м — 36,6 тонны.

Выбор редакции
28 декабря 2016, 20:12

Former Bundesbank president Hans Tietmeyer dies aged 85

Hans Tietmeyer, a key architect of European monetary union and former Bundesbank president, dies aged 85.

Выбор редакции
28 декабря 2016, 17:11

Former Bundesbank president Hans Tietmeyer dies

Champion of euro project was ambivalent about way currency union was implemented

28 декабря 2016, 11:19

Германия хочет, но не может вернуть своё золото из США

Немецкий федеральный банк (Бундесбанк) намерен вернуть золото Германии домой. Как сообщил член правления Бундесбанка Карл-Людвиг Тиле, банк хочет переместить большую часть своих золотых запасов из Нью-Йорка, Парижа и Лондона к себе во Франкфурт-на-Майне уже к 2020 году. Почему германское золото оказалось за границей и работает на престиж и финансовую стабильность своих экономических конкурентов, вопрос особый. Для немцев сегодня важно то, что хранить «спасательный пояс» экономики дома вполне резонно.

27 декабря 2016, 20:02

Германия хочет, но не может вернуть своё золото из США

Немецкий федеральный банк (Бундесбанк) намерен вернуть золото Германии домой. Как сообщил член правления Бундесбанка Карл-Людвиг Тиле, банк хочет переместить большую часть своих золотых запасов из Нью-Йорка, Парижа и Лондона к себе во Франкфурт-на-Майне уже к 2020 году. Почему германское золото оказалось за границей и работает на престиж и финансовую стабильность своих экономических конкурентов, вопрос особый. Для немцев сегодня...

27 декабря 2016, 14:06

Немецкое золото бежит из США

Запасы драгметалла Германии возвращаются в страну. За год из Нью-Йорка вывезли его больше, чем предполагалось. Если банки США использовали немецкое золото в своих операциях, у них могут возникнуть крупные проблемы

27 декабря 2016, 01:50

The Italian Bank Run: Monte Paschi Capital Shortfall Surges 75% To €8.8Bn Due To "Rapid Liquidity Deterioration"

While the big news last week was that Italy's third largest bank, Monte Paschi, had been nationalized after JPM destroyed the bank's chances of securing a private-sector rescue, and that Italy would issue up to €20 billion in public debt to fund the bailout of this, and other insolvent Italian banks, it appears there may be more moving parts to the story. Recall that as we warned, the biggest danger for both Monte Paschi, and Italy's banking system in general, is that retail depositor confidence in the Siena bank is shaken enough to lead to a bank run either in the world's oldest bank, or worse, across the entire Italian banking sector, leading to a worst case probability outcome of falling bank dominoes as bank funding needs explode, resulting in even more deposit outflows, and so on in a toxic feedback loop. To be sure, Monte Paschi's deposit run is hardly new, and as the bank itself admitted last week, it had already suffered roughly €14 billion in deposit outflows, or 11%, in the first nine months of the year as shown in the chart below. It turns out that  the bank run not only continued but accelerated. As Reuters reports this afternoon, the ECB has told Monte dei Paschi it needs to plug a capital shortfall of €8.8 billion, 76% greater than the previous €5 billion gap estimated by the bank, and which hole the entire recently failed bank recapitalization was aimed at plugging, the lender said on Monday. Meanwhile, for those who missed the last few episodes in the dramatic third bailout, and nationalization, in as many years involving Monte Paschi, here is a recap from Reuters: Last Friday the Italian government approved a decree to bail out Monte dei Paschi (BMPS.MI) after Italy's No. 3 lender failed to win investor backing for a desperately needed 5 billion euro capital increase. The bank said on Monday it had officially asked the ECB last Friday for go ahead for a "precautionary recapitalisation".   A precautionary recapitalisation is a type of state intervention in a struggling bank that is still solvent. It means only a modest bail-in of investors though the government can buy shares or bonds only on market terms endorsed by EU state aid officials in Brussels. In its reply, the ECB said it had calculated the capital it believed the bank needed on the basis of a shortfall emerging from European stress test of large lenders earlier this year. In those tests Monte dei Paschi was the only Italian bank to come short under an adverse scenario. The ECB said the lender was solvent but signaled the bank's liquidity position had rapidly deteriorated between the end of November and December 21, Monte dei Paschi said. In other words, depositors yanked even more billions from the bank - a perfectly reasonable course of action in light of concerns about the bank's viability - which in turns has led to an even worse liquidity situation at Monte Paschi. The Siena bank said that it "has quickly started talks with the competent authorities to understand the methodologies underlying the ECB's calculations and introduce the measures for a precautionary recapitalisation..." The bank's problems date back several years but successive Italian governments have failed to tackle the issue, which became a political taboo this year with new EU rules banning state bailouts unless private investors take losses first. The European Commission said on Friday it would work with Rome to establish conditions were met for a bailout of Monte dei Paschi. But on Monday ECB policymaker Jens Weidmann said plans for a state bailout of Monte dei Paschi should be weighed carefully as many questions remain to be answered. In an interview with Bild, the Bundesbank head said the bar should be high for government funds being used for bank as these are intended as last resort. He added that the planned Italian government measures can only be directed to banks that are healthy “in their core.” He also joined S&P in warning that the raised rescue funds may not serve to cover for foreseeable losses and that if government funds are used, there should be matching public funding because of Italy’s high government debt. There won't be as the whole point of the exercise is to avoid angering the public by impairing its investments. Italy's market watchdog Consob said last week the bank's shares and securities would be suspended from trading until the conditions of a state bailout become clear.

26 декабря 2016, 19:31

ECB's Weidmann on Monte Dei Paschi - State Bailout Only Possible If Fundamentally Sound

Jens Weidmann, at the Bundesbank and thus the European Central Bank, has pointed out that Italy's state aid to the failing Monte dei Paschi bank is only allowable if the bank itself is fundamentally sound. It's also not possible for state aid to be given if such is to cover [...]

26 декабря 2016, 17:12

Bundesbank Repatriates Gold From New York, Paris "Faster Than Planned"

In January of 2016, the Bundesbank announced that three years after commencing the transfer of some of its offshore-held gold from vaults located at the Banque de France in Paris and the NY Fed in New York, it had repatriated a total of 366.3 tonnes, bringing the German central bank's gold reserves held in Frankfurt to 1,402 tonnes, or 41.5% of Germany's total gold of 3,381 tonnes, for the first time greater than the 1.347 thousand tonnes located at the New York Fed, which as of January 27, 2016 held 39.9% of Germany's official gold. "With approximately 1,403 tonnes of gold, Frankfurt has been our largest storage location, ahead of New York, since the end of last year," said Carl-Ludwig Thiele, Member of the Executive Board of the Deutsche Bundesbank. "The transfers are proceeding smoothly. We have succeeded in once again significantly increasing the transport volume compared with 2014. This means that operations are running very much according to schedule," added Thiele last January. As a reminder, according to its gold storage plan, unveiled in January 2013, the Bundesbank would store half of Germany's gold reserves in its own vaults in Frankfurt am Main by 2020 which would  necessitate a transfer to Frankfurt of 300 tonnes of gold from New York and all 374 tonnes of gold from Paris. It also meant that as of January, another 111 tonnes of gold from the NY Fed and 196.4 tonnes of gold from Paris remained to be transfered. The "politically correct" motives for the transfer, as well as the logistics and the mechanics behind it were explained in a March 2015 video released by the Bundesbank... ... the real reasons, however, is that following several reports on this website which cast doubts on Germany's gold holdings, in late 2012 the German Court of Auditors demanded that the Bundesbank undertake an audit of its gold reserves. Specifically, the court wanted to ensure that the nearly 3400 tons of gold, of which more than 2,000 tonnes held offshore, is in fact in existence - 'because stocks have never been checked for authenticity and weight'.  The move to repatriate was only accelerate following rumors that much of the offshore-held gold might have been "rehypothecated", and not be there anymore, that it might have been melted down, leased, or sold. Ironically, at the time, Bundesbank Board member Carl-Ludwig Thiele told the Handelsblatt that these moves were a “trust-building” measure, and he tried vigorously to put the rumors about the missing gold to rest. Of course, repatriating your gold from foreign central banks is precisely the opposite of a "demonstration of confidence." What made matters worse is that at the end of 2013, the Bundesbank announced it had managed to repatriate only 37 tonnes of the total 700 scheduled for redemption, further spooking the local population and suggesting that conspiracy theories that the gold was missing were in fact accurate. As a result, following blowback from both the media and the public, the Bundesbank accelerated its activity, and repatriated 120 tonnes in 2014 and another 210 in 2015, implying that the Bundesbank's faith in its foreign central bank peers had declined in inverse proportion to the following accelerated redemption schedule as of January 2016. Almost one year later, last Friday, Germany's Bild reported that in 2016 the Bundesbank has repatriated "more of its gold than planned", as it moves toward relocating half of the world's second-largest reserve at home. "We brought back significantly more gold to Germany in 2016 again than initially planned. By now, almost half of the gold reserves are in Germany," Bube president Jens Weidmann told the German publication. As Reuters added, in the wake of the European financial crisis, many ordinary Germans have demanded to see more of the 3,381 tonnes of gold in vaults at home. "Some had even questioned whether it still exists, prompting the Bundesbank to publish a long list of details on the gold holdings in 2015." According to Bild, around 1,600 tonnes of Germany's gold reserves are now in the country, a figure set to rise to 1,700 tonnes by 2020. This means that the Bundesbank repatriated roughly 200 tonnes of gold in 2016, comparable to the 210 tonnes its brought back to Frankfurt in 2015, and the total held domestically  amounts to 1,600 tonnes at the end of 2016, just shy of the 1,700 or so planned to be repatriated over the next three years, suggesting that for some unknown reason, the German central bank has aggressively pushed forward the redemption timetable ahead of its scheduled completion in 2020. Neither Bild, nor Weidmann, explained why after initially dragging its feet on gold relocation in 2013, over the past two years the German central bank has demonstrated a curious sense of urgency in repatriating its gold.  In any case, we are confident that the German population will be happy to learn that nearly half of its gold is now on domestic soil, just in time for the holidays.

24 декабря 2016, 11:35

Глава Бундесбанка заявил о перевыполнении плана по возврату своих золотых резервов в ФРГ

Бундесбанк перевыполнил план по возврату своих золотых резервов в Германию, сказал его президент Йенс Вайдман газете Bild.

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23 декабря 2016, 11:10

Альпари: Валютная пара EUR/USD готова к снижению

В четверг курс евро/доллар закрылся в небольшом плюсе. Учитывая, что многие основные валюты торговались в минусе к доллару США, евро помогли укрепиться два кросса – евро/фунт и евро/йена. На американской статистике евро не мог так подскочить. Есть мнение, что его укрепление к фунту вызвал «Бундесбанк», который в конце месяца за стерлинги покупает единую валюту. Индекс

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22 декабря 2016, 16:48

Курс евро/доллар вырос на европейской сессии - Forexite

Курс евро/доллар вырос на европейской сессии с уровня 1.0422 до 1.0468. Поддержку курсу оказывал рост кросс-курсов евро/фунт и евро/иена. Курс евро/фунт поднялся на 50 пунктов - до уровня 0.8486. Покупки евро против фунтов традиционно в конце месяца осуществляет Бундесбанк. Курс евро/иена вырос на 60 пунктов -до отметки 123.07. Курс доллар США/канадский доллар вырос на 60 пунктов - до отметки 1.3477. Давление на курс канадского доллара оказывает снижение цен на нефть.

15 августа 2013, 15:20

США отказываются возвращать немецкий золотой запас

Мир теряет веру в доллар как в самую надежную валюту. Волна недоверия поднялась после того, как Немецкий федеральный банк потребовал репатриации огромного количества золота, хранящегося в Федеральной резервной системе США. Некоторые обеспокоены тем, что национальные вклады других стран не будут в безопасности в США. Да и находятся ли они там вообще? Подробности в репортаже корреспондента RT Гаяне Чичакян. Подписывайтесь на RT Russian - http://www.youtube.com/subscription_center?add_user=rtrussian RT на русском - http://russian.rt.com/ Vkontakte - http://vk.com/rt_russian Facebook - http://www.facebook.com/RTRussian Twitter - http://twitter.com/RT_russian Livejournal - http://rt-russian.livejournal.com/

06 февраля 2013, 00:00

Утечка информации из МВФ: «золотое» мошенничество центральных банков

О GATA и «золотом картеле» Еще в конце ХХ века наиболее въедливые эксперты стали подозревать, что на рынке золота происходит что-то неладное. А именно: даже если жёлтый металл не дешевеет, то цены на него всё равно отстают по темпам роста от динамики цен на многие другие товары мирового рынка. Золото дешевело также на фоне индексов фондовых рынков, цен на недвижимость и т.п. Никаких крупных месторождений золота в это время не было открыто, золотые метеориты на Землю не падали. Заниженные цены на желтый металл больно били по компаниям золотодобывающей промышленности. Представители нескольких компаний этой отрасли решили разобраться в загадке, для чего и создали организацию под названием GATA (Gold Anti-Trust Action). В буквальном переводе - «Действие против Золотого Треста». Как следует из названия, учредители GATA подозревали, что на мировом рынке золота действует группа злоумышленников, объединенных в трест, который манипулирует ценами на золото в сторону их занижения. В своих публикациях GATA чаще использовала термин «золотой картель». Постепенно удалось вычислить основных участников этого картеля. Среди них - Казначейство США, Федеральный резервный банк Нью-Йорка (главный из 12 федеральных банков, составляющих ФРС США), Банк Англии, ряд крупнейших коммерческих и инвестиционных банков США и Западной Европы (здесь особо выделяется «Голдман Сакс» - инвестиционный банк с Уолл-стрит). Это – ядро картеля. Время от времени в поле зрения GATA попадали и другие организации, участвовавшие в операциях картеля. В том числе центральные банки некоторых стран.  1990-е годы были периодом наибольшей активности США на мировых рынках активов. Проще говоря, американцы организовывали приватизации государственных предприятий по всему миру (в том числе в России), а для таких операций нужен был сильный доллар. Финансовые аналитики и спекулянты прекрасно знают простое правило: чем ниже цена на золото, тем крепче доллар. Самый простой и дешевый способ укрепить доллар – «прижать» цену на «желтый металл», который явно и неявно выступает конкурентом этой резервной валюты. Однако чтобы «прижать» цену, надо обеспечить повышенное предложение этого металла на мировом рынке. У тех, кто хотел сыграть на «понижение» золота, взоры обратились к несметным запасам золота, сосредоточенным в подвалах казначейств и центральных банков. Эти запасы лежали там без движения с тех пор, как в 1970-е гг. рухнула Бреттон-Вудская валютно-финансовая система. В новой Ямайской валютно-финансовой системе золото перестало быть деньгами, оно было объявлено одним из биржевых товаров – таким как нефть, пшеница или бананы. Версия о золотых манипуляциях центральных банков Как можно использовать это золото для манипуляций ценами?  Первое и главное условие сводится к тому, чтобы полностью засекретить официальные запасы желтого металла и все операции денежных властей с ними. Еще более повысить независимый статус центральных банков, для того чтобы «народные избранники», органы финансового контроля и прочие любопытствующие элементы не совали свои носы в дела этих институтов. Не допускать государственных аудиторов до «золотых закромов». В США, например, Главное контрольное управление (Счётная палата Конгресса) последний раз посещало главное хранилище официального золотого запаса США Форт Ноксболее 60 лет назад.  Далее под завесой секретности можно начинать операции с золотом. Однако не продавать его, а передавать разным частным структурам «на время», оформляя эти операции как кредиты или лизинг желтого металла. А вместо золотых слитков оставлять в хранилищах бумажки, которые являются с бухгалтерско-юридической точки зрения «требованиями», «расписками», «сертификатами» и т.п. То есть золото на балансе центрального банка сохраняется, только оно имеет не металлическую, а виртуально-бумажную (или даже электронную) форму. А «народу» это знать не обязательно. Если в эти «золотые аферы» втянуть десяток-другой центральных банков, то каждый год на рынок можно выкидывать не одну сотню тонн драгоценного металла и сбивать на него цену.  Эксперты (в том числе эксперты GATA) находили многочисленные подтверждения тому, что все это не вымысел, а результат преступного сговора центральных банков с частными банкирами и спекулянтами. И тут сразу возникают вопросы: кому центральные банки передавали золото? Было ли это золото возвращено назад в сейфы центральных банков? Известны ли эти махинации законодателям? Сколько на сегодняшний день реально осталось физического золота в хранилищах центральных банков (и государственных казначейств)? Отметим, что отдельные попытки разобраться в том, что представляют собой официальные золотые запасы, насколько официальная статистика золота отражает истинное положение дел, кто и как управляет официальным золотым запасом, предпринимались парламентариями, политиками, общественными активистами в разных странах. Например, в США такие попытки регулярно предпринимал член Конгресса США Рон Пол. Регулярные запросы в разные инстанции делала также GATA.  Денежные власти предпочитали отмалчиваться. Или же ответы были крайне лаконичными и сводились к тому, что «золотой запас страны находится в неприкосновенности». Такую же позицию занимали на протяжении последних 15 лет (с тех пор, как начались разговоры о «золотом картеле») и международные финансовые организации: Банк международных расчетов (который, кстати, активно занимается операциями с желтым металлом и был заподозрен в участии в «золотом картеле»), Всемирный банк, Международный валютный фонд (1).  Утечка информации из МВФ И вот последняя новость в этой области. Речь идет о материале, размещенном на сайте GATA в декабре 2012 года (2). Это полученное одним из экспертов GATA секретное исследование Международного валютного фонда 13-летней давности. Оно касается мирового рынка золота и роли центральных банков в операциях на этом рынке в 1999 году. Поскольку оно секретное, то его автор позволяет себе писать полную правду об операциях центральных банков.  «Информация о рынке золота неоднородна», – говорится в исследовании. «Для транзакций характерна высокая степень секретности. Наряду с относительно небольшим количеством открытых торгов на биржах, продажи золота представляют собой приватные внебиржевые сделки, о таких операциях сообщается скупо. … Официальные данные о ссудах в золоте практически отсутствуют». Вот ключевые факты и цифры из этого материала МВФ. В 1999 годуболее 80 центральных банков ссудили 15 процентов официальных золотых запасов рынку (имеется в виду величина непогашенных обязательств по золотым кредитам). В числе центральных банков, предоставлявших ссуды в золоте, были Бундесбанк Германии, Швейцарский национальный банк, Банк Англии, Резервный банк Австралии и центральные банки Австрии, Португалии и Венесуэлы. В исследовании подтверждается, что центральные банки играли на рынке золота на «понижение»: «…высокая степень мобилизации резервов центробанка через кредитные операции в золоте оказала понижающее влияние на наличную цену золота, поскольку перекредитуемое золото обычно связано с продажами золота на наличном рынке». Далее в исследовании МВФ говорится, что «кредитование в золоте заставило центробанки проявлять активность на рынке производных финансовых инструментов золота, где участвуют банки по операциям с драгоценными металлами и производители золота, продавая золото через форвардные сделки и опционы. В свою очередь, банки по операциям с драгоценными металлами приложили все усилия для защиты и укрепления долгосрочных отношений с центральными банками». Вот еще выдержка из документа МВФ: «Доля промышленно развитых стран на всём рынке официального кредитования в золоте выросла с 33 процентов в конце 1995 года до 46 процентов к концу 1998 года, поскольку некоторые центральные банки промышленных стран повысили уровень кредитования; в то же время на рынке появились новые кредиторы, в частности Бундесбанк и Швейцарский национальный банк». А вот комментарий эксперта GATA, разместившего данный материал:«При столь значительном количестве центральных банков, секретно предоставляющих ссуды в золоте тем финансовым организациям, чей основной талант, как можно было видеть в последнее время, состоит в рыночных махинациях, кто станет отрицать, кроме обычных агентов дезинформации, что рынком золота манипулируют именно для того, чтобы не позволить всему миру пользоваться свободными рынками?» 2013 год: ждём новых «золотых» скандалов и «золотых» сенсаций Раскрытия страшной тайны золота ждут уже много лет. Ещё в 2004 году Лондонский банк Ротшильдов заявил о своем выходе из «золотого фиксинга» - процедуры ежедневного определения в узком кругу цены на жёлтый металл в лондонском Сити. Тем самым Ротшильды заявили миру, что они выходят из золотого бизнеса, которым занимались на протяжении двух столетий. Однако это – всего лишь эффектный жест. Из золотого бизнеса они не ушли, а продолжили заниматься им через структуры с другими вывесками. Чувствуя угрозу надвигающегося скандала с разоблачениями «золотого картеля», эти олигархические круги решили своевременно отойти от эпицентра возможного взрыва…  Возбуждение общественности и политиков по поводу официальных запасов золота резко обострилось в 2012 году. Выяснилось, что на мировом рынке активно идет торговля фальшивым золотом в виде вольфрамовых позолоченных слитков (хотя специалистам об этом стало известно еще в 2004 году, трубить об этом мошенничестве мировые СМИ начали только в 2012 году). Возникли подозрения, что в подвалах центральных банков и казначейств находятся груды вольфрама. Рон Пол добился проведения выборочной проверки брусков металла в подвалах Форт-Нокс и Федерального резервного банка Нью-Йорка. Германия потребовала от США вернуть золото из своего официального запаса (Бундесбанк), которое хранилось в подвалах ФРБ Нью-Йорка, но встретила глухое сопротивление со стороны казначейства и ФРС США. Кончилось это тем, что председатель Федерального резерва Бен Бернанке заявил, что недавний ураган Сэнди… «уничтожил» немецкое золото. Ничего лучшего он придумать не смог. Все это лишь подкрепило мнение тех, кто давно обвиняет ФРС и другие центральные банки в мошенничестве с золотом.  Думаю, что в 2013 г. тема золота центральных банков станет еще более горячей. Например, все с нетерпением ждут обнародования результатов выборочной физической проверки слитков золота из закромов Казначейства США. Власти обещали сообщить об этом в начале 2013 года. От Германии все напряженно ожидают реакции на заявление Бернанке о таинственном исчезновении немецкого золота.  Появились вопросы и к Банку международных расчетов (БМР), активно практикующему коммерческие операции с желтым металлом - и собственным, и тем, который центральные банки предоставляют БМР в виде депозитов или кредитов. Отчётность БМР об этих операциях крайне лаконична и не даёт представления о деталях сделок, их контрагентах и конечных бенефициарах.  Международный валютный фонд будет продолжать настойчиво требовать от Китая раскрытия истинной информации об официальном золотом запасе. В 2009 г. Народный банк Китая (НБК) сообщил, что его золотые запасы увеличились сразу на 76% и составили 1054 тонны. С тех пор официальные цифры золотого запаса НБК не менялись. Мало кто верит в то, что эти цифры отражают реальное положение дел. Считается, что денежные власти Китая сильно занижают цифры, тайно переводя часть своих несметных валютных резервов в желтый металл. В Конгрессе США ожидается окончательное решение вопроса о том, будет ли ФРС подвергнута серьезному аудиту - впервые за век ее существования. Если такой аудит всё-таки состоится, то полной проверке должны подвергнуться все операции Федерального резерва с золотом. Почти все серьезные эксперты ждут от этой проверки сенсационных разоблачений.  (1) Подробнее о манипуляциях «золотого картеля» см.: В.Ю. Катасонов. Золото в экономике и политике России. – М.: Анкил, 2009, с. 57-63.  (2) «IMF study in 1999 found 80 central banks lending 15% of official gold reserves». December 9, 2012 (http://www.gata.org/files/IMFGoldLendingFullStudy1999.pdf)