Negative newsflow out over the last 24 hours means that there is no deal yet on Greece. The sticking point is not the PSI negotiations, it’s the OSI negotiations. The official sector involvement (Troika) is telling Greece to implement the labor reforms and pension cuts for an additional 1.5% of GDP. Troika (ECB, EU, IMF) want this done before they agree to provide the new 130 billion EUR loan. They want to see the cuts implemented and assurances from all political parties that these reforms will stay in place even after the Greek elections in April.

Thus, we have a … ...READ MORE

In speeches I do for clients and conferences, one of my favorite charts comes from the Kauffman Foundation’s study on where jobs are created in the United States. It shows that firms 5 years and younger accounted for over 90% of new jobs created in the US from 1992-2006……

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Overnight, we had a slew of PMI data out with the numbers all slightly better than expected.  The euro zone Dec. PMI was 48.8 vse 48.7 and Germany’s PMI was 51.0 vse 50.9.  The semi-official Dec. Chinese CLFP PMI was 50.5 vse 50.3.  As with many of the Chinese numbers, the official data collection could be improved and expanded.  China Business News Reports that the National Bureau of Statistics and China Federation of Logistics & Purchasing said they plan to expand the sample in compiling its Purchasing Managers Index for manufacturing sectors to 3,000 enterprises from the current 820, according … ...READ MORE

China aggressively added funds into their financial system and their money-market rate had its biggest monthly drop since July.  The PBOC injected 477 billion Yuan ($75.6 billion) and is the most cash to the financial system in almost four years.  This is another example of policy makers stepping in to eliminate funding risks and downside to the equity markets.  (February’s ECB LTROs will also be supportive as well.)  The Chinese injection makes up for the lack of a reserve rate cut.  It’s very positive for the AUD and NZD.… ...READ MORE

The discussions around Greece and their debt are reaching an important stage as the private sector negotiations are coming to a conclusion.  On January 27^th, the two sides they had reached understandings on legal and technical issues.  Sadly, the sticking point remains what the yield for the coupons on the new swapped bonds will be as the lower the rate, the bigger the relief to Greece.  Given the contraction in the Greek economy, the lack of tax revenue and the inability to implement structural reforms, estimates for their bailout loan have swollen to $145 billion euros to meet … ...READ MORE

GDP trade for tomorrow:

Today at 10:20 AM ET, I’ll be appearing on CNBC’s Squawk on the Street going over this trade. As always, adjust the levels to new information and movement. Q4 US GDP and market is expecting 3.0%.

If US GDP<3.0%, Buy USD/Sell SEK.

If US GDP=3.0-3.5%%, do nothing.

If US GDP>3.5%, Buy MXN/Sell JPY.

I think the risk is for a stronger than expected GDP, so let’s do the MXN/JPY trade.

Entry 5.8800 (hoping for a pullback today)

S/L 5.7850 (below recent breakout highs, should be support)

T/P 6.2850 (below … ...READ MORE

Overnight, the Japanese announced that they ran a full year trade deficit for the first time since 1980.  Japan Follow Up:  Last night the Japanese made it official:  first time in 31 years they had a yearly trade deficit.   

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Let’s face it; the only surprise left to the European debt crisis would be if it actually got resolved. There have been so many predicting that Europe would be unable to fix its problems that listening to Steven Tyler sing the National Anthem would be a welcome alternative.  Yet, European leaders continue to act like Churchillian American leaders:  they do the right thing after exhausting all the alternatives. 

As I wrote yesterday, the ECB is finally engaging in Fed-like alphabet soup lending facilities and cutting interest rates.  Italy, Spain, Ireland have engaged in belated, yet meaningful austerity measures.  (Yes, Greece … ...READ MORE

Is 12/11=3/09?

Today, the EUR and risk continues to rally as the financial markets appear to be sanguine over the prospects of a Greek bondholder agreement.  However, is this truly why the EUR currency has rallied or is there an underlying, positive shift occurring?

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WSJ’s Javier David writes an excellent article on the ECB and the risks they have by expanding their balance sheet.  Here’s the article:  http://online.wsj.com/article/BT-CO-20120112-714628.html

Here’s an great piece of research on the opaque ECB and questions whether it can survive European sovereign downgrades.

http://www0.gsb.columbia.edu/faculty/dbeim/papers/Can%20the%20Euro%20be%20Saved.pdf

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