[expat_panama]

Central banks...   ...have replaced the free market in determining credit allocation...

That's a bit over the top.  In fact, stupid.  Like, does anyone here go to the Fed to apply for a credit card?  Car loan?  Politics aside, supply and demand still rule and we need to face reality on its own terms.

[expat_panama]

Good morning all and welcome back to the daily slog.  Last Friday saw stocks punching down to new lows in rising volume and today's futures are (depending on which contracts) both up and down. At least metals traders aren't confused, they're just not doing anything.  If anyone cares today we're getting NAHB Housing Market Index and Net Long-Term TIC Flows.

In other news:

A Recession Is Not What the Markets Are Signaling - John Tamny, RCM
Blame Our Lousy Economy for Wall Street's Woes - John Crudele, NYP
The Chicken Littles Cry That the Sky Is Falling - Zachary Karabell, Politico
The Topic Missing From Presidential Debates - John Chambers, Fortune
Regulatory Relief Could Aid a Shaky Stock Market - Wayne Crews, Forbes
Investors Begin to Wonder When Pain Will End - Adam Shell, USA Today
The Main Driver of Stock Mkt. Returns? - John Coumarianos, MarketWatch
To Hit Big Oil, Unions Side w/Human Rights Abusers - Erik Telford, RCM
By Catering to Girl Buyers, Lego Angers Feminists - Ryan McMaken, Mises

[KC Burke]

What we see in the market for 2016 may include forces from outside the market using major manipulation in timing bumps. 2008 included signs of that by big players that were never explained or run-to-ground.

[mad_as_he$$]

Biggest clue to contraction I see is diverging central bank policies.

[DCBryan1]

From BN:

Business Briefing

1) China GDP Slows to Weakest Since 2009 on Manufacturing Slide
China’s economy slowed in December, capping the weakest quarter of growth since the 2009 global recession, as the Communist leadership struggles to manage a transition to consumer-led expansion. Industrial production, retail sales and fixed-asset investment all slowed at the end of the year, while gross domestic product rose 6.8 percent in the fourth quarter from a year earlier. Full-year growth of 6.9 percent, the least since 1990, was in line with the ...

2) Asian Equities Fluctuate After China Data as Iran Weighs on Oil
Asian equities fluctuated at a three-year low as investors weighed weaker-than-estimated Chinese economic data against prospects for increased stimulus. The offshore yuan declined, while oil traded near the lowest since 2003. The MSCI Asia Pacific Index swung between gains and losses after dropping 10 percent this year. The offshore yuan and Hong Kong’s dollar both fell 0.1 percent, while shares in Shanghai rallied at the end of the morning ...

3) Yuan Bears Stick to Their Guns After PBOC Attacks on All Fronts
China is attacking yuan bears on multiple fronts, forcing banks to hold more of the currency, driving up offshore interest rates, issuing verbal warnings and undertaking intervention that cut reserves by $108 billion last month alone. That has only emboldened some forecasters. Rabobank Group, Natixis SA and Barclays Plc are sticking to calls for a yuan slump, arguing falling reserves will weaken China’s finances, while curbs on selling only ...

4) Biggest Leveraged ETF Takes in $1.5 Billion as Japan Stocks Sink
Investors are putting more money into Japan’s giant leveraged exchange-traded fund than any other equity ETF around the world as stocks in Tokyo extend their worst start to a year on record. The Next Funds Nikkei 225 Leveraged Index ETF took in 177.4 billion yen ($1.5 billion) this year, boosting assets by 7 percent through Monday even as stocks tumbled, according to data compiled by Bloomberg. The fund’s current size of 786 billion yen ...

5) Ex-Goldman Macro Trader Lim Reopens $1.1 Billion Hedge Fund
Guard Capital Management, the Hong Kong- based firm led by former Goldman Sachs Group Inc. trader Leland Lim, reopened its macro hedge fund to new investors this month after outperforming peers in 2015, said a person with knowledge of the matter. The company also hired Don Hanna, who ran the Asia office of Roubini Global Economics, and Michael Stenske, a former Ernst & Young partner, said the person, who asked not to be identified as the information is private. ...

[DCBryan1]

Fixed income news:
OVERNIGHT EVENTS:
* Chinese GDP YoY, Q4 - weaker-than-expected at 6.8% vs. 6.9% prior and 6.9% anticipated. QoQ level was +1.6% vs. +1.8% prior and 1.8% anticipated. YTD YoY matched expectations at +6.9%.
* Chinese Retail Sales YoY, Dec - lower-than-expected at 11.3% vs. 11.1% consensus and 11.2% Nov. Retail Sales YTD YoY matched forecasts at 10.7% vs. 10.6% prior.
* Chinese Industrial Production YoY, Dec - lower-than-anticipated at 5.9% vs. 6.2% Nov and 6.0% forecast. YTD YoY unchanged as expected at 6.1%.
* German ZEW Expectations, Jan - higher-than-expected at 10.2 vs. 16.1 Dec and 8.0 forecast. Current situation improved to 59.7 vs. 55.0 Dec and 53.1 anticipated. Inflation expectations slipped to 39.7 vs. 56.5 Dec.
* Euro-zone ZEW Survey Expectations, Jan - declined to 22.7 vs. 33.9 Dec. Inflation expectations dropped to an 11-month low as 38.4 vs. 52.7 prior.
* Euro-zone CPI MoM, Dec - unchanged vs. -0.1% Nov and 0.0% consensus. YoY levels unrevised with core at +0.9% and headline +0.2%.
* UK CPI MoM, Dec - higher-than-expected at +0.1% vs. 0.0% Nov and 0.0% forecast. YoY gained in-line with expectations to +0.2% vs. +0.1% Nov. Core-CPI YoY increased to +1.4% vs. +1.2% prior and expected.
* UK PPI Output MoM, Dec - dropped -0.2% vs. -0.2% Nov and -0.2% consensus. YoY level came in at -1.2% vs. -1.5% Nov - as expected.
* UK ONS House Prices, Nov - improved +7.7% YoY vs. +7.0% Oct.
* Japanese Tertiary Industry Index, Nov - weaker-than-expected at -0.8% MoM vs. +0.7% Oct and -0.7% forecast.
* Sanctions lifted against Iran’s oil exports and non-US destinations are no permitted.

OVERNIGHT FLOWS: Treasuries were under modest pressure overnight as the safe-haven flows reversed with stocks and oil performing well. Overnight volumes were elevated with cash trading at 123% of the 10-day moving-average while TY came in at 197% of the norm. 5s were the most active issue, taking a 34% marketshare while 10s managed 29%. 2s and 3s combined to take 17% at 7% and 10%, respectively. 7s were elevated at 13%, while the long-bond also took an above-average 8%.

We’ve heard of real money selling in 5s vs. buying in 10s with little else of note.

IMPENDING EVENTS:
* NAHB Housing Market Index, Jan - expected 61 vs. 61 prior
* Net Long-term TIC Flows, Nov - seen vs. -$16.6 bn prior.

[Lazamataz]

I am so screwed.