Much needed weekend…
Rail traffic weekly: Stable growth despite bad 2013 calendar | Association of American Railroads (AAR)
Carloads -7.3% and Intermodal +5.9 (cumulative ytd volume y/y); -3.5% and +13.5 respectively (vs. this week last year).
9 of 20 carload groups posted gains: Petroleum products +60.9%, motor vehicles +19.1 & lumber +15.8; forestry -20.9%, iron/steel scrap -17.7 & nonmetallic minerals -16.9.
[With New Years during the work week & no Leap Year in 2013, y/y comparisons may look weak throughout 1q.]
Shale bonanza reaches Australia with $20T discovery | Business Insider
Linc Energy discovered estimated 3.5-233B barrels ($450B-30T) of shale oil in its Arckaringa basin, which would give Australia energy independence again.
Video: “The Untouchables” | Frontline (PBS)
Documentary investigates why Wall Street executives & other leaders weren’t prosecuted for fraud relating to the sale of bad mortgages.
Quantitative study: S&P 500 returns after making new high | Woodshedder (iBankCoin)
Using historical data from 1928-2012, charts the return for various holding periods after buying SPX upon its 1276 day high vs. average buy & hold period. 39 samples show that the 1st week after the high is unprofitable; 1st month is profitable but underperforms average market; sweet spots are 5-7 months & 9+ months out.
BoJ disappoints: Governor Shirakawa, PM Abe raise inflation target, but footnotes underwhelm | The Big Picture
Japanese inflation target raised to 2% (as expected) & new ¥13T/month open-ended QE announced (also expected), but won’t begin until 1/2014–succeeding current ¥101T programme.
That monetary stimulus will be dampened by fiscal contraction, like the government’s goals of both lowering bond issuance to under ¥44T in 2013 & halving primary deficit by 2015.
[$USDJPY -1% after initial rally.]
Population demographics & economics: The “age timebomb” | Fitch
Developed markets’ aging will exacerbate indebtedness & could hurt credit ratings unless governments enact labor/pension reforms. Europe particularly at risk, but recent reforms in Greece/Italy/Portugal have neutralized long term effects.
Model forecasts median budget deficit +0.6% of GDP by 2020, +4.9% by 2050.
Italy’s economic appraisal: Post-Eurocrisis checkup | MacroBusiness
Italian industrial production -6.6% ytd in November, -7.6% y/y & -1% m/m. Bank of Italy revised 2013 GDP growth forecast down from -0.2% to -1.0; 2014 forecast +0.7%; warn that 2012 was around -2.1%.
Italy will likely face a €9B budget deficit in 2013, despite a record €2.66B trade surplus in 2012.
Around the world in 22 charts: US, Eurozone, Japan & China | Sean Corrigan (Diapason)
US technicals & fundamentals deteriorating; EZ macro data haven’t improved & Germany/France/UK being dragged down; sovereign bond technicals show end to 30 year bull run in USTs & JGBs.
Chinese government spending +34% (annualized) in 4q12 after a flat 3q, accounting for 72% of domestic credit creation; capital efficiency is declining, as 2012 took 3 RMB of new credit to yield 1 RMB in incremental GDP (vs. 1.76/1 in 2011).