Ready For Inflation Scare?

While the economists are rather cool about the Eurozone, where Commerzbank expects the headline inflation to top out by March, the US psycho may be less robust due to QEasing. Albert Edwards from Societe Generale expects the major American overreaction.

Click on charts to enlarge, courtesy of Commerzbank.

Food Retail Price Structure

There are quite a lot of discussions around the food inflation and monetary policy these days, mainly due to tail risks, like this. However, it is interesting to see how much "Farm value" is in the food retail price, see below the estimate version by Barclays Capital.

Click on chart to enlarge, courtesy of Barclays Capital.

"Giddy Euphoria About The Swedish Economy" And Household Dreams In Debts

Of course, I did not know yesterday that SEB is going to publish their Nordic Outlook today. As I have spent some posts recently and some time earlier too, I thought it is worth to refresh the Swedish dreams in debt.

The economists at SEB write today:

Looking a bit ahead, the rapid upturn in home prices and household debt in recent years constitutes the biggest risk in the Swedish economy. After a brief slowdown in 2008, household borrowing has accelerated and debt is now close to 180 per cent of disposable income, a high level in an international comparison. Meanwhile home prices have continued climbing in a way that diverges sharply from trends in other countries.


In the latest issues of Nordic Outlook, we have discussed these risks in detail. There are several factors underlying current developments, for example structurally low home construction, exceptionally low mortgage interest rates and strong growth in employment and income. Meanwhile, international experience indicates that as a rule, a debt expansion as rapid as that occurring in Sweden is followed by a significant correction.

Click on chart to enlarge, courtesy of SEB.

So much for giddy euphoria...

Vikings See Different Stock Stories

Relative value gaming? Is it obvious that S&P500 is by far more stretched than Nikkei 225?

Click on chart to enlarge, courtesy of SEB.

So far any correction appears like a wishful thinking, when everyone waits for it and is ready to buy the dip.

Noise Around The US Debt Ceiling

Fear mongering tactics by Ben Bernanke of default is noise and, probably, should be rather assumed as detraction, if history of debt ceiling crisis of 1995-96 is any guide.

Click on chart to enlarge, courtesy of Societe Generale.

Inflation Scare Of The Day

From Dow Jones Newswires today:

*DJ US 4Q Unit Labor Costs -0.6%; Consensus +0.1%

Well, there are risks of honest hedonics in statistics ...

Some additional explanations, from Global Data Watch Handbook by J.P.Morgan:

... Unit labor cost is equal to total labor costs (wages and benefits) divided by total output. (Or, equivalently, labor cost per hour divided by output per hour.) Consequently, unit labor cost depends on both productivity and compensation: the rate of increase in unit labor cost is approximately the rate of increase in compensation minus the rate of increase in productivity. For instance, if labor cost inflation is 4% and productivity growth is 1%, unit labor cost inflation is 3%.

Productivity growth outpaces compensation ... errr.

My Language

PIMCO's Gross "speaks my language", go and read the Devil's Bargain.

Update By Japanese Candlestick Masters

Japanese candlestick masters have been expecting a correction for some time now, but that never happened and feels like impossible.

Click on chart to enlarge, courtesy of Nomura.

North Africa Contagion Risk

Analysts at BNP Paribas believe:

 ... countries that are most likely to be affected by the current turbulent political environment are those who show the weaker combination of some crucial economic indicators, particularly higher inflation rates, lower per-capita income and higher youth unemployment. 

Click on charts to enlarge, courtesy of BNP Paribas.

Where the youth unemployment is a problem?

Baltic Depression Update By Danske Markets

Look at Danske Markets: Presentation - Baltic outlook: Markets continue to recover.