Estimates of US GDP growth for 2014’s fourth quarter have been rising in recent months, but the current outlook still anticipates a substantial slowdown from Q3’s strong advance. The economy is projected to increase 3.6% in Q4 (real seasonally adjusted rate), based on The Capital Spectator’s new median point forecast for several econometric estimates. That’s a solid rate of growth, but the latest outlook still represents a substantially lesser pace vs. the 5.0% increase previously reported for Q3.
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● Doubts grow about mid-year rate hike, but Fed won’t express any | MarketWatch
● U.K. GDP Growth Moderates In Q4 | RTT
● Greece debt repayment in full is ‘unrealistic’, says Syriza | BBC
● Market reaction muted after S&P drops Russia to ‘junk’ | Reuters
● China 2014 factory profit growth hits two-year low | Reuters
● Texas factory activity flat in Jan., Dallas Fed survey shows | El Paso Times

Traders and investors tend to operate in parallel universes, using different analytical toolkits and looking at markets from radically different perspectives. But sometimes there’s common ground. David Varadi’s recent investigation of what he calls error-adjusted momentum (EAM) to normalize returns by way of volatility is an example. Although he’s focused on developing short-term trading signals, EAM serves double duty as a risk measure for monitoring the potential for severe market corrections. That’s of interest to traders, of course, but it’s a topic of import for long-term investors as well. As such, this signal potentially offers valuable intelligence for managing asset allocation over a medium- to long-term horizon via looking for productive times for rebalancing.
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● Greece Chooses Anti-Austerity Party in Major Shift | NY Times
● Freddie Mac: US 30-yr mortgage rate hits 20-month Low | SelectedLoans
● NABE Survey: US firms plant to raise wages | Reuters
● Ifo: German Jan Business Sentiment Higher Than Expected | RTT
● BOE Forbes: UK Rates Could Rise Sooner Than Currently Thought | MNI
● What’s driving the price of oil down? | Econobrowser

● American Insecurity: Why Our Economic Fears Lead to Political Inaction
By Adam Seth Levine
Summary via publisher (Princeton University Press)
Americans today face no shortage of threats to their financial well-being, such as job and retirement insecurity, health care costs, and spiraling college tuition. While one might expect that these concerns would motivate people to become more politically engaged on the issues, this often doesn’t happen, and the resulting inaction carries consequences for political debates and public policy. Moving beyond previously studied barriers to political organization, American Insecurity sheds light on the public’s inaction over economic insecurities by showing that the rhetoric surrounding these issues is actually self-undermining. By their nature, the very arguments intended to mobilize individuals—asking them to devote money or time to politics—remind citizens of their economic fears and personal constraints, leading to undermobilization and nonparticipation.
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Earning a respectable investment is hard. Holding it on to it is even harder, according to a variety of studies over the years that have analyzed the portfolios that investor build and own. The news is at once disturbing and baffling. Disturbing because a large population of individuals have earned painfully low returns over long stretches of time; baffling because the solution to climbing out of the performance hole is ridiculously easy… in theory.
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● ECB unveils massive QE boost for eurozone | BBC
● US Jobless claims off 7-month high, but oil layoffs a concern | CSN
● Oil jumps as Saudi king’s death feeds market uncertainty | Reuters
● U.S. Fears Chaos as Government of Yemen Falls | NY Times
● PMI: Eurozone Private Sector Growth Accelerates In January | RTT
● PMI: German private sector expands faster in January | Reuters

The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to decelerate to a +0.23 reading in the December update that’s scheduled for release tomorrow (Jan. 23), based on The Capital Spectator’s median point forecast for several econometric estimates. The projection is moderately below the +0.48 reading for November, which reflected a strong above-average pace of economic growth for the US relative to the historical trend. Only negative values below -0.70 indicate an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Using today’s estimate for December as a guide, CFNAI’s three-month average is expected to remain at a level that’s historically associated with growth at an above-trend pace.
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Global economic growth continued to decelerate through December, according to business survey data, but there are few signs at the moment that the offshore slowdown is threatening the US macro trend. A diversified set of indicators shows that macro momentum remained solidly positive through the end of 2014. It’s naïve to think that the US can remain insulated from foreign turbulence if conditions deteriorate further in Europe and elsewhere. But analyzing the latest figures suggests that the potential for trouble in the US is minimal for the immediate future thanks to an acceleration in the pace of the expansion in recent months.
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● Suspense builds as ECB prepares to unveil QE | Reuters
● Why Mario Draghi and the ECB could disappoint | Marketwatch
● What to Expect From the ECB’s Stimulus Efforts | NY Times
● One-Family Home Gain Brightens U.S. Housing Outlook | Bloomberg
● Can U.S. Stocks Stay Hot As Global Markets Lag? | Barron’s
● Bank of Canada Shocks With Rate Cut “Insurance” Against Oil Slump | WSJ