● Fed’s labor-markets conditions index climbs in December | MarketWatch
● The Conference Board Employment Trends Index Increases in December | CB
● Fed’s Lockhart sees strong U.S. growth, rate hike in mid-2015 | Reuters
● China exports surge, but policy easing still needed | CNBC
● UK inflation rate falls to 0.5% in December | BBC
● Italy Output Rises More Than Expected Boosting Recovery Optimism | Bloomberg
● Russia faces wave of bankruptcies if interest rates don’t fall | CNN

The Eurozone economy seems to be slipping ever so slowly into a deflationary trap, which means that the European Central Bank (ECB) needs to react. The crowd’s expecting no less via a formal announcement later this month from the ECB. But the political pressure in Europe (primarily due to Germany’s hefty influence on monetary matters) suggests that a new phase of stimulus may be dead on arrival. As such, the global economy may be facing stronger headwinds this year if Europe’s malaise deepens.
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A markets-based estimate of US macro conditions has endured a volatile period in recent months, but the outlook remains positive in the new year. The Macro-Markets Risk Index (MMRI) closed at +7.2% on Friday (Jan. 9). The benchmark’s ongoing persistence above zero implies that business cycle risk remains low. A decline below 0% in MMRI would indicate that recession risk is elevated; readings above 0% imply that the economy will expand in the near-term future.
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● European Central Bank Policy Makers Divided on Bond Purchases | NY Times
● Germany-ECB dispute intensifies, court to weigh in this week | Nat’l Monitor
● Global markets hang on Germany’s next move | Telegraph
● Oil prices extend falls; Goldman Sachs slashes forecasts | Reuters
● Bank of France Keeps Q4 French GDP Growth Forecast at 0.1% | MNI
● Japan Raises FY 2015 GDP Forecast | RTT

● The Change Book: How Things Happen
by Mikael Krogerus and Roman Tschäppeler
Summary via publisher (W.W. Norton)
From business cycles to budding trends, models make sense of a world that never stops spinning. The Change Book delivers 52 simple and effective models—each with a visual component—about how change happens. Drawing on myth-busting theories and breakthrough discoveries from thinkers of all stripes, Mikael Krogerus and Roman Tschäppeler, authors of the international bestseller The Decision Book, apply their characteristic wit and knack for the succinct to show what fuels the internet, why empires rise and fall, and why change hurts—but ultimately helps us grow.
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The US labor market posted another healthy increase last month, the government reports. Private-sector payrolls increased 240,000, a bit more than economists were forecasting (but slightly below The Capital Spectator’s median prediction). Although December’s advance was well below November’s increase (+345,000 for the private sector), today’s release still looks encouraging. Indeed, when you strip out the monthly noise and focus on the year-over-year change for private payrolls, the numbers look quite cheery. Indeed, the labor market last month grew at the fastest pace (+2.48%) in nearly two years, based on annual growth in workers at US companies.
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It may be a trap, but the recent slide in US Treasury yields and the market’s implied inflation forecast could be a blessing that helps unleash a stronger cycle of growth. The critical factor, of course, is the strength of the US economy. So far, so good. The macro trend for the US has improved lately, and there are few signals that suggest that the positive bias is about to deteriorate. The Labor Department’s employment report that’s due out later this morning is widely expected to provide a new round of data that supports the case for optimism. If so, the US economy appears to be headed for a sweet spot: stronger growth and low/falling interest rates and inflation.
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● US jobless claims dip; 2014 layoffs lowest in 17 years | Reuters
● US Consumer Confidence Rising as Job Market Strengthens | Bloomberg
● Germany Industrial Production Drops Unexpectedly In November | MNI
● UK Industrial Output Falls Marginally In November | RTT
● China’s December inflation rate rises to 1.5%, near 5-year low | BBC
● Japan Survey: Nov Machine Orders +4.6%, 1st Rise in 2 Months | MNI
● Bank of England keeps rates at 0.5%; ECB eyed | CNBC

Private nonfarm payrolls in the US are projected to increase by 247,000 (seasonally adjusted) in tomorrow’s December update from the Labor Department, based on The Capital Spectator’s median point forecast for several econometric estimates. The monthly prediction reflects a substantial deceleration in growth vs. November’s 314,000 gain.
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Utility sector stocks don’t usually excite the crowd, but this corner of the US equity market has shed its dull image lately. Traditionally seen as a safe haven within the broad market, shares of electric and gas utility companies are performing like growth stocks these days.
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