Recap 1-14-14


GS did a great piece on the persistence of GDP and employment growth across US states, with some clear implications for the Eurozone. The scatter charts below show GDP and employment growth rate of the US states from 1978-1995 vs 1995-2012. The persistence is fairly strong, and suggests that even in a somewhat homogenized country like the US, GDP and employment momentum tends to persist. The implication, of course, is that the intra-EU growth equalization trend has some high hurdles.


  • US Retail Sales rose 0.2% MoM vs 0.1% exp and 0.7% prev, although that was revised lower to 0.4%. The Control Group figure was roughly inline after adjusting for the revision.
  • Japan Eco Watchers Survey improved to 55.7 vs 54 exp and 53.5 prev
  • JPM posted $1.40 in EPS versus $1.37 expected. Revenue of $24.11bn was close to $24.08bn expected. They paid roughly $20bn over the last 12 months to resolve government investigations and it continues to act as a drag on earnings. GS: Credit continues to drive bottom line, as JPM’s provision ($104mn) continued to come down ($0.10 versus our estimate). Given the continued improvement in underlying credit trends, outsized reserve releases appear sustainable into 2014, which should support consensus estimates.
  • WFC reported 4Q13 EPS of $1.00, which we estimate as $0.95 on a “core” basis (ex MSR gain and a slightly lower tax rate) vs. consensus of $0.99. We view core results as mixed, with strong loan and deposit growth partly offset by 12bp of NIM pressure. WFC outperformed industry data as loan growth was 7% annualized qoq driven by strong growth in C&I (+11% annualized). Deposit growth was even stronger, up 14% qoq annualized. Mortgage originations of $50bn were down 38% QoQ (relatively in line with our expectations as the pipeline was down 44% last quarter). With the pipeline down another 29% in 4Q, originations could see further pressure from here. -GS
  • US House and Senate negotiators said yesterday that they have agreed to a $1 trillion spending deal that will fund the government through September 30th.
  • The ECB’s Lautenschlaeger said the ECB should exit some measures as soon as possible. Low interest rates are not without risks in the long run.
  • Japan’s November current account logged a record deficit of JPY 592.8bn, far higher than the consensus forecast of JPY 380.4bn due to a larger than expected increase in imports. The trade deficit widened to 1.25 trillion from 1.0941tn. Economy Minister Akira Amari said, “We have to take this problem seriously and solve the underlying causes… Japan would have to depend on foreign investment to finance its budget shortfall if it allows its current-account balance to remain in deficit.”
  • South Korea’s trade ministry said the government will act if needed to stabilize the currency market to help businesses cope with the weak yen.
  • FRBSL: The decline in Average Hours worked per employed (with only a small contribution from lower employment) was largest driver of weak Japanese growth over the past 2 decades. h/t TBP

Upcoming Data:

  • Wed: Empire Mfg, Core PPI, UK RICS House Price balance, Australia Employment
  • Thu: US CPI, Jobless Claims, Philly Fed, NAHB Housing Market Index, Bernanke Speaks
  • Fri: UK Retail Sales, US Housing Starts, UMichigan Confidience
  • Mon: China Data,
  • Tue: German ZEW, Australia CPI