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Anecdotes as signposts

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  • The US consumer has been discovered alive and well, and livening in a shopping mall somewhere around Idaho. US retail ale showed a decent level of underlying consumer demand, giving upside risks to GDP at the end of 2013 and creating some positive momentum into 2014.
  • Today we get the Beige Book from the Federal Reserve, which will provide important anecdotal evidence on the health of the US economy. In particular the extent to which labour market weakness can be attributed to seasonal weather distortions, and the level of credit creation will be important.
  • Hollande of France gave his much anticipated economic speech, and talked about greater cooperation with Germany. If that actually bears fruit it could be important for the Euro, as the Franco-German rift has been something of an obstacle to attempts to create a better functioning monetary union.
  • Spanish inflation is expected to come in with a reading of zero. While Euro wide deflation is not a concern, investors are worried about deflation risks in part of the Euro area. One challenge in a low inflation environment is engineering the nominal GDP that allows an economy to escape debt.

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