I am looking forward to an exciting day today with loads of numbers and then the FOMC meeting as a fine finish.

Just to mention the positive Japanese stocks this morning. The banking sector went up as it seems likely that the tougher capital rules will be delayed. The Japanese banks will probably get 10 years to adopt the new rules. Short term, it of course helps the profitability in the banking sector and give some relief (also the reason for the delay I assume). One of the reasons to tighten the rules was to protect the investor, but to give a 10 years deadline is equal to cancel them. Within the next 10 we will have had another crisis again, but fewer banks than today would then need to care about the new rules. So, no reason to fill up your stock accounts with Japanese banks……

The Dec PMI’s from Europe this morning should keep us occupied for a moment while waiting on US. The market expects the readings to be a touch higher (PMI Manufacturing at 51,4 and service at 53,1). I could see the numbers slightly lower. If they are around the expected I do not see it as positive enough to help stocks today, so I go for a minus until US opens.

US will offer several really interesting data. The last days inflation has gained attention, fair enough, as especially food inflation is jumping (watch India and China). Right now I am not scared about inflation on a global perspective (more on that particularly in the New Year), but the market talks, so I am more alert. The headline inflation in November is expected to be +0,4%, that will be in focus with a clear upside risk due to food, a risk for stocks.

Fundamentally I regard housing starts as the true number to watch, the market expects 575k in November compared to 529k last month. It’s very important to see if the US housing is finding more stability. If so, I might need to adjust my skeptical picture of the world…..A good number will help stocks and vice versa.

Bernanke’s words tonight we will all listen very carefully to, but he will tell us that the world has improved a bit again. He might also hint a rate hike one day, but what else can he do – they are at zero. It’s priced in the market but could give a short term reaction. No doubt that the statement is interesting because this is the main focus in the market this week.

The Dollar has already reacted too much on this. But if we look at the trading volume, then it is low in a December trading that reminds me of the good old days where nobody touched a position if they could avoid it. EUR/USD will trade towards 1,4750 again the coming days.

Peter

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