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The ever humble Barack Obama has just wrapped up yet another “exit interview,” this time with democratic political operative David Axelrod, in which he effectively throws the entire Hillary team under the bus for not connecting with voters while declaring that he would have beaten Donald Trump.

While recognizing that “a lot of people” now think that his whole “Hope & Change” mantra was nothing more than “a fantasy,” Obama said he was confident he could have “mobilized a majority of Americans” where Hillary failed because he is better able to articulate the message of “Hope.” The full interview with Axelrod can be heard on CNN.

“In the wake of the election and Trump winning, a lot of people have suggested that somehow, it really was a fantasy,” Obama said of the hope-and-change vision he heralded in 2008. “What I would argue is, is that the culture actually did shift, that the majority does buy into the notion of a one America that is tolerant and diverse and open and full of energy and dynamism.”

 

“I am confident in this vision because I’m confident that if I had run again and articulated it, I think I could’ve mobilized a majority of the American people to rally behind it,” Obama told his former senior adviser David Axelrod in an interview for the “The Axe Files” podcast, produced by the University of Chicago Institute of Politics and CNN.

Somehow Obama still seems to be convinced that the American people are simply longing for a few more eloquent speeches from polished politicians rather than actual change in Washington.  That said, for some reason we doubt voters chose Trump for his “eloquence”…big league.

Not satisfied with simply reminding us once again that he would have beaten Trump, Obama also decided to take a few more parting shots at Hillary by basically describing her as lazy, complacent, boring and arrogant…not in those exact word, of course.

“If you think you’re winning, then you have a tendency, just like in sports, maybe to play it safer,” he said, adding later he believed Clinton “performed wonderfully under really tough circumstances” and was mistreated by the media.

 

“We’re not there on the ground communicating not only the dry policy aspects of this, but that we care about these communities, that we’re bleeding for these communities,” he said. “It means caring about local races, state boards or school boards and city councils and state legislative races and not thinking that somehow, just a great set of progressive policies that we present to the New York Times editorial board will win the day.”

Meanwhile, Obama also reminded us that he’ll use his retirement to recruit and develop “young Democratic leaders” including organizers, journalists and politicians and that, unlike previous presidents, he plans to be vocal in his opposition to Trump’s policies.

He said part of his post-presidential strategy would be developing young Democratic leaders — including organizers, journalists and politicians — who could galvanize voters behind a progressive agenda. He won’t hesitate to weigh in on important political debates after he leaves office, he told Axelrod.

 

Following a period of introspection after he departs the White House, Obama said he would feel a responsibility as a citizen to voice his opinions on major issues gripping the country during Trump’s administration though he would not necessarily weigh in on day-to-day activities.

 

“At a certain point, you make room for new voices and fresh legs,” Obama said.

 

“That doesn’t mean that if a year from now, or a year-and-a-half from now, or two years from now, there is an issue of such moment, such import, that isn’t just a debate about a particular tax bill or, you know, a particular policy, but goes to some foundational issues about our democracy that I might not weigh in,” Obama went on. “You know, I’m still a citizen and that carries with it duties and obligations.”

 

Obama’s first acts out of office, however, will be lower-profile. He said he’ll focus on writing a book and self-analyzing his time in office. Obama and his family plan to live in Washington while his younger daughter finishes high school.

 

“I have to be quiet for a while. And I don’t mean politically, I mean internally. I have to still myself,” he said. “You have to get back in tune with your center and process what’s happened before you make a bunch of good decisions.”

While we’re happy to see that Obama has de-emphasized the “Russian hacking” narrative in his official talking points, we continue to be stunned by his blissful ignorance to the true underlying causes of Hillary’s loss.

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Submitted by Michael Shedlock via MishTalk.com,

Most state boundaries were drawn during the 17^th to 19^th centuries. Many of the decisions were arbitrary or political. What might a map of the United States look like if we started fresh today?

Please consider What the U.S. Map Should Really Look Like.

State boundaries matter for all sorts of reasons. The state you live in determined how much your vote counted in the 2016 election. It shapes what kind of benefits your employer might offer you, what taxes you pay, what kind of schools you can attend, and much more.

 

And yet, most state boundaries were drawn during the 17th to 19th centuries, says Garrett Nelson, a historical geographer at Dartmouth College. “Why should we think that areas which were drawn up for horses and buggies still make sense for interstates and telecommuting?”

 

Nelson, along with Alasdair Rae of the University of Sheffield, has published new research in the journal PLOS ONE that shows how we might redraw state lines today, if given the opportunity. Their insights have profound implications for how business and political leaders can better organize as a region to work toward policies and projects that help their communities, as well as how Americans should think about the rural-urban divide following the 2016 election.

 

In the study, the researchers used algorithms to analyze data on the commuting paths of more than 4 million Americans from the U.S. Census. They then created maps of what they call economic “mega-regions” — cities, satellite cities, towns and suburbs that are woven together into the communities where Americans live, work and spend their free time. The researchers argue that these, rather than the current states, are the real units that make up the U.S. economy.

 

In the map below, each “mega-region” is labeled with a different color. All have one or more cities at their centers — the blue area is centered around Chicago, for example, while the forest green stretch encompasses Baltimore and Washington, D.C.

To map out these mega-regions, the researchers used the volume of commuter flow between locations as a proxy for the economic connection between two areas.

 

The researchers then used an algorithm to identify the best boundaries to 50 economic communities. That’s how they created the map below, showing what our 50 states might look like if they were redrawn today based on economic connections:

The researchers say the maps offer a different perspective on the U.S. than the one many people have adopted since the election. The election gave a picture of a country that is starkly divided into urban and rural areas. Yet these maps show that most parts of the country are actually economically well-integrated, Nelson says.

 

“The reality is that cities, suburbs, exurbs, and rural areas are all extensively connected to one another — not only by commuter traffic, but by all sorts of economic and social connections. While a voter in downtown Boston and a voter in rural Maine might not feel like they have very much in common, our research suggests that they are actually part of an interlocking regional system,” he says.

These maps are not only interesting, but the new divisions seem realistic. Would that have affected the election?

One thing is for sure: Such a map would have changed Trump’s campaign strategy.

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With January just around the corner, the world’s billionaires, CEOs, politicians and oligarchs prepare to take their private planes to Davos, Switzerland for their annual convocation at the World Economic Forum, where they discuss such diverse topics as global warming due to greenhouse gases (which exempts Gulfstream jets) and the dangers of record wealth inequality (which exempts them), while snacking on $39 hot dogs and $50 Caesar salads.

All in a day’s work for a billionaire, surrounded by fawning members of the press who “surprisingly” never ask any probing questions due to concerns they may get uninivted to the DJ party du jour, or worse, lose access to their favorite oligarch, and be forced to do real journalism instead of promotional PR.

This year, however, things will be slightly different because according to the Daily Mail, the annual junket has become so popular for the world’s elite that the Swiss ski resort is running out of accommodation, and as a result the unfortunate staff at the World Economic Forum could see a different side to Davos at its conference for the super-rich.

The 2017 event sold out within days, and for 2018 it is thought there just won’t be enough hotel rooms to go round.

The 2017 event at the Ski resort of Davos sold out within days

As a result the organisers of the conference which every January attracts the world’s top politicians, CEOS and billionaires to discuss the state of the world economy, are taking desperate measures by putting people up in shipping containers in car parks. 

 But as the meetings have grown in popularity, an ever-expanding guest list has forced even the best- connected attendees to fight for somewhere to stay.

Around 11,000 visitors are expected in 2017, including 2,500 official guests along with their retinues, the media and other hangers-on.

The WEF was unable to find rooms for its 500 employees by the end of November, and although it has now secured beds for all of them, it is looking for another solution for future years.

Quoted by the Mail, spokesman Yann Zopf said: ‘We are facing more and more people every year.

‘We’ll manage for 2017, but we need to think longer term.’

We wonder if this means that on the agenda of 2017 topics there will be a panel led by Blackstone’s  Steve Schwarzman titled “deplorable living conditions for the deplorables… and how to profit.”

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One year ago, the airplane market was spooked by reports of “market tests” for Boeing 777 plane prices, when according to the CEO of Delta the company had acquired a used 777s for a paltry $8 million, a 97% discount from new Boeing 777-ER prices!

Prior to this report, in October, Delta CEO Dennis Muilenburg  raised more eyebrows when he said there was a “huge bubble” in used widebody aircraft, and that as a result the market was “ripe” for Delta to  buy used 777s, as he subsequently did for an unprecedented 97% price reduction.

CEO: I was wrong when I said used 777s were on market for $10M. It was actually $7.7M. We just signed a letter of intent to buy one.

— Delta News Hub (@DeltaNewsHub) December 17, 2015

Boeing’s late December decision to cut production of its 777 long-haul jet due to a drop in demand, confirmed that behind the stable industry facade, the underlying economics are far worse than most suspect, and that prices were set to plunge absent implicit government subsidies. Furthermore, with the Ex-Im bank subsidizing Boeing’s new plane purchases, it was next to impossible to obtain a clean “market test” for new Boeing airplanes.

Then, over the weekend, we got a glimpse into the real “price” of airplanes, when Iran said on Sunday it had negotiated to pay only about half the announced price for 80 new Boeing airliners in an order that Boeing had previously said was worth $16.6 billion. The sale includes 50 twin-jet, narrow-body 737 planes and 30 long-range, wide-body 777 aircraft. The first airplanes are scheduled for delivery in 2018, with the entire order being fulfilled over 10 years.

“Boeing has announced that its IranAir contract is worth $16.6 billion. However, considering the nature of our order and its choice possibilities, the purchase contract for 80 Boeing aircraft is worth about 50 percent of that amount,” said Deputy Transport Minister Asghar Fakhrieh-Kashan, quoted by Iran’s IRNA state news agency.

Then there is the question of how much funding the Ex-Im bank may have provided to Iran: when all is said and done, it is possible that the Persian nation ended up paying nothing out of pocket, and merely funded its purchase of Boeing airplanes with a generous loan from Uncle Sam.

As part of Iran’s return to a post-sanctions world, Boeing and Airbus both signed huge contracts this month to supply airliners to Iran, the first such deals since international sanctions were lifted under a deal to curb Tehran’s nuclear program.

Iran’s recent return on good terms with the US has meant few have benefited as much as Boeing. as replacing the Middle-eastern nation’s antiquated civil aviation fleet is one of the biggest economic opportunities of the 2015 accord to lift sanctions, negotiated President Barack Obama, who several years ago also imposed the same sanctions. Donald Trump has been a vocal critic of the pact, and his recent tweets have hardly benefited Boeing.

Even better news for Iran is that its need to replace its old planes comes at a time when Boeing, Airbus and smaller planemakers have all faced a downturn in orders, and are therefore expected to offer deep discounts, in this case roughly “half off” on new airplanes.

Meanwhile, Airbus’s contract to sell 100 jets to IranAir, signed last Thursday, would be worth $18-$20 billion at list prices, but the head of IranAir has been quoted as saying the value of the contract would not exceed $10 billion, again suggesting that the demand for new airplanes across the world has collapsed if the world’s two major aircraft producers are willing to offer half off terms to any marginal buyer.

The government of President Hassan Rouhani, a pragmatist, has pushed to finalize aircraft deals to show results from the nuclear accord with world power to end sanctions; the smart move also makes it unlikely that Trump will be able to undo the sanctions once financing commitments are in place with the Iranian nation, the proud host of brand new Boeing and Airbus planes. Ironically Rouhani faces criticism at home from hardliners over the cost of the purchases which could well be zero.

According to Reuters, Fakhrieh-Kashan also said on Sunday that IranAir may exercise an option to buy 20 more aircraft from ATR, a European maker of regional turboprops, in addition to a planned firm order of 20. A team from the planemaker would arrive in Tehran next week for final talks. “The final round of talks will be held with ATR representatives (next) week and we expect the IranAir contract to be signed … in the following week,” he told IRNA. “The purchase of 20 planes has been finalised and Iran may buy 20 more planes,” said Fakhrieh-Kashan, adding that the contract for 20 planes was worth less than $500 million. It was not immediately clear if the sticker price for the order was $1 billion an higher.

Iran’s orders aside, with global demand for airplanes – pardon the pun – crashing, it is not clear how this core component of exportable US Durable Goods, and US GDP, will fare in a year when the USD is already soaring and set to hit US exports significantly. One thing we do know, however, is that if and when GDP prints soft in the next quarter or two, the “economists” will just blame the weather as they always do, or perhaps just blame Trump.

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In January of 2016, the Bundesbank announced that three years after commencing the transfer of some of its offshore-held gold from vaults located at the Banque de France in Paris and the NY Fed in New York, it had repatriated a total of 366.3 tonnes, bringing the German central bank’s gold reserves held in Frankfurt to 1,402 tonnes, or 41.5% of Germany’s total gold of 3,381 tonnes, for the first time greater than the 1.347 thousand tonnes located at the New York Fed, which as of January 27, 2016 held 39.9% of Germany’s official gold.

“With approximately 1,403 tonnes of gold, Frankfurt has been our largest storage location, ahead of New York, since the end of last year,” said Carl-Ludwig Thiele, Member of the Executive Board of the Deutsche Bundesbank. “The transfers are proceeding smoothly. We have succeeded in once again significantly increasing the transport volume compared with 2014. This means that operations are running very much according to schedule,” added Thiele last January.

As a reminder, according to its gold storage plan, unveiled in January 2013, the Bundesbank would store half of Germany’s gold reserves in its own vaults in Frankfurt am Main by 2020 which would  necessitate a transfer to Frankfurt of 300 tonnes of gold from New York and all 374 tonnes of gold from Paris. It also meant that as of January, another 111 tonnes of gold from the NY Fed and 196.4 tonnes of gold from Paris remained to be transfered.

The “politically correct” motives for the transfer, as well as the logistics and the mechanics behind it were explained in a March 2015 video released by the Bundesbank…

… the real reasons, however, is that following several reports on this website which cast doubts on Germany’s gold holdings, in late 2012 the German Court of Auditors demanded that the Bundesbank undertake an audit of its gold reserves. Specifically, the court wanted to ensure that the nearly 3400 tons of gold, of which more than 2,000 tonnes held offshore, is in fact in existence – ‘because stocks have never been checked for authenticity and weight’.  The move to repatriate was only accelerate following rumors that much of the offshore-held gold might have been “rehypothecated”, and not be there anymore, that it might have been melted down, leased, or sold.

Ironically, at the time, Bundesbank Board member Carl-Ludwig Thiele told the Handelsblatt that these moves were a “trust-building” measure, and he tried vigorously to put the rumors about the missing gold to rest. Of course, repatriating your gold from foreign central banks is precisely the opposite of a “demonstration of confidence.”

What made matters worse is that at the end of 2013,
the Bundesbank announced it had managed to repatriate only 37 tonnes of
the total 700 scheduled for redemption, further spooking the local
population and suggesting that conspiracy theories that the gold was
missing were in fact accurate.

As a result, following blowback from both the media and the public, the Bundesbank accelerated its activity, and repatriated 120 tonnes in 2014 and another 210 in 2015, further suggesting that the Bundesbank’s faith in its foreign central bank peers had declined in proportion to the following accelerated redemption schedule.

Then on Friday, Germany’s Bild reported that in 2016 the Bundesbank has repatriated more of its gold than planned, as it moves toward relocating half of the world’s second-largest reserve at home.

“We brought back significantly more gold to Germany in 2016 again than initially planned. By now, almost half of the gold reserves are in Germany,” the paper quoted Weidmann as saying in an article published on Saturday.

As Reuters added, in the wake of the European financial crisis, many ordinary Germans have demanded to see more of the 3,381 tonnes of gold in vaults at home. “Some had even questioned whether it still exists, prompting the Bundesbank to publish a long list of details on the gold holdings in 2015.”

According to Bild, around 1,600 tonnes of Germany’s gold reserves are now in the country, a figure set to rise to 1,700 tonnes by 2020.

This means that the Bundesbank repatriated roughly 200 tonnes of gold in 2016, comparable to the 210 tonnes its brought back to Frankfurt in 2015, and the total held domestically  amounts to 1,600 tonnes at the end of 2016, just shy of the 1,700 or so planned to be repatriated over the next three years.

Neither Bild, nor Weidmann, explained why after initially dragging its feet on gold relocation in 2013, over the past two years the German central bank has demonstrated a curious sense of urgency in repatriating its gold.  In any case, we are confident that the German population will be happy to learn that nearly half of its gold is now on domestic soil, just in time for the holidays.

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Two days after China demonstratively showed off a live-fire exercise involving its one and only aircraft carrier, the Liaoning, in the Yellow Sea, with the Defense Ministry hinting that the carrier would next sail to the South China Sea after announcing that “as a next step it will conduct scheduled cross-sea training and tests,” Beijing did just that and as Reuters reports, a group of Chinese warships led by the country’s sole aircraft carrier passed south of Taiwan on Monday, and entered the top half of the South China Sea, in what China has termed a routine exercise.

Taiwan’s Defense Ministry said the carrier, accompanied by five vessels, passed southeast of the Pratas Islands, which are controlled by Taiwan, heading southwest. The carrier group earlier passed 90 nautical miles south of Taiwan’s southernmost point via the Bashi Channel, between Taiwan and the Philippines. The Liaoning and five escorts sailed 20 nautical miles outside Taiwan’s air defence identification zone (ADIZ) in the Bashi Channel between Taiwan and the Philippines on Sunday, the defense ministry said.

“The military has been on guard and fully monitoring the Liaoning. We urge the public to rest assured,” the ministry said. Taiwanese media said an unspecified number of F-16 fighter jets and warships were deployed in Taiwan’s ADIZ to closely watch the Chinese warships. The ministry declined to comment. “Staying vigilant and flexible has always been the normal method of maintaining airspace security,” said ministry spokesman Chen Chung-chi, declining to say whether Taiwan fighter jets were scrambled or if submarines had been deployed. Chen said the ministry was continuing to “monitor and grasp the situation”.

Earlier that day, Japan’s defense ministry said that eight Chinese vessels, including the carrier and three destroyers, were spotted by one of its ships in the central part of the East China Sea on Saturday afternoon. Japan’s top government spokesman said on Monday the voyage showed China’s expanding military capability and Japan was closely monitoring it.

Cited by Reuters, Senior Taiwan opposition Nationalist lawmaker Johnny Chiang said the Liaoning exercise was China’s signal to the United States that it has broken through the “first island chain”, an area that includes Japan’s Ryukyu Islands and Taiwan.

Meanwhile, in Beijing, Chinese Foreign Ministry spokeswoman Hua Chunying said people should not read too much into what the carrier was up to, as its movements were within the law and that China hopes other nations can respect the right of planes from its Liaoning aircraft carrier to fly where international law permits.

“Our Liaoning should enjoy in accordance with the law freedom of navigation and overflight as set by international law, and we hope all sides can respect this right of China’s,” she told a daily news briefing.

Chinese media has reported that the aircraft carrier was headed for the Pacific on exercise for the first time, France24 reported. The navy drills are seen as a show of strength by Beijing at a time of rising tensions with Taiwan and the United States following a protocol-breaking telephone conversation between Taiwanese President Tsai Ing-wen and US President-elect Donald Trump.

It was the latest in a series of recent exercises staged by China, after its military aircraft passed near Taiwan on December 10 for the second time in a month.

The state-run tabloid, the Global Times, said the exercise showed how the carrier was improving its combat capabilities and that it should now sail even further afield, going so far as warning that the “Chinese fleet would cruise to the Eastern Pacific sooner or later”, i.e., directly threatening the US zone of influence. To wit:

The Chinese fleet will cruise to the Eastern Pacific sooner or later. When China’s aircraft carrier fleet appears in offshore areas of the US one day, it will trigger intense thinking about maritime rules.

 

The distant sailing of the Chinese aircraft carrier fleet is not aimed at provoking the US nor at reshaping maritime strategic structure. But if the fleet is able to enter areas where the US has core interests, the situation when the US unilaterally imposes pressure on China will change.

 

China should speed up launching its new aircraft carriers so as to activate their combat.

Additionally, the Global Times warned that “in addition, China needs to think about setting up navy supply points in South America right now.” One wonders how the US will respond once Beijing has opened its own port in Venezuela, or some other Latin American country within striking distance of the US, in exchange for “loan forgiveness.”

The Global Times article closed off with the traditional jingoist propaganda: “Chinese people love peace, but the Chinese military must be resolute. China will not be easily irritated, but once it is, it will take firm countermeasures. The Liaoning and its fleet is expected to experience the cruel geopolitical competition and become a standard bearer of the Chinese navy.”

China’s anger had been provoked recently by U.S. naval patrols near islands that China claims in the South China Sea. This month, a Chinese navy ship seized a U.S. underwater drone in the South China Sea. China later returned it. The country’s air force conducted long-range drills this month above the East and South China Seas that rattled Japan and Taiwan; Beijing said those exercises were also “routine.”

Beijing could build multiple aircraft carriers over the next 15 years, the Pentagon said in a report last year; last December, the defense ministry confirmed China was building a second aircraft carrier but its launch date is unclear. The aircraft carrier program is a state secret. One thing is clear: if China indeed intends to engage the US, it will need to dramatically update and overhaul its existing carrier fleet (of one), which is based on an old Ukrainian carrier hull acquired years ago and refurbished mostly for symbolic purposes.

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With most global market closed for Christmas holiday, and traders taking the day and the week off, global stocks traded mixed in thin, subdued conditions as the dollar dipped against the yen, with the USDJPY sliding for a fourth straight day to 117, while the EUR was flat at 1.0450, taking stock of the US 10Y yield which closed lower on Friday.

The Tokyo Topix index slipped 0.4% on trading volumes 40% below the 30-day average, while the Nikkei225 dipped 0.16% to 19,397. The Shanghai Composite Index erased a drop of as much as 1.3%, which had dragged it to the lowest level since October, closing 0.4% higher at 3,123 with construction stocks rebounding after the government said it aims to invest 1.8 trillion yuan in highways and waterways next year. Despite the rebound in stock, Chinese commodity futures tumbled, with coking coal closing 6.4% lower, coke lost near 6%, rubber and lead fell 5.1%, steel rebar down 3%. Adding to the concerns, Chinese liquidity continued to tighten, with Shibor mostly higher across the board, and the benchmark 3M SHIBOR higher for the 38th consecutive day.

India’s Sensex Index resumed its decline, falling to the lowest in more than a month.

“There are technical indicators flashing certain signs, but there aren’t any events left this year, and I see 2016 ending with little disturbance, and small moves,” Seiji Iwama, a fund manager with Daiwa SB Investments Ltd. in Tokyo told Bloomberg.

Treasury yields pulled back further from 27-month highs hit in mid December following Friday’s release of U.S. economic indicators that included strong housing and consumer confidence data but also numbers that pointed to slower household income. Of note: rising concern about Trump’s policies, which threatens the euphoria-driven rally since the election, once trading resumes in earnest.

“The currency market is likely to lack incentives as major markets in Asia, Europe and North America will be closed. That said, dollar/yen risks drifting below 117 on caution toward the Trump administration’s protectionist policies,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo. Last week, Donald Trump named economist Peter Navarro, known as a China hawk, to head a newly formed White House National Trade Council. China’s response was one of “shock” and as the FT reported “Chinese officials had hoped that, as a businessman, Trump would be open to negotiating deals,” said Zhu Ning, a finance professor at Tsinghua University in Beijing. “But they have been surprised by his decision to appoint such a hawk to a key post.”

Back to the USDJPY, according to the latest CFTC data, speculators boosted net yen short positions to highest this year in week ended Dec. 20. The pair logged its first weekly loss since Nov. 4 on Friday, falling 0.5%. 

BOJ minutes of Oct. 31-Nov. 1 policy meeting showed most board members saw necessity of keeping the 80t yen bond-purchase target. According to Reuters, BOJ policymakers disagreed on how much emphasis the central bank should place on the size of its bond purchases under a new framework targeting interest rates, minutes of its Nov. 1 rate review showed, highlighting the challenges of navigating the complex policy scheme. The BOJ shifted its target from the pace of money printing to interest rates under the new framework adopted in September. It guides short-term interest rates at minus 0.1 percent and the 10-year government bond yield around zero percent. But the central bank also maintained loose guidance that it will continue buying government bonds so that the balance of its holdings increases at an annual pace of 80 trillion yen ($682 billion), likely intended to appease board members who argued that heavy money printing helps heighten inflation expectations. At the two-day policy meeting that ended on Nov. 1, one board member said the guidance on the bond buying amount could gradually be phased down “over the course of time” as the BOJ would likely achieve its yield targets with fewer purchases, the minutes showed on Monday. But a few board members insisted that the central bank maintain the guidance because deleting it could send “a wrong signal to markets by making it appear as if the BOJ was considering tapering its asset purchases”, the minutes showed. That concern is reflected in the USDJPY which is testing the 116 handle this morning.

Also speaking overnight at a meeting of the business federation Nippon Keidanren in Tokyo, Bank of Japan Governor Haruhiko Kuroda said that it’s necessary to achieve 2% inflation in this round of monetary easing to ensure Japan never falls back into deflation.  Kuroda said he rejects the argument that Japan should have a lower inflation target given its lower potential growth rate, adding that the low growth rate should be reason for aiming at higher inflation rate, in order to secure room for monetary easing. He also said that the lower the potential growth rate, the greater the risk of falling into deflation, and added that the commitment to overshooting inflation target designed to clarify BOJ’s stance that it will “certainly achieve this target.”

As an amusing aside, Kuroda said that while 2016 was a tough year, headwinds are now turning into tailwind and he is “convinced” Japan’s economy will take “big step forward to overcoming deflation” in 2017, because the “global economy has moved out of the post-financial crisis adjustment phase” and the pace of growth in advanced economies has accelerated recently. Translation: yet another career economist letting price action dictate the narrative; we wonder what he will say in a few months when the Trumpflation rally is long forgotten and the USDJPY has plunged to pre-election levels.

In any case, looking at the immediate future of the USDJPY, the technical downside is 116.70, while upside seems capped around 117.70, writes Naoto Ono, analyst in Tokyo at Ueda Harlow.

“Many market players are on holiday, so moves are a bit exaggerated with the obvious low liquidity,” says Simon Pianfetti, trader at SMBC Trust Bank in Tokyo.

Other key FX news via BBG:

• The South Korean won gained 0.1 percent, snapping an eight-day losing streak.
• The offshore yuan rose 0.1 percent to 6.9527 versus the dollar after a 0.2 percent gain last week.
• India’s rupee was little changed at 67.8262 per dollar.
• Brazil’s real appreciated 0.1 percent.
• The ruble strengthened 0.8 percent, prices compiled by Bloomberg show.

Among open global stock markets, the action was focused in Asia and EM nations. Here are the highlights:

• The Topix index dropped 0.4% in Tokyo. The index briefly erased its loss for the year last week, and is now down 0.6 percent for 2016. The Nikkei 225 has gained 1.9 percent this year.
• The Shanghai Composite Index rose 0.4%. Earlier in the day, it fell to the lowest since October as reports of further curbs on the property market weighed on the sector. President Xi Jinping told a Communist Party meeting last week he isn’t wedded to China’s 6.5 percent economic growth objective, according to a person familiar with the situation.
• Russia’s Micex Index rose as much as 0.5 percent after three straight days of declines.
• India’s Sensex Index fell as much as 1.1 percent after Prime Minister Narendra Modi hinted at tax increases on stock-market income.
• Global stocks were little changed last week after reaching an almost 17-month high Dec. 13.
• Saudi Arabian stocks retreated, with the Tadawul index losing 0.3 percent, ending a three-day winning streak.

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