● US retail sales drop the most in 11 months, but seen as a blip | Reuters
● US Import Prices Fall Sharply In Dec Amid Lower Fuel Prices | RTT
● Atlanta Fed: Inflation expectations slip for 2015 to 1.7% | Atlanta Fed
● Fed’s Beige Book: concern over consumer spending, slumping oil | MarketWatch
● German Economy Grows 1.5% In 2014; Fastest In 3 Years | RTT
● India’s central bank announces surprise interest rate cut | Reuters
● Swiss National Bank scraps minimum exchange rate vs euro | AP/WaPo

Retail consumption fell sharply in December, far more than expected, the US Census Bureau reports. Sales slumped 0.9% last month vs. November, well below the consensus view that predicted a relatively mild 0.1% fall (or the modest 0.2% gain anticipated by The Capital Spectator’s median forecast). Today’s surprisingly weak report translates to a 3.2% annual increase, the slowest year-over-year gain in 10 months. In short, today’s numbers for retail spending at last year’s close look discouraging. It may be a warning sign for the US economy, but a closer review of the data suggests that last month’s skid may be noise.
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Securitized real estate is crushing the competition. The global markets have turned wobbly lately, but you wouldn’t know it by looking at the recent performance for real estate investment trusts. US REITs are far and away the best performer among the major asset classes via our standard list of ETF proxies over the past 12 months. Vanguard REIT (VNQ) has climbed an impressive 33.5% on a total return basis through yesterday (Jan. 13), based on the trailing one-year period (defined here as the past 250 trading days). The number-two performer—US stocks, broadly defined via Vanguard Total Stock Market (VTI)—is far off in the rear-view mirror with a 10.5% advance.
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● Job openings jump to a 14-year high | AP/USA Today
● Small Business Most Optimistic In US Since 2006 | Industry Week
● World Bank Downgrades Global Growth Forecast | RTT
● Eurozone industrial production beats forecasts: +0.2% in November | FT
● Europe court backs ECB bond-buying program | CNBC
● ECB’s Draghi says risk of deflation higher than a year ago | Reuters
● Oil extends losses as World Bank cuts growth forecast | Reuters

US retail sales are expected to rise 0.2% in tomorrow’s December report vs. the previous month, according to The Capital Spectator’s median point forecast for several econometric estimates. The median prediction reflects a substantial deceleration in growth vs. the previous month’s 0.7% advance.
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Atlanta Fed President Dennis Lockhart says that the central bank is still on track to start raising interest rates in mid-2015. Speaking at a conference yesterday, he reasoned that the U.S. economy “is hitting on all cylinders.” But the renewed decline in bond yields, driven by an accelerating wave of disinflationary momentum around the world, suggests that the first rate hike will be delayed.
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● 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