● The Change Book: How Things Happen
by Mikael Krogerus and Roman Tschäppeler
Summary via publisher (W.W. Norton)
From business cycles to budding trends, models make sense of a world that never stops spinning. The Change Book delivers 52 simple and effective models—each with a visual component—about how change happens. Drawing on myth-busting theories and breakthrough discoveries from thinkers of all stripes, Mikael Krogerus and Roman Tschäppeler, authors of the international bestseller The Decision Book, apply their characteristic wit and knack for the succinct to show what fuels the internet, why empires rise and fall, and why change hurts—but ultimately helps us grow.
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The US labor market posted another healthy increase last month, the government reports. Private-sector payrolls increased 240,000, a bit more than economists were forecasting (but slightly below The Capital Spectator’s median prediction). Although December’s advance was well below November’s increase (+345,000 for the private sector), today’s release still looks encouraging. Indeed, when you strip out the monthly noise and focus on the year-over-year change for private payrolls, the numbers look quite cheery. Indeed, the labor market last month grew at the fastest pace (+2.48%) in nearly two years, based on annual growth in workers at US companies.
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It may be a trap, but the recent slide in US Treasury yields and the market’s implied inflation forecast could be a blessing that helps unleash a stronger cycle of growth. The critical factor, of course, is the strength of the US economy. So far, so good. The macro trend for the US has improved lately, and there are few signals that suggest that the positive bias is about to deteriorate. The Labor Department’s employment report that’s due out later this morning is widely expected to provide a new round of data that supports the case for optimism. If so, the US economy appears to be headed for a sweet spot: stronger growth and low/falling interest rates and inflation.
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● US jobless claims dip; 2014 layoffs lowest in 17 years | Reuters
● US Consumer Confidence Rising as Job Market Strengthens | Bloomberg
● Germany Industrial Production Drops Unexpectedly In November | MNI
● UK Industrial Output Falls Marginally In November | RTT
● China’s December inflation rate rises to 1.5%, near 5-year low | BBC
● Japan Survey: Nov Machine Orders +4.6%, 1st Rise in 2 Months | MNI
● Bank of England keeps rates at 0.5%; ECB eyed | CNBC

Private nonfarm payrolls in the US are projected to increase by 247,000 (seasonally adjusted) in tomorrow’s December update from the Labor Department, based on The Capital Spectator’s median point forecast for several econometric estimates. The monthly prediction reflects a substantial deceleration in growth vs. November’s 314,000 gain.
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Utility sector stocks don’t usually excite the crowd, but this corner of the US equity market has shed its dull image lately. Traditionally seen as a safe haven within the broad market, shares of electric and gas utility companies are performing like growth stocks these days.
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● US Employers Added More Jobs In December Than Expected | ActionForex
● German November Factory Orders Fall More Than Forecast | RTT
● Euro zone retail sales rise 0.6% in November | Investing.com
● Oil halts four-day drop, U.S. stockpile data supports | Reuters
● Fed looks past a world in turmoil, confident in U.S. recovery | Reuters
● Can Germany save the Euro? | MacroBusiness

Private payrolls in the US increased by 241,000 in December, according to this morning’s ADP Employment Report. The gain, which beat expectations by a sizable margin, marks a moderate improvement over November’s revised 227,000 advance. More importantly, the year-over-year pace of growth accelerated to roughly 2.2% through last month—the fastest annual growth rate since August 2012. Today’s data comes at a critical time, when concerns that Europe’s economic trend is stagnating or worse. Granted, the offshore risks for the US remain substantial, but ADP’s latest release suggests that the recent improvement in job growth was intact at last year’s close.
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US economic data has been improving lately, but Mr. Market’s no longer in a mood for celebrating. The US equity market has tumbled sharply in recent days. Meanwhile, the appetite has surged again for the safe haven of US Treasuries. Is all this just noise, or a warning signal that the recent acceleration in the US macro trend has already run its course? No one really knows the answer at this point, in part because you can still make a compelling case for both narratives. Clarity is coming, however, and perhaps as early as this week, once we see updated numbers on US payrolls for December.
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● Eurozone consumer inflation rate turns negative in Dec | Bloomberg
● Brent oil slips below $50 on mounting glut, slack demand | Reuters
● Soaring Bond Prices May Sound an Economic Warning | NY Times
● US services firms expand at steady but slower pace in December | AP/WaPo
● German Unemployment Rate At Record Low in December| RTT
● Italy Jobless Rate At A Record High In November | RTT