Looking at the BOJ announcement the governors loom to be content with the lower pace of inflation, which they mark as due to declining oil prices. The lack of aggression  in combating low inflation seemed expected by many analysts but it does open the door for the Yen to strengthen from market weakness. Such weaknesses can come from the ECB on Thursday should the purchases co e in weaker than expected and create doubts about the global economy getting out of the near deflationary slump. Time will tell how the markets take the ECB meeting but the Yen could be the safe haven currency if things turn for the worst.

Also interesting to note is if oil price was the true detractor from the inflation targets, the currency may be a good bet for oil dropping as well, should the BOJ continue to do nothing (low oil, low inflation, therefore higher Yen pressure)

With corporate earnings season kicking off, now may be the time to look into some shares of beaten down energy stocks. While it does seem at odds to buy into earnings that will no doubt be disappoint, it could be the beginning of some green shoots in the sector.

Discounting the obvious, earnings may provide better entry points for some companies. As a whole the unexpected could come from an amalgamation of production and Capex cuts which could provide the gesture wanted from OPEC as well as limit the future production that will be available stemming demand now for storage. As long as production isn't increased to meet this demand, we could see a leveling off of both the commodity and energy companies.

When looking at increased volatility during energy earnings announcements, keep an eye out for the bigger picture in  terms of future capacity and investment.

Jobs numbers came out better than expected with unemployment dropping to 5.6%. This has caused many to think that the end of low rates in the US is near, at least briefly. Markets  gave back gains and treasuries rallied on thoughts that the imminent rate hike in the middle of this year may be delayed until later in the year or even 2016. Why? Many think if it because of the drop in wages, which adds to the deflationary pressures of lower oil prices. The Fed has been concerned with the employment mandate while allowing inflation to drop below the desired 2% mark. This could cause delays in the rate increases that many have come to expect. If that is the case a few trends could be challenged, at least in the near term. The stock markets could see a continues rally next week as the Fed will be seen as sticking with accommodative policy for longer. The bigger trend reversal would be a decline in the dollar to other currencies as seen with the pound since the middle of this year (when economic news started to concern the BOE) there could be a sustained decline in the dollar as investors measure this delay in rate increases. While the dollar index might see higher prices from the disproportionate weight of the Euro, some currencies such as the pound might stage a comeback in the next few months.

The Greek elections have caused the markets to start the first full week of the new year on a down trend. While many analysts and commentators are already dusting off the "Grexit" talk and yields are rising on Greek debt. What is suprising is the relative calm seen by Spanish and Italian debt in the same time frame. Seeing yields drop as QE is built up by Draghi and the news is a likely answer to the drop in bond yields but there has to be more to it. To price out Greece from the looming implementation of asset purchases but include Spain and Italy, with all their own political dysfunctions, creates opposing views. If Greece was to default on its debt as the far left warns the core countries then a game of chicken will ensue. Should core countries give leway to Greece, surely Spanish and Italian people will want the same deal. Should the core kick them from the Euro, individual countries will start to be prices more as individuals again despite Draghi's talk. In either case there shouldn't be this much negative correlation between the yields. Perhaps a pair trade opportunity is upon us.

Italian 10yr
http://www.bloomberg.com/quote/GBTPGR10:IND

Greek 10yr
http://www.bloomberg.com/quote/GGGB10YR:IND

With 2015 markets officially opening in the US today there are will be countless reviews of the year and prediction of the next big asset class, stock, or economy that will grow through 2015. These predictions usually never come to fruition (I know I tried it) or if they do it is not because of the reasons or in the pattern that was originally expected.

This time of year brings to mind Campbell's law, which states that the more a given metric is used to measure success in a domain, the less reliable it becomes. The reason is the participants will start to neglect other metrics and focus on improving the metric being measured to; which will corrupt the process it was meant to monitor. Charles Goodhart a former BOE adviser had a similar theory pertaining to markets as well, as soon a governments try to manipulate a specific asset class, this asset class becomes unreliable as indicators of economic trends.

This theory should be kept handy in 2015 as the expectations for the year are heavily based on government manipulations. Oil is being crushed by the increase of US shale production and OPEC (but mostly Saudi Arabia) look to keep production high and even lower prices they sell oil for. The US equity market is leaning on the fact the the Fed is quick to act in the case of any headwinds in the real economy and bonds are looking for an interest rate increase because of the language used by the Fed in the last statement and growing economic indicators. Russia is suffering from a drop in oil but also sanctions from governments in Europe and the US imposing sanctions. 

With many market moving trends thought to continue in 2015 being government caused, almost all of the major asset classes have some degree of intervention embedded in the price. This is something to look out for in 2015, much of the movements we see in asset classes will be coming from governments and regulators decisions or in-decisions on specific asset classes they have attacked or propped up for years. Add to this that speculative capital is dominated by future exchange and interest rate expectations and you are in for a potentially volatile year, of course expecting that, markets can lose their predictive factor of volatility ahead as regulators try to measure and mitigate this.

Japanese stocks stand out as winners over the past few years (especially in Yen terms) from the working of Abenomics on the otherwise stagnant economy. But over a longer term horizon the direction of the market seems less uncertain. The demographics of Japan are not in favor of the growth prospects that are being projected, thus the country will not be able to rely on the service sector at home for this growth. The country will have to start looking out of the country for a lot of that growth as well as financing (since many of the aging Japanese are holders of JGBs). As a result of globally competing on financing rates as well as customers the companies will be forced to cut costs in order to stay competitive to the outside world. 

Because of this need I would expect to see companies outsource tasks such as accounting and tech services to other regions that are less expensive (think India or China) and have their manufacturing sector automated as well. Automation companies could also be a good play on China which still relies on scores of people to do simple tasks because of their low wages, which is changing.

Despite the massive QE in Japan I think that JGBs will no fare well over a longer term horizon as well. Should Abenomics be successful, you can expect inflation to have adverse effects on the bond prices, if inflation fails to pick up and the economy slip back to a deflationary spiral one has to wonder how sustainable the 200+% of GDP stockpiles of government bonds will fare with less and less domestic buyers available.