‎Madonna‬ still killing it at 56. Sam Smith scoops four awards (although I really preferred many other artists and songs to win. I don’t even like his “stay with me” song for G-d’s sake!) And president Obama interrupted the Grammys to make a statement more remarkable than any award or dress: He gave a heartfelt message about rape and domestic violence…

But more important than all these was the impressive Non-Farm Payrolls (NFP) figures as the economy added 257K jobs in January, stronger than the projected 236K gain. A quick review of the past releases indicates that the U.S. has been throwing out better-than-expected NFP readings for the past four months.

Canada also printed strong jobs figures for December, as the employment change indicated a 35.4K increase in hiring. This was much better than the estimated 4.7K rebound and enough to keep the jobless rate steady at 6.6% instead of increasing to the projected 6.7% figure.

As a result, Ms. USA and Mr. Canadian dollar got head to head with no apparent winner on the forex dance floor and started Monday off by dancing sideways.

European Summary

Greek Might actually leave the euro

In Greek. Alex Tsipras, who had a rough ride with the ECB last week, has rejected any notion of bailout extension over the weekend, as he doesn’t want to be tied to further austerity measures that this would entail. Instead the Greek leader wants to create a bridging facility to be able to meet the repayments schedule between now and June, during which time he hopes to have negotiated favorably with his creditors – who you’ll remember said no to any kind of restructure last week.

In most instances countries could go and raise short term money in capital markets to meet imminent financing requirements. Greece can’t because of rules imposed as part of the bailout which were designed to stop them increasing their debt burden even further. One solution to this, reported by the FT, would be for them to issue a local bond in a ‘parallel currency’, which would only be redeemable locally (i.e. ‘I’ll issue you this bond in imaginary currency A which is fixed to the euro at X rate. Upon maturity, I will repay you your principal, plus interest in currency A, which I will then convert to euro at our pre-agreed rate of X) Now, if you were to replace the words ‘currency A’ with ‘New Drachma’ you would see that this could be an excellent precursor to a Grexit.

Alan Greenspan, former head of the Federal Reserve, believes that it is only a matter of time before Greece do leave the euro, saying “I don’t see it helps them to be in the euro and I certainly don’t see that it helps the rest of the eurozone”. Our view in 2011/12 was that this should have happened then and it remains the same now. Political pride has stopped a lot of real progress and just because a Grexit is an unknown quantity, it doesn’t make it any worse than staying and suffering, on both sides. Lastly, Paddy Power have the odds on ‘Greece adopting an official currency, other than the euro, by 2017’ at 7 to 4!

Angela Merkel & Obama Meet on Ukrainian Deal

Elsewhere in the world, Angela Merkel is flying to Washington today to get Obama on side for the latest attempt at a Ukrainian peace deal. The details of the deal aren’t clear, but Ms Merkel will be hoping to get the US’ backing before Wednesday, when she is due to return to the negotiating table, along with France, Russia and, of course, Ukraine. Last week the Ukrainian central bank caused a currency collapse when they raised interest rates by 5% and then removed the peg that they had been trying to maintain against the Dollar. The combined effect of the measures was a 50% devaluation in the currency at one point.

Mr. Aussie Falls on China’s Negative Report

Overnight Australia saw their currency hit hard after China reported a 35% fall in imports from them. The news underscores two problems; One is that Australia is far too reliant on China and even their policies to diversify are going to be far too little too late. The other problem is that China’s imports have slumped to their lowest level since 2009, which is bad news on a global level. The overall figure for global imports was 20% lower than it was last month, a huge move by any standards and, even considering any anomalies due to the Chinese New Year, is worrisome. China have tried to carefully manage their slowing economy, with huge infrastructure investments, opening up access to markets and improved monetary policies. However this doesn’t look like it’s been enough, though analysts will now be watching February and March’s numbers very carefully before hitting the panic button.

Coming up This Week

Looking at what we have in store this week – snow storms in New York and tri-state area; the big data will be GDP numbers from Europe. Obviously their economic performance is well away from the UK and US numbers, but there is hope that the fourth quarter will have brought them an uplift in activity, particularly as the mild winter will have allowed construction projects to continue far later into the year than they normally would.

From the UK, the quarterly inflation report on Thursday will be closely watched, particularly as the MPC voted 9-0 to keep rates on hold – the move back from 7-2 almost certainly being driven by fears over ultra-low inflation.

On Friday ,as well as European GDP, we get US payrolls data, which will be a big one given the positive numbers saw last month.