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ECB,BOE,RBA MEETINGS/ US-CHINA DEC TRADE DATA/CHINESE INFLATION/EU BUDGET SUMMIT/EUROPEAN EARNINGS/BUND AUCTION/SERVICES PMIS

Wednesday’s global markets were a pretty good illustration of the nature of new year rally. The largest economy in the world reported a shock contraction of activity in the final quarter of 2012 despite widespread expectations of 1%+ gain and this month’s bulled-up stock market barely blinked. Ok, the following FOMC decision and Friday’s latest US employment report probably helped keep a lid on things and there was plenty of good reason to be sceptical of the headline U.S. GDP number. Reasons for the big miss were hooked variously on an unexpectedly large drop in government defence spending, a widening of the trade gap (even though we don’t get December numbers til next week), a drawdown in inventories, fiscal cliff angst and “Sandy”. Final consumer demand looked fineand we know from the jobs numbers (and the January ADP report earlier) that the labour market remains relatively firm while housing continues to recovery. The inventory drop could presage a cranking up assembly lines into the new year given the “fiscal cliff” was dodged on Jan 1 and trade account distortions due to East Coast storms may unwind too. So, not only are we likely to see upward revisions to this advance data cut, there may well be significant “payback” in Q1 data and favourable base effects could now flatter 2013 numbers overall.

Yet as logical as any or all of those arguments may be,  the reaction to the shocker also tells you a lot about the prevalent “glass half full” view in the market right now and reveals how the flood of new money that’s been flowing to equity this year has not been doing so on the basis on one quarter of economic data. An awful lot of the investor flow to date is either simply correcting extremely defensive portfolios toward more “normal” times or reinvesting with a 3-5 year view in mind at least. There’s a similar story at play in Europe. Money has come back from the bunkers and there’s been a lock-step improvement in the “big picture” risks – we are no longer factoring in default risk into the major bond markets  at least and many are now happy to play the ebb and flow of economics and politics and market pricing within more reasonable parameters. There are no shortage of ghosts and ghouls still in the euro cupboard – dogged recession, bank legacy debt issue, Cyprus, Italian elections etc – but that all still seems more like more manageable country risk for many funds and a far cry from where we were over the past two years of potential systemic implosion. Never rule out a fresh lurch and the perceived lack of market crisis itself may take the pressure off Brussels and other EU capitals to keeping pushing hard to resolve the outstanding conundrums. But it would take an awful lot now to completely reverse the recent stabilisation, not least given the ECB has yet to fire a bullet of its new OMT intervention toolkit.

And so a hugely impressive January for risk assets comes to a close today. For the record, global stocks have clocked up almost  5% – the best month in 12, even if still shy of last Janauary’s 5.7% gain. Wall St stocks, where total returns indices hit record highs last September, are now within reach of new price records after a 5.7% gain this month. Although January is typically an the best month of the year for stocks, this year’s gain is more than three times the average January gain of since 1928 and there have been record new investor flows in excess of $55 billion. If only for health reasons alone, February will not be as effervescent and the final days of this month already see some cooling of prices and firming of volatility indices.  There may well be some pullback if any of the peristent euro zone or US political rows gain more attention  — but few assume this shift will evaporate as easily as it has done in recent years.

DATA/EVENTS TO WATCH NEXT WEEK

Europe Q4 earnings Mon: Julius Baer

Spain PM Rajoy meets Germany’s Merkel in Berlin Mon

RBA rate decision Tues

Europe Q4 earnings Tues: UBS, BP, BG

Global Feb services PMIs Tues

EZ Dec retail sales Tues

France’s Hollande speech to European Parliament Tues

Europe Q4 earnings Weds: GlaxoSK, ArcelorMittal, Svenska Handelsbanken, Volvo

German 5-yr government debt auction Weds

Poland/Iceland rate decisions Weds

US Q4 earnings Weds: Marathon/Time Warner

Europe Q4 earnings Thurs: Vodafone, Credit Suisse, Daimler, Danske, Telecom Italia

EU Council meets on EU budget Thurs/Fri

German/UK Dec manufacturing output Thurs

UK Dec trade data Thurs

BOE rate decision Thurs

ECB rate decision and presser Thurs

US Q4 earnings Thurs: Sprint-Nextel, Hasbro

US Dec consumer credit Thurs

China Jan trade and inflation Fri

US Dec trade data Fri

 

Unless you’re buying something online, the Internet is a tax free service. That all might change in 2014, however, if a bill barring the government from taxing the Internet isn’t extended. Fortunately, two senators are already on the case with a new permanent extension.

The Hill reports that Senators Kelly Ayotte and Dean Heller have introduced an extension to 1998′s Internet Tax Freedom Act. The law last saw an expansion in 2007 that would keep the Internet tax free until 2014. The law being proposed by Ayotte and Heller would make the extension permanent. The bill would only block taxes like bandwidth or email taxes. It does not have an effect on online sales tax as that’s an entirely separate issue.

In a statement published on her Web site, Ayotte said extending tax exemptions for Internet access will keep job growth alive:

“E-commerce is thriving largely because the Internet is free from burdensome tax restrictions. Unfortunately, tax collectors see it as a new revenue source, and they must be stopped. This legislation will provide certainty to the marketplace, helping the Internet continue to be a driving force for jobs and growth.”

Heller also chimed in by saying the permanent tax exemption would preserve the Internet “as a tool for education and innovation:”

“Nevadans and every American should be able to access the Internet without penalties from the federal government. The Internet Tax Freedom Act will ensure a long-standing federal policy that prevents the government from raising taxes, and preserves the Internet as a tool for education and innovation. I am pleased to work with Senator Ayotte on this issue and encourage Congress to work together to extend this act permanently.”

I’m sure there will be some disagreement over how far Internet taxation can go, and some may argue that a permanent extension would not allow them to revisit the issue in the future if Internet taxation becomes more acceptable. That being said, an extension, preferably longer than the previous seven year extension, would only be a good thing. The Internet’s phenomenal growth can only be attributed to its lack of regulation, and taxing people for just using Internet services would seriously cut down on its continued growth.

Besides, I don’t think any of us want to pay more for Internet access than we already do.

It looks like we’re getting closer to having Google Now functionality in Chrome. Google released Google Now as part of Android last year when it launched the Jelly Bean version of the OS.

Developer François Beaufort points out rich templated notifications in a recent chromium build, sharing a screenshot. You can see the look of the notifications in the bottom right-hand corner of his image.

As TheNextWeb (which first pointed to Beaufort’s post) notes, it’s possible that the notifications could look different by the time they actually get to be a Chrome feature. That’s also assuming that this does become a Chrome feature, but it’s very likely that it will.

Google Now in Chrome would be a major step toward the convergence of Chrome and Android into one operating system – a path that Google co-founder Sergey Brin has implied in the past would likely happen eventually. For now, it seems both brands will live on for the foreseeable future, but the more Google is able to bring features from one to the other, the less reason Google may have, in time, to continue operating them separately.

We’ve already seen Chrome rapidly evolve into a much more advanced browser than it started as, and even into its own operating system. Chrome recently got speech recognition capabilities, and has gotten better at preserving battery life.

In what could be another hint of things to come, Google’s HQ has a new statue of a Chrome Android:

This may not be a hint at all, but rather a representation of two important Google products in one homage. However, considering those comments made by Brin in the past, and pending Google Now features in Chrome, it doesn’t seem like too much of a stretch.

It’s important to remember that Google is essentially on a quest to unify its products into one larger Google product. This is has been happening little by little, especially since the launch of Google+ – the social and identity layer that ties them all together. “Google+ is Google,” as the company likes to say. Well, perhaps Chrome is Google, and Android is Google too.

As far as Google Now itself goes, Google has been steadily adding more functionalities to that, and they’re only getting started. Adding Google Now to the desktop via Chrome should only serve to incubate new use cases and user demand for more (or perhaps for less for some of the more privacy-concerned users).

Chrome Android mage via DroidLife (who credits Paul Wilcox)

Kristen Cavallari, who is new mom to 5-month old Camden, says she isn’t sure she’ll let him play football when he’s older, despite the fact that his dad is Jay Cutler.

Like any new mom, Cavallari is worried about her baby getting hurt and says she might try to steer him in another direction if he shows an interest in sports.

“Maybe a sport that isn’t so aggressive…maybe baseball — something where he doesn’t have to get hit,” she said.

The former “Hills” star admits, however, that she might not have too much say in the matter, anyway.

“At the end of the day, I think if he wants to play football, I don’t know if I’m gonna have too much control over it,” said Cavallari. “You know, how can your dad be a football player and you tell them that they can’t do it?”

For now, though, Cavallari and Cutler are enjoying being new parents and are trying not to worry too much about the future.

“He’s such a sweet little baby, he really is. And he just got his first tooth, which we’re excited about, and we started feeding him last week, so it’s been a lot of fun,” she said.

Little more than two weeks after the beta version debuted, the new Carbon backup app has made its way onto the Play Store. The biggest change comes for Android users with non-rooted devices as they can now also perform app and data backups, a feat previously exclusive to those running the little green droid with elevated permissions.

Carbon is the work of ClockworkMod and ROM Manager developer Koushik Dutta who, with the help of 12,000 beta testers, has managed to squash out most of the bugs from previous versions of the app. Dutta, however, warns that due to the way Motorola handles the adb backup functionality (also known as the built-in backup feature in Android) the Google subsidiary’s smartphones are prevented from installing Carbon.

Users who have elevated privileges enabled on their Android devices only have to install Carbon from the Play Store. For those sporting non-rooted devices the process requires a few extra steps in order to backup (and restore) apps and data, although it’s a fairly straightforward process.

They will need to install Carbon Desktop (available for Windows, MacOS and Linux), the Windows drivers for the device if required, connect the smartphone or tablet to the computer and select “PTP” mode for the USB connection. The final step is enabling “USB debugging” from “Developer options”.

So what about Carbon’s options? Upon opening the backup tool, users can select the apps by going through the list and ticking individual items. They can also add them into groups for easier handling and choose whether to  include the app within backups (by default only the data is backed up). Carbon can also be used to transfer apps with data between devices and restore items from the USB storage.

Carbon currently provides five options for managing backups and restoring files — USB Storage, Schedule Backup, Google Drive, Dropbox and Box. However, only the first one can be used for both actions with the free version of the app. The remaining four can only be used to backup files, with the restore option exclusive to Carbon Premium.

There is also a “PC Download” feature included for handling apps. Users have to power it up, at which point a server will be enabled on the device. The listed IP address has to be used within a browser in order to connect to the mobile and backup and restore files to and from the PC.

Carbon is available to download from Google Play. The premium version runs for $4.99.

The National Agency for the Safety of Drugs and Health Products (ANSM) in France this week suspended sales of an acne drug linked to the deaths of several women.

The drug, Diane-35, is a hormonal acne treatment, but was begin prescribed as contraceptives to hundreds of thousands of women in France. The medication was found to have played a role in at least four deaths. Blood clots in other women have also been linked to the medication.

The suspension will roll out over the course of months, allowing women enough time to find alternate contraceptive methods.

The director of the ANSM, Dominique Maraninchi, told the AFP that the drug is not licensed for use as a contraceptive. He emphasized that there are many other contraceptives available to French women.

The AFP report states that the ANSM has requested a change in prescription guidelines for third and fourth generation oral contraceptives (such as Diane-35), which have higher blood clot risks.

This suspension is similar to one ANSM issued in November 2009. At that time, at drug marketed as “Mediator” (benfluorex) was pulled from pharmacy shelves after it was linked to hundreds of deaths in France. The drug was approved for the treatment of diabetes, but was often prescribed as an appetite suppressant for overweight patients.

Model Amber Rose, who is about to pop any day now after nine long months of pregnancy, shared a photo of her belly on Twitter and proudly declared that she has no stretch marks.

Rose and fiance Wiz Khalifa plan on having a natural birth at home, and Rose has opted out of pain medication. She frequently posts on Twitter about the pregnancy and recently talked about the thing that has annoyed her most over the past several months.

The happy couple are due to become parents on or around February 24th.