A future scenario with oil prices dominated by "above-ground" factors: Veteran economist and oil analyst Phil Verleger in his latest note has roundly criticised everyone who forecast in recent years that oil prices would keep rising forever; which he says includes just about everyone who has an opinion about oil prices. Kate argues that Verleger's view of a hypothetical Saudi et al response to lower prices and/or production is compelling, in that it doesn't follow that more prolific US oil supply will mean lower global prices. Love, Basel: The Basel Committee on Banking Supervision has finalised rules for bank liquidity. Kate runs you through the highlights. The zombie credit mispricing: Do please take note of this story from IFR as it could turn out to be very important. It's basic point is that yield-to-worst - the returns that are likely to be received in the worst possible scenario - in the high-yield market dipped to their lowest level ever this week. The compression in high yield, and particularly CCC high-yield, argues Izzy, is reminiscent of that experienced by another famous "implicit guarantee" market in the run-up to the subprime crisis: the GSE paper market. Banks win more flexible Basel rules: International banks received a new year fillip when regulators announced that the first ever global liquidity standards would be less onerous than expected and not be fully enforced until 2019, four years later than expected. (Financial Times) (FT Alphaville) (Wall Street Journal) (Full list of changes) Berlusconi in pact with rightwing League: "Habeamus papam," Mr Berlusconi said in a radio interview, using the Latin for "We have a pope," referring to weeks of hard negotiations with the Milan-based Northern League. He said he had agreed on an electoral pact with the rightwing Northern League, a development that could lead to no outright winner emerging from the country's parliamentary elections next month. Japan stimulus plans include $4.9 billion business support: "Japan's new government will set up schemes worth nearly $5 billion to boost businesses, including helping them buy foreign companies, according to a draft economic stimulus package seen by Reuters on Monday that could be approved later this week." (Reuters) Bloomberg has the Japanese media reporting around 12 trillion yen ($136 billion) in fiscal stimulus measures to boost the nation's shrinking economy. (Bloomberg) The Japanese yen has lost 13.4 per cent against the US dollar since September 2012 and now sits at Y87.82 having touched Y88 on January 4. M&A optimism... in oil and gas where bid chat around a few majors has recently rekindled. (Financial Times) and pharma according to Bloomberg - "Led by Pfizer, in New York, and Whitehouse Station, New Jersey-based Merck & Co. (MRK), five of the largest U.S. drugmakers had more than $70 billion in cash, near cash and short-term investments at the end of the third quarter. CIC said to be in talks on Daimler stake: China's sovereign wealth fund is in talks to buy a stake in Daimler, the German luxury car and truckmaker, according to official Chinese media. CIC declined to comment. However, a person close to the situation said an imminent deal was unlikely. HTC profit slumps as competition intensifies: "HTC net profit fell for the fifth consecutive quarter to its lowest level since 2006, and analysts expect the first quarter to remain challenging as competition in the smartphone market intensifies... HTC's global smartphone market share slipped to 4.0% in the third quarter of 2012 from 10.3% a year earlier, according to market-research firm International Data Corp. That compared with Samsung's 31.3% and Apple's 15%" (Wall Street Journal) Markets: Growth-focused assets are mildly softer, pulling major "risk" barometers back from multi-month highs as the new year rally loses impetus. The dollar and US Treasury prices are firmer - a traditional indicator that investors are more cautious - while industrial commodities struggle; copper is off 0.3 per cent to $3.68 a pound and Brent crude is 45 cents cheaper at $110.86 a barrel. Gold is down $3 at $1,653 an ounce. The FTSE All-World equity index is slipping 0.1 per cent after the Asia-Pacific region lost 0.2 per cent and with the FTSE Eurofirst 300 softer by 0.1 per cent despite strength in banks following an easing of mooted regulation writes the FT's Global Market conquistador Jamie Chisholm.