Beware, we are now spiraling headlong into a collapse thanks to a nightmarish NIRP "doom loop" from which the global cabal of central bankers' gone full-Krugman will not allow us to escape.
Why Yellen's Testimony Was Not Dovish Enough: Bank CEOs Told Her The 'Economy Is Stronger Than Markets Imply'Submitted by Tyler Durden on 02/12/2016 - 13:15
"The Council believes the economy is stronger than the recent negative market sentiment would imply."
Following last week's dramatic 31 rig decline, Baker-Hughes reports another major decline of 28 oil rigs (dropping the total oil rigs to 439 - lowest since Jan 2010 - for the 8th consecutive week). The total rig count dropped 30. On the heels of OPEC rumors overnight and then re-rumored bullshit from Venezuela, oil prices had already surged during the day and the biggest 2-week rig count decline in 10 months after initially being sold, is rallying once again.
It is becoming increasingly difficult to ignore the collapse of global credit markets... as Markit warns the number of distressed bonds (trading greater than 1000bps) is "escalating at an alarming pace."
In a note out Friday, BofA takes a fresh look at what the plunge down the NIRP rabbit hole has meant for the proliferation of negative-yielding assets in Europe. In addition to creating some €3.5 trillion in negative-yielding assets, successive rounds of easing have also had some rather disconcerting unintended consequences.
A week ago we exposed the real reason for the "crazy volatility" in crude oil markets, and specifically the driver of the immense rally (despite weak data) in crude - a massive liquidation of the triple-inverse ETF DWTI. Today we have another mysterious, even larger spike in crude oil prices (for no good reason other than 'old' misunderstood rumors about OPEC production cuts). The driver, it would appear, is another liquidation as the ETF trades at a huge discount to NAV. The last time this happened, it didn't last.
"A vote today for Hillary Clinton is a vote for endless, stupid war...Clinton shouldn’t even “be let near a gun shop, let alone an army. And she certainly should not become president of the United States.”
Another day, another OPEC Production Cut rumor, and another massive swing in WTI Crude oil prices (+11.5% - biggest since Feb 09). But having run stops to these levels, we wonder what happens next?
The Fed's Bill Dudley just unleashed the most cognitively dissonant statement of his career. That superlative is highlighted by theses two headlines:
DUDLEY SAYS U.S. ECONOMY IS IN QUITE GOOD SHAPE
DUDLEY: DON'T SEE NEGATIVE RATES HAVING 'BIG CONSEQUENCE'
Try telling The BoJ's Kuroda that!!
After starting out strongly this morning, with DB stock trading just shy of $17/share, European banks have seen some weakness in the past 30 minutes following a report from Reuters, in which sources were cited as saying that there is "firm support for a deposit rate cut within the European Central Bank's Governing Council."
Having already warned of a "deflationary mindset," today's University of Michigan Confidence data suggests Americans are falling deeper into dis-inflation territory. Today's headline tumble in confidence to 4-month lows, with "hope" dropping to 6-month lows is dominated by the plunge in 5-10 year inflation expectations to 2.4% (from 2.7%) - a 36-year record low.
After some stabilization into mid-2015, the ratio of business inventories-to-sales has surged as sales have disappointed and mal-investment-driven dreams have over-stocked. Business inventories rose 0.1% MoM in December (retail up 0.4%) and sales tumbled 0.6%. At 1.39x, the current ratio is flashing a warning that a deep de-stocking recession looms.
What NIRP communicates is: this sucker's going down, so sell everything and hoard your cash and precious metals. If that's what the central banks want households and enterprises to do, NIRP will be a rip-roaring success.