Central Banks

Three Weeks After Buying Stocks, Gundlach Is Cashing Out Again: "I'm Bearish"

In an interview with Reuters Jennifer Ablan after DoubleLine Capital's February flow figures were released (it was a $2.2 billion inflow) , Gundlach said the firm is now considering closing out some of its long positions in the stocks that they purchased three weeks ago.... And just to avoid confusion, this is where Gundlach stands now:  "I am bearish. There are just wiggles and jiggles in the markets."

Most "Priced In" Policy Since 2011 - Why Draghi Better Not Disappoint

Mario Draghi better put up or shut up at the next ECB meeting as the market is more-than-pricing-in a very significant deposit rate cut (deeper into NIRP). In fact, at -56bps, 2Y German bond yields are the most "priced in" since 2011 (and bear in mind he disappointed in December).

Frontrunning: March 1

  • Trump, Clinton poised for big wins on Super Tuesday (Reuters)
  • U.S. Index Futures Signal Equities to Rebound After Monthly Drop (BBG)
  • Barclays Plummets as Bank Slashes Dividend in Plan to Shrink (BBG)
  • Glencore Tumbles to Loss, Promises Accelerated Debt Reduction (WSJ)
  • The Angry Americans: Trump, Sanders and the Aftershocks of 2008 (BBG)

China PMIs Plunge, Economists Demand Stimulus To "Prevent Economy Falling Off A Cliff"

"The index readings for all key categories including output, new orders and employment signalled that conditions worsened, in line with signs that the economy’s road to stability remains bumpy...The government needs to press ahead with reforms, while adopting moderate stimulus policies and strengthening support of the economy in other ways to prevent it from falling off a cliff.

Systemic "Fragility" Surges

With "significant" financial stress pervading the markets, it is hardly surprising that systemic risk concerns are rising rapidly. What we have been experiencing in markets this year, as BofA's FX team notes, is the impact of multiple shocks, at a time when central banks cannot come to the rescue, in a market that has been addicted to the central bank policy put. This leave cross-asset correlation soaring as shocks become larger leaving market fragility increasing.

 

Six Reasons To Buy Gold In 2016

“Betting against gold is the same as betting on governments. He who bets on governments and government money bets against 6,000 years of recorded human history.” – Charles De Gaulle

"Has Everyone Lost Their Freaking Minds?"

It’s getting weird and the market is having a tough time figuring out what to take seriously, what to ignore, what to laugh nervously about and what to just laugh at. Are serious economists actually have a debate about whether it is a good idea to just print up cash and pass it out? Is that really monetary policy? Are governments really talking about banning actual currency, the very money created by that government? Money that depends, oh by the way, solely on people’s trust that the government will stand behind the money they are about to outlaw? Has everyone lost their freaking minds?

"The Liquidity Just Dries Up In A Stressed Market" - How HFT Killed FX Trading

Collin Crownover, head of currency management at State Street Global Advisors Inc., which oversees about $2.4 trillion,  who during a panel presentation said that "we are concerned. During volatile periods, market participants are backing away until conditions settle down, making it harder to complete large orders."“A lot of the electronification of the market, which by and large is a good thing, has led to kill switches on a lot of that algorithmic-provided liquidity,” Crownover said. “The liquidity just dries up in a stressed market.”

China's Panicked RRR Cut Leads To Feeble Stock Rebound; Gold Resumes Climb

After the G-20 ended in a wave of global disappointment, leading to the biggest Yuan devaluation in 8 weeks, and sending Chinese stocks into a tailspin on concerns the PBOC has forsaken its stock market as well as speculation the housing bubble is now sucking up excess liquidity which in turn pushed global market deep in the red to start the week, it was the PBOC's turn to scramble in a panicked reaction to sliding risk exactly one month after Japan unveiled its own desperation NIRP, and as reported before unexpectedly cut its Reserve Requirement Ratio by 0.5% to 17.0%, the first such cut in 2016 and the 5th since the start of 2015.

The Empire Will Strike Back

The populist revolt fueling non-mainstream political movements in both Europe and the US flows from a single source: you can not fool all the people all the time. The central lie of our time is that governments can and should forcibly assume control of individuals’ lives, in the name of vague and always shifting greater goods. The Command and Control Futility Principle holds that governments and central banks can control one, but not all variables in a multi-variable system. The number of variables global governments and central banks have arrogated to their purported control has grown beyond measure. Breakdowns are visible everywhere, and as those failures exact their ever-increasing toll on the masses, the masses are pushing back.

Central Banks Shiny New Tool: Cash-Escape-Inhibitors

Negative interests rates are the shiny new thing that everyone wants to talk about. We hate to ruin a good plot line, but they're actually kind of boring; just conventional monetary policy except in negative rate space. Same old tool, different sign. No, the novel tool that has been created is what we're going to call a cash escape inhibitor.

The Central Bankers' Greatest Blunder Yet: Negative Rates = Deleveraging

In a world which has long since crossed the monetary twilight zone of negative rates, and which is spiraling ever deeper into NIRP, below we present some quite fascinating observations on debt, NIRP and how the latter leads to the deleveraging of the former, and thus encourages global deflation - something which in retrospect will be (and in many cases already has been) seen as a central bank fatal flaw, and confirmation said central bankers have zero understanding of the process they have unleashed.

Forward Guidance: The Road Map To Crazy Town

If one puts aside all of the moving metrics and policy talk that happened during Mr. Bernanke’s tenure. How would one assess “the guidance” or the “communications for clarity” we now have emanating from not only the Fed., but also, central bankers globally? Crazy Town is the only thing that comes to my mind. (Hint: look to the SNB or BoJ for clues)