While the duration of the current rally is increasingly inside "outlier" territory, it so far show no signs of stopping. According to Deutsche Bank, there are several key reasons that have kept the market rising: i) Strong equity inflows following large outflows and massive under-allocation; ii) US equity fund positioning moved from under- to over-weight; iii) a return of buybacks, iv) the bypass - so far - of the negative phase in economic data surprises.
Confirming that US consumers are far more sensitive to rising gas prices than preciously expected, the 0.5% increase in miles driven in December 2016 was the smallest monthly increase since November 2014. Since then gas pries have risen far more, potentially leading to a sharp drop in gasoline demand.
"Using the results from the Fed staff's work, and assuming that there results can be extended linearly, a recession that is half as severe would require the Fed to undertake a $1tn QE program in 2020."
Following unconfirmed sources earlier warning about a major capital raise for the world's most sysetmically dangerous bank, Bloomberg reports that Deutsche Bank AG is nearing a plan to boost capital by more than 10 billion euros ($10.6 billion) through an equity offering and the partial sale of its asset management unit, according to people with knowledge of the discussions.
After some strength in Europe overnight, Deutsche Bank shares are tumbling this morning after reports that the world's most systemically dangerous bank plans to review strategic options over coming weeks that include a capital increase and the partial sale of its asset management business.
In every annual budget debate since the 1980s, one side figures out that the way to get what it wants – which is higher spending – is to frame the request in a particular, ingenious way: We have to borrow and spend way more now if we want to borrow and spend way less later.
In a quiet night for markets, in which the top highlight was the Oscar's historic peddling of best picture "fake news" and where "millions" of Academy members seemingly voted illegally, European stocks were little changed after a selloff that pushed them to a two-week low, while the MSCI Asia index fells as Japan’s Topix dropped for third day. S&P futures were unchanged.
"Vast liabilities are being switched quietly from private banks and investment funds onto the shoulders of taxpayers across southern Europe. It is a variant of the tragic episode in Greece, but this time on a far larger scale, and with systemic global implications."
Tesla shares have quickly given up all gains from the better-than-expected earnings as the sell-side awaits more clarity on the cost and capital raise plans. One analyst specifically took aim at the fourth quarter results, calling out the beat as "phantom" given the exclusion of the SolarCity acquisition from consensus estimates.
"Our global credit impulse (covering 77% of global GDP) has suddenly collapsed: whereas back in Jan '16 the global credit impulse was positive to the tune of 3.8% of global GDP (of which China comprised 3.5% of global GDP) it has now fallen back to -0.1% of global GDP."