Moral Hazard

Global Stocks Soar On Stimulus Hopes After Miserable Chinese, Japanese Data; Short Squeeze

"The Chinese market didn’t react as bad as we feared and with the weak export data there is some big hope that he central banks will react quite fast," John Plassard, senior equity-sales trader at Mirabaud Securities LLP in Geneva, told Bloomberg. "It’s a mix of hope of intervention from the Asian central bank, short squeeze and also a relief in some energy and banking sectors, the most shorted sectors." And there are your catalysts for today's surge: hope of more central bank intervention and a global short squeeze.

Through The Looking Glass On Rates

Negative interest rates act effectively as a hidden tax funneled directly to banks. They are inherently unhealthy. Currently, they could indicate also a measure of unease among two of the four most powerful central banks. If so, that could well escalate.

SEC Throws Up On Third Avenue's Gating Plan (Then Folds)

Update: The SEC Folds - SEC PERMITS TEMPORARY SUSPENSION OF THIRD AVENUE REDEMPTIONS, WILL BE SUBJECT TO ONGOING SEC OVERSIGHT

HYG, the now infamous high-yield bond ETF, had an "ok" day, rallying along with everything else post-Fed. However, shortly after the close, it started to fade quickly as SEC "expressed concerns" about Third Avenue's plan for liquidation.

It Begins: Desperate Finland Set To Unleash Helicopter Money Drop To All Citizens

Over the last few months, in a prime example of currency failure and euro-defenders' narratives, Finland has been sliding deeper into depression. Almost 7 years into the the current global expansion, Finland's GDP is 6pc below its previous peak. As The Telegraph reports, this is a deeper and more protracted slump than the post-Soviet crash of the early 1990s, or the Great Depression of the 1930s. And so, having tried it all, Finnish authorities are preparing to unleash "helicopter money" to save their nation by giving every citizen a tax-free payout of around $900 each month!

Did The PBOC Just Exacerbate China's Credit & Currency Peg Time Bomb?

China as the global Bubble’s focal point – the weak link yet, at the same time, the key marginal source of Bubble finance. China’s policy course appears to focus on two facets: to stabilize the yuan versus the dollar and to resuscitate Credit expansion. For better than two decades, similar policy courses were followed by myriad EM policymakers in hopes of sustaining financial and economic booms. Many cases ended in abject failure – often spectacularly. Why? Because when officials resort to such measures to sustain faltering Bubbles it generally works to only exacerbate systemic fragilities. For one, late-stage reflationary measures compound Credit system vulnerability while compounding structural impairment to the real economy. Secondly, central bank and banking system Credit-bolstering measures create liquidity that invariably feeds destabilizing “capital” and “hot money” outflows.

IIF Warns Household Wealth Gains Will Disappear Unless Fed Normalizes Rates Soon

"Easy policy has passed the point of diminishing return and keeping it longer would only increase moral hazard and distort financial markets," exclaims the Institute of International Finance, warning that the gap between the value of Americans' holdings of stocks, bonds and other financial assets and the trend growth rate of the economy is still large and not far off the level that prevailed in 2007 before the financial crisis. "The Fed should start to normalize policy as soon as possible," removing the excess as the 'gap' "typically ends up being narrowed by a correction in the stock market."