• Steve H. Hanke
    02/11/2016 - 16:08
    The burgeoning literature contains a great deal of hype, which validates the 95% Rule: 95% of what is written about economics and finance is either wrong or irrelevant.

Nikkei

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"It's Probably Something" - Gold Surges Above $1200; USDJPY, Oil, Stocks Plunge





Hong Kong traders are back from vacation, and with few options on the table, they are buying the one asset that provides the best cover to central banks losing faith, demonstrated most vividly by the total failure of the BOJ, and as a result just as Yen soars above 113, gold has taken out the numerous $1,200 stops and is currently surging to levels not seen in almost a year.

 
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European Banks Soar On Rumor ECB May Monetize Bank Stocks; Japan Crash Continues





While algos patiently await the only thing that matters for US stocks today which is Janet Yellen's testimony before Congress. expected to be released at 8:30 am (and previewed here), the rest of the world this morning is a hot mess of schizophrenic highs and lows.

 
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Futures, Global Stocks Tumble As Europe Bank, Periphery Carnage Unfolds





Everything went from bad to worse once Europe opened, and things started going "bump in the morning" across the European banking sector, where not only has it been more of the same with CDS spreads for major banks - most notably Deutsche Bank - continuing their surge wider, but also EM spreads to Bunds all following, with the Portugal-Germany Yield spread blowing out above 300 bps for the first time since 2014, and other peripheral nations following.

 
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Even With the Market Rolling Over, This Is What Bears Are Worried About





With faith in "growth" faltering and the momo leaders rolling over, there are still worries for the bears in the intermediate term...

 
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Futures Unchanged, Global Stock Algos Anemic Ahead Of U.S. Payrolls Report





US futures were largely unchanged overnight, with a modest bounce after the European close driven by a feeble attempt to push oil higher, faded quickly and as of this moment the E-mini was hugging the flatline ahead of today's main event - the January payrolls, expected to print at 190K and 5.0% unemployment, however the whisper number - that required to push stocks higher - is well lower, at 150K (according to DB), as only a bad (in fact very bad) jobs number today will cement the Fed's relent and assure no more rate hikes in 2016 as the market now largely expects.

 
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Futures Flat As Dollar Weakness Persists, Crude Rally Fizzles





After yesterday's torrid, chaotic moves in the market, where an initial drop in stocks was quickly pared and led to a surge into the close after a weaker dollar on the heels of even more disappointing US data and Bill Dudley's "serious consequences" speech sent oil soaring and put the "Fed Relent" scenario squarely back on the table, overnight we have seen more global equity strength on the back of a weaker dollar, even if said weakness hurt Kuroda's post-NIRP world and the Nikkei erased virtually all losses since last Friday's surprising negative rate announcement. Oil and metals also rose piggybacking on the continued dollar weakness as the word's most crowded trade was suddenly shaken out.

 
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How Low Can The Bank Of Japan Cut Rates? Ask Gold





When people hold cash out of aversion to negative interest rates, they risk losses due to theft and the like. The cost of avoiding this risk could be a key determinant of negative interest rates' lower bound, but it is hard to directly quantify. As a proxy for the cost of holding physical currency, we estimated the cost of storing gold based on gold futures prices. This cost has averaged an annualized 2.4% over the past 20 years, though it has varied widely over this timeframe.

 
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Europe Falls, U.S. Futures Rise As Oil Halts Two-Day Plunge





While the biggest news of the night had nothing to do with either oil or China, all that mattered to US equity futures trading also was oil and China, and since WTI managed to rebound modestly from their biggest 2-day drop in years, rising back over $30, and with China falling only 0.4% overnight after the National Team made a rare, for 2016, appearance and pushed stocks to close at the day's high, US E-minis were able to rebound from overnight lows in the mid-1880s, and levitate above 1900. Whether they sustain this level remains to be seen.

 
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Kuroda Suggests "No Limit" To More NIRP Measures To Stall Japanese Bond Yields, Stocks, USDJPY Plunge





KURODA: POSSIBLE TO CUT NEGATIVE RATE FURTHER IF NEEDED

With Nikkei 225 down 800 points from post-NIRP highs and USDJPY having almost roundtripped, there is little wonder that Japanese government bond yields are collapsing to imply considerably deeper NIRP to come. With 10Y JGBs on the verge of a negative yield, 2Y yields are now at -17bps (well below Kuroda's -10bps level). Japanese bank stocks are a bloodbath with Nomura leading the way lower.

 
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BofAML Warns The Risk Of "Quantitative Failure" Is Growing





Yield “fatigue” may be overtaking yield “euphoria”. The further central banks go down the rabbit hole of unique monetary policy, the greater the fear factor of how normality will eventually be restored. And asBofAML's Michael Hartnett highlights, the risk of “quantitative failure” in markets grows.

 
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Behold Unintended Consequences: Japan Cancels 10Y Auction For First Time Ever Due To Sub-Zero Rates





PLANNED MARCH SALE OF 10-YEAR JAPANESE GOVERNMENT BONDS THROUGH BANKS TO BE CANCELED AMID EXPECTED BELOW-ZERO YIELDS - NIKKEI
JAPAN'S MINISTRY OF FINANCE IS EXPECTED TO ANNOUNCE WEDNESDAY THE FIRST-EVER DECISION TO CALL OFF SALES OF 10-YEAR JGBS- NIKKEI

 
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Groundhog Day Trading: Stocks Slide As Oil Plunge Returns; BP Suffers Biggest Loss On Record





It certainly does feel like groundhog day today because while last week's near record oil surge is long forgotten, and one can debate the impact the result of last night's Iowa primary which saw Trump disappoint to an ascendant Ted Cruz while Hillary and Bernie were practically tied, one thing is certain: today's continued decline in crude, which has seen Brent and WTI both tumble by over 3% has once again pushed global stocks and US equity futures lower, offsetting the euphoria from last night's earnings beat by Google which made Alphabet the largest company in the world by market cap.

 
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