• Gold Money
    05/03/2016 - 11:35
    Crude oil time-spreads have completely dislocated from inventories. Historically, such dislocations have proved to be short lived. We expect that either spot prices will sell-off again or the back...

Norges Bank

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Sweden Prepares For FX "War" With Bloodthirsty Hedge Funds





Look out Stefan Ingves, the 2 and 20 crowd smells blood: "The market seems eager to challenge the Riksbank and there are rumors that many foreign hedge funds are long kronor and see a weakening of the krona after a possible intervention as a good buying opportunity.”

 
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What Does The Future Hold For Negative Rates In Europe? Goldman Answers





While the market might have been disappointed by the ECB’s “underdelivery in December, it came as a relief for the Riksbank, the SNB, the Norges Bank, and the Nationalbank who are effectively forced to cut each time the ECB eases or risk seeing upward pressure on their respective currencies. That dynamic has led to a veritable race to the Keynesian bottom with Norway as the last man standing in terms of conducting monetary policy with rates above zero. As we enter the new year, a number of questions remain regarding Europe's headlong plunge into NIRP-dom.

 
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Darkness Falls Upon Norway’s Key Figures Going Into 2016





As we move into winter, darkness has fallen up on us. Oil, ca. 65% of the nation’s economy, will not see the required $70 barrel anytime soon. American innovation, once again, turns a scarce resource into an abundant commodity. Despite optimistic Norwegian media articles, the potential for $20 per barrel looms. Production overwhelms demand while inventories rise to record highs. Although, still considered the best place to live, the cracks, in the oil based economy, are forming.

 
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Futures Slide As Quad-Witching Has A Violently Volatile Start After Massive BOJ FX Headfake; Oil Tumbles





Following the latest BOJ statement, the market found itself wrongfooted assuming the BOJ was actually launching another episode of easing, sending the USDJPY soaring, until suddenly the realization swept the market that not only was the incremental action not really material, but even Kuroda spoke shortly after the announcement, confirming that "today's decision wasn't additional easing." The result was one of the biggest FX headfakes in recent days, perhaps on par with that from December 4 when EUR shorts were crushed, as the biggest carry pair first soared then tumbled and since the Yen correlation drives so many risk assets, also pulled down not only Japanese stocks but US equity futures.

 
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Global Stocks, Futures Continue Surge On Lingering Rate Hike Euphoria





Heading into the Fed's first "dovish" rate hike in nearly a decade, the consensus was two-fold: as a result of relentless telegraphing of the Fed's intentions, the hike is priced in, and it will be a "dovish" hike, with the Fed lowering its forecast for the number of hikes over the next year. Consensus was once again wrong on both accounts: first the rate hike was far more hawkish than most had expected (see previous post), and - judging by the surge in Asian, European stocks and US equity futures - the "market" simply is enamored with such hawkish hikes which will soon soak up trillions in liquidity from the financial system.

 
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Draghi's Currency War Ceasefire Faces Test As Sweden, Switzerland, Norway Take Aim





“I don’t think we’ve seen the last of this trend. When I trained as an economist, negative rates weren’t in the textbooks. But that’s the world we live in now, and it hasn’t stopped turning."

 
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With Expectations Sky High, Draghi Prepares To Whip Out Bazooka But Beware Water Pistols





Mario Draghi is on deck Thursday morning and market expectations could scarcely be higher. In fact, Draghi is widely expected to execute the Keynesian trifecta, i) a rate cut, ii) expansion of QE, and iii) extension of QE duration. The ECB has indeed gained a reputation for over-delivering, but as SocGen puts it, "with high expectations comes a high risk of disappointment." 

 
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As Market Awaits "Santa" Draghi, The ECB Is "Chasing Its Own Tail"





“If the ECB merely does on 3 December what is effectively priced by the market, we could collectively wake up on 4 December feeling a bit deflated, like a child discovering on Christmas day that his parents ‘only’ gave him what he/she had asked for, without the ‘little extra’ that would have kept him/her smiling all day long."

 
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Did Mario Draghi Just Leak The Bazooka? Two-Tiered NIRP System May Presage Big Rate Cut





With the ECB's December meeting just one week away, Mario Draghi and co. are still debating how best to package a new round of easing measures. As Reuters reports, the central bank is considering a tiered system for the application of negative rates in an effort to mitigate the effect on banks. Translation: the ECB may be preparing to "overwhelm" with an even larger cut to the already negative depo rate that analysts were expecting.

 
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Swiss Bank "Goes There", Applies Negative Rates To Retail Deposits





"We have determined that applying a negative rate was a more transparent and fairer solution for our clientele. This decision on negative rates is costing us a lot of money -- pretty much the equivalent of our entire annual profit last year."

 
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Rich Nation Problems: Even If Norway Wanted To Do QE, They Couldn't





"My guess is that we will have negative rates in Norway before there will be any talk of QE"...

 
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World's Largest Sovereign Wealth Fund Has Worst Quarter In 4 Years After Losing 21% On Chinese Stocks





Norway's $860 billion sovereign wealth fund (tasked with managing the country's vast oil wealth) just had its worst quarter in 4 years and its first back-to-back quarterly loss since 2009 after an array of EM bets went awry. Meanwhile, the government is set to start making withdraws from the fund as slumping crude prices have effectively reduced inflows to zero. 

 
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Slumping Crude Will Send Norway To ZIRP As Economy Careens Toward Recession





With crude prices still stuck in the doldrums, economists at Handelsbanken say the Norges Bank will soon be forced to cut rates to zero in order to stave off a looming recession. What we want to know is this: if the housing bubble that the Norges Bank has helped to inflate bursts, how does the central bank plan to deal with the fallout (which will be amplified by the economic drag from low oil prices) when it has exhausted its counter-cyclical capacity by cutting rates to zero?  

 
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Futures Surge On Renewed "Hopes" Of Fed Rate Hike, Sliding Yen





The market, which clearly ignored the glaring contradictions in Yellen's speech which said that overseas events should not affect the Fed's policy path just a week after the Fed statement admitted it is "monitoring developments abroad", and also ignored Yellen explicit hint that NIRP is coming (only the size is unclear), and focused on the one thing it wanted to hear: a call to buy the all-critical USDJPY carry pair - because more dollar strength apparently is what the revenue and earnings recessioning S&P500 needs - which after trading around 120 in the past few days, had a 100 pip breakout overnight, hitting 121 just around 5am, in the process pushing US equity futures some 25 points higher at last check.

 
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