Don`t focus on Energy company earnings as they are going to be awful, keep in mind money has to be stored somewhere.
Locking It In. Since January, the spread between spot Brent prices and 2020 Brent prices has dropped nearly $8.00 to $10.71 per barrel, indicating selling in 2017, 2018, and 2019 futures contracts. According to Reuters, the majority of selling has come from E&Ps looking to lock in prices to hedge against a repeat of last year's second half commodity price route. At the same time, the hedges indicate a lack of confidence that the current commodity rally will continue.
"...markets have essentially lost confidence in the ability for central banks to stoke growth and inflation... we see very few reasons to be excited by today’s action or any development since the February 11th market lows."
"Risk assets about to top: ultimately markets about "rates" and "earnings", little else; central banks have played “rates card” as aggressively as they can; ECB done, BoJ has nothing in the tank, and any US macro strength will elicit Fed rate hike expectations (the Fed wants to tighten); EPS momentum simply not strong enough near-term to overwhelm Q2 risks of Brexit, BoJ failure, US politics, China debt deflation."
Less than 24 hours after European stocks tumbled on initial disappointment by Draghi's announcement that rates will not be cut further, mood has changed dramatically and the result has been that after "reassessing" the ECB kitchen sink stimulus, risk has soared overnight with both Asian and European stocks surging. As of this moment European bourses are all broadly higher led by banks, with the DAX and FTSE both up over 2.7%, while the Stoxx 600 is higher by 2.3% as of this writing.
Global stocks and U.S. equity futures are fractionally higher (unchanged really) this morning (despite China's historic NPL debt-for-equity proposal) as traders await the main event of the day: the ECB's 1:45pm CET announcement, more importantly what Mario Draghi will announce during the 2:30pm CET press conference, and most importantly, whether he will disappoint as he did in December or finally unleash the bazooka that the market has been desperately demanding.
The European Central Bank promised in January to "review and reconsider" its monetary stance this week. The question, as BloombergBriefs notes, is not if policy makers will ease but how. Haruhiko Kuroda's humbling in FX markets shows what Mario Draghi is up against tomorrow: namely, that even the most forceful policy decisions can be overwhelmed by events, positioning, or sentiment. Draghi has a number of options (some more and some less priced in) but most crucially there two large gaps to be filled in European Stock indices - the question is which is filled first?
In the aftermath of last week's disappointing G-20 Shanghai summit, there was much riding on this weekend's start of the China's People's Congress, and specifically what if any stimulus announcement Beijing will make; sadly for stimulus addicts China mostly disappointed and after the unimaginative scope of growth proposals, it is hardly surprising that European stocks and US equity futures have taken a leg lower.
There is an odd feeling of Deja QEu this morning, when with two hours to go until the February payrolls, global stocks are modestly higher, US equity futures are likewise slightly higher on the back of a weaker dollar (or perhaps stronger Euro following a Market News report according to which the ECB may disappoint, more on that shortly), but it is gold that is breaking out, and after entering a bull market yesterday when it rallied 20% from its December lows gold has continued to surge, rising as high as @1,274 in early trading a price last seen in January 2015.
While Asian stocks continued their longest rally since August overnight, led higher for the third consecutive day on the back of Japan (+1.3%), Australia (+1.2%) and China (+0.4%) strength, European stocks have as of this moment halted their longest rally since October (Stoxx -0.1%) and U.S. index futures are little changed. Oil slipped from an eight-week high despite yesterday's massive rise in US oil inventories on hopes Saudi Arabia may be forced to cut production as its budget strains grow actue and the kingdom is forced to seek a $10 billion loan, its first material borrowing in a decade.
With markets happy to put February in the history books because it marked the fourth consecutive monthly decline in global stocks, we move on to March 1st, which doubles down as 'Super Tuesday' in the US when Trump's presidential candidacy will almost certainly be sealed and a day in which stocks decided to join the super fun by super surging overnight on nothing but bad global macro and economic which however was promptly ignored and instead the focus was on ongoing central bank intervention and even more jawboning.
"Extreme negative leadership readings of this duration generally only occur in bear markets", which in addition to the PBOC's panicked RRR cut overnight to halt the latest swoon in stocks, confirms that this is merely the latest bear market rally.
Monetary Metals has been predicing a rising gold-silver ratio. This ratio moved up very sharply this week, and now it takes 83.2 ounces of silver to buy an ounce of gold.
It's within a hair’s breadth of breaking out past the high set on Oct 17, 2008.
Fearful of a renewed rise in the US dollar, Saxo's chief economist Steen Jakobsen expects a "nasty March" as this will kill commodity stabilization as well as the ability of emerging markets to live up to their expectations to revitalize the global economy. Despite The Bank of Japan's clear "example of how not to do things," Jakobsen warns other central banks will follow Kuroda's cue and, as he explains below, is "shorting everything" as he sees two major canaries in the coalmine.