RBS

Deutsche Bank Is Crashing Again As European Banks Slide To Crisis Lows

As of this moment, various European banks but most prominently Deutsche Bank as well as Credit Suisse and RBS, have been crashing back to lows hit in early February and then all the way back to the March 2009 "the world is ending" lows. The problem is that now that global central banks are more focused on appeasing China and keeping the USD weaker (by way of a dovish, non-data dependent Fed), the pain for Europe (and Japan), and their currencies, and their banking sector, will likely only get worse. This is precisely the case proposed by Francesco Filia of Fasanara Capital, who explains below his "Short European Bank Thesis."

The Path To The Final Crisis

We cannot be sure what shape the next crisis will take, although it seems likely that it will be yet another “deflation scare”, mainly caused by falling asset prices. However, we do know what the last crisis of the current system will look like. It will entail a crumbling of the public’s faith in fiat money and the institutions that issue and administer it.

Why Currency Traders Are So Confused

"The FX market is confusing this year. More easing by the BoJ, the RBNZ, the Riksbank, the ECB and the Norges Bank, led to stronger currencies, despite delivering more than markets had expected in all cases. The market seems to be taking recent monetary policy easing as evidence that central banks are reaching their limits, as their forward guidance has sent mixed signals."

Will The Fed Follow The BoJ Down The NIRP Rabbit Hole?

At this point, one wonders why any central banker would chase down the NIRP rabbit hole only to find themselves the protagonist in the latest retelling of "Krugman in Wonderland," but alas, the experiment continues. The only question now is this: will the FOMC take the plunge? Here's a chronological list of Fed NIRP commentary.

Frontrunning: March 11

  • Shares bounce, euro fades after savage ECB reaction (Reuters)
  • Trump's Islam comments draw attacks as Republicans discover civility (Reuters)
  • Oil Prices Rise on Hopes Glut Will Ease (WSJ)
  • IEA Says Oil Price May Have Bottomed as High-Cost Producers Cut (BBG)
  • Why Euro-Area Inflation Will Be Low for Years, According to Draghi (BBG)
  • Calmer markets, positive data prime Fed to push ahead with rate rises (Reuters)

Asian Surge Continues As Rally Stalls In Europe; S&P Futures Unchanged

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.

Frontrunning: February 26

  • Fight night: Rubio, Cruz gang up on Trump in debate ploy (Reuters)
  • Laid Bare in Shanghai: G-20 Tensions Over How to Spur Growth (BBG)
  • China Flags Scope for Policy Stimulus, Tweaks Monetary Stance (BBG)
  • Global Stocks Rise With Commodities as China Sees Room to Ease (BBG)
  • Greece seeks to stem migrant flow as thousands trapped by border limits (Reuters)

Frontrunning: February 22

  • Futures sharply higher as oil extends gains (Reuters)
  • Global Stocks Gain on Rising Commodities Prices, China (WSJ)
  • Pound in freefall as Boris Johnson sparks Brexit fears (Telegraph)
  • Pound Slides Most Since 2009 as Johnson Backs ‘Brexit’ Campaign (BBG)
  • Oil Glut Will Persist Into 2017 as IEA Sees Prices Capped (BBG)
  • Japanese Seeking a Place to Stash Cash Start Snapping Up Safes (WSJ)

Neil Howe Warns The 'Professional Class' Is Still In Denial Of The Fourth Turning

"The world has fundamentally shifted over the last decade, especially since we’ve emerged from the Great Recession... But the professional class has been very slow to understand what is going on, not just quantitatively but qualitatively in a new generational configuration that I call the Fourth Turning. They don’t accept the new normal. They keep insisting, just two or three years out there on the horizon, that the old normal will return – in GDP growth, in housing starts, in global trade. But it doesn’t return."

The Return Of Crisis

Let me be blunt: this next crash will be far worse and more dramatic than any that has come before. Literally, the world has never seen anything like the situation we collectively find ourselves in today. The so-called Great Depression happened for purely monetary reasons. Before, during and after the Great Depression, abundant resources, spare capacity and willing workers existed in sufficient quantities to get things moving along smartly again once the financial system had been reset. This time there’s something different in the story line...