The aspirations to global dominance of the American deep state have resulted in pushing China and Russia to adopt a comprehensive shared strategy in which they place at the center of their relations common interests rather than differences. The maneuvers towards de-dollarization are already being conducted. This for Washington is an existential threat that can hardly be ignored. Equally improbable is the possibility of America halting this drift.
Just as there’s a scheme to pay old investors with new investors money (aka a Ponzi.) There’s another part of the scheme that rarely gets talked about: i.e.,The narrative that fuels the scheme to begin with.Much like the original structure which involves money, this too needs an ever-growing amount of gullible, willing participants. However, the currency here is narrative.
If oil were to drop back under $40, not only would it precipitate even more selling of oil as momentum strategies flip, but it would catalyze a liquidation by those SWFs who thought they were done selling equities, leading to a return of the same sellers that pushed the S&P back to the low 1,900s a short 6 months ago. So for all those curious where stocks are going next, the simple answer is: keep an eye on what oil does next.
Far from a sign of good things for the economy as whole, recently declining oil prices now tend to indicate a weakening economy that was already in a weak state. It turns out that the oil price and the economy are now in a very tight relationship, and we are going to be seeing them together a lot for a long time to come.
On the surface, China is talking the reform talk. But is it also walking the walk? There are many examples to demonstrate it isn’t. The most recent one is a directive from the China Banking Regulatory Commission (CBRC) to not cut off lending to troubled companies and evergreening bad loans.
In a mostly quiet session, European and Asian stocks rose, pushed higher by financial stocks and the USDJPY which initially dipped on some hawkish comments by BOJ deputy governor Iwata, only to rebound later in the session, lifting the Nikkei 1.1%, while the Stoxx 600 rose 0.4% led higher by the banking sector. S&P futures are unchnaged after yesterday's last hour ramp. The key event is the BOE decision due in half an hour.
After 7 consecutive drops in the Dow Jones, the Industrial average is set for an 8th decline with US equity futures modestly lower in the premarket as risk-averse sentiment persists overnight. Oil’s continued slide and recent plunge into a bear market, despite some stabilization this morning just south of $40, has finally rekindled global growth concerns, and is keeping a lid on bullishness. European stocks are little changed, while Asian stocks and S&P futures fall.
Turns out China's capital controls enacted back in December to curb capital outflows might be working... which we're sad to report is bad news for all the 20-something year old I-bankers and tech geniuses reading this post from the comfort of their $2mm, 800 square foot apartments in New York and San Fran.
European stocks and Asian shares rose, U.S. equity futures were unchanged and the yen surged after the BOJ shocked markets and kept its QE program unchanged, defying market expectations of a big boost to its monetary stimulus program.
Overnight China's Banking Regulatory Commission drafted new rules curbing the nation’s multi-trillion market for wealth management products, which was not taken well by the local stock market, leading to a plunge in stocks in early Chinese trading, before rebounding at the close of trading. China's ChiNext index of smaller companies sank as much as 5.5%.
Once again the 'fake' FX stability of pre-geopolitical-events has ben shattered now that the G-20 meetings ended with their usual un-fanfare of nothingness (and rising discord). After exuberant status-quo-supporting weakness in the Yen and stability in the Yuan (against the dollar), that's all coming unglued rapidly in the last 36 hours as USDJPY tests back to a 104 handle and Yuan resumes its weakening trend...