What’s a Keynesian monetary quack to do when the economy and markets fail to remain “on message” within a few weeks of grandiose declarations that this time, printing truckloads of money has somehow “worked”, in defiance of centuries of experience, and in blatant violation of sound theory? In the weeks since the largely meaningless December rate hike, numerous armchair central planners, many of whom seem to be pining for even more monetary insanity than the actual planners, have begun to berate the Fed for inadvertently summoning that great bugaboo of modern-day money cranks, the “ghost of 1937”.
Here is the one chart which in our opinion virtually assures that the Fed will follow in the footsteps of Sweden, Denmark, Europe, Switzerland and now Japan.
RANsquawk Weekly Wrap - 29th January 2016: Central banks, Oil and US earnings all in focus this weekSubmitted by RANSquawk Video on 01/29/2016 13:41 -0400
Bank of America has a simple question: Why, if we are truly seven years into a “recovery”, are populist parties and politicians dominating the political landscape?
Oil prices around USD 30/bbl mean that an increasingly significant volume of future oil projects no longer make sense. Although Deutsche Bank does not expect US crude inventories to reach capacity, rising US inventories and high US crude imports may heighten downside pressures to push prices closer to marginal cash costs of USD 7-17/bbl for US tight oil, with few plausible scenarios for a strong price recovery in the short term,
"I am pretty mixed on what this BoJ move means but my main observation is that people are incredibly skeptical. Almost everyone I talk to wants to fade this move; it’s just a matter of how long to wait before going the other way... Be prepared for all sorts of insanity today as the market tries to wrap its collective head around month end flows + what this BOJ action means." - Citi
One look at the chart below should explain not only how the "services" half of the US economy continues to grow, but just which tax, because that is how the Supreme Court defined Obamacare, is responsible for healthcare "spending" amounting to a quarter of the growth in US personal consumption expenditures...
Following years of QE-inspired excess returns, investors in 2016 suddenly find themselves embroiled in a broad and brutal bear market. The 10-year rolling return loss from commodities (-5.1%) is currently the worst since 1938, and equal-weighted US stock index down 25% from recent highs. However, in BofAML's view, the pertinent question for investors is whether the current bear market represents a healthy "reset" of both profit expectations and equity and credit valuations, or more ominously, the onset of a broader economic malaise that will require a major policy intervention in coming months to reverse.
It's all falling apart in Germany as frightened citizens load up on small arms and hurl grenades at migrant centers while at least 40% of the public now believes the "Iron Chancellor" should resign.
This is the paradox for Norway: the country needs to buy NOK in order to fund stimulus and support the economy. But by doing so, the Norges Bank is putting upward pressure on the currency at a time when it really needs to depreciate. In other words, what Norway must do to pay for stimulus (buy kroner) is indirectly hurting the economy by keeping the NOK from depreciating and functioning as a counter cyclical buffer.
"Never before have so many central banks explored sub-zero territory at the same time."
The US total rig count dropped 18 to 619 in the last week with a drop of 12 in oil rigs (to 498) as the ongoing lagged drop of crude drives rig counts every lower. Perhaps oddly, given the rig count decline, WTI is tumbling as a 12 rig drop is clearly not enough...
What will they call this "crisis"? Or is it transitory and different this time?
Coordination on production cuts between OPEC and Russia has always been a long shot, and probably still remains an unlikely development. The big difference this time around, though, is Russia’s change in tone. Saudi Arabia had hinted at its willingness last year to undertake a 5 percent production cut if Russia did the same, but up until now Moscow never really took the idea seriously. However, don’t get too excited.