Bank of America
It is safe to say that nobody expected the BOJ stunner announced last night, when Kuroda announced that Japan would become the latest country to unleash negative interest rates, for one simple reason: Kuroda himself said Japan would not adopt negative rates just one week ago! However, a few BIS conference calls since then clearly changed the Japanese central banker's mind and as we wrote, and as those who are just waking up are shocked to learn, negative rates are now a reality in Japan. The immediate reaction was to send the USDJPY surging by nearly 200 pips, back to levels seen... well, about a month ago.
After the Fed's statement, one thing was clear: the career economists at the Marriner Eccles building are very confused, admitting to hiking rates for the first time in nine years "even as economic growth slowed late last year". But more confused are the Wall Street economists who follow the Fed and are expected to interpret what the Fed says, means and hints, especially when said Fed has no clue what is going on, like right now. So while their opinions are utterly worthless, for the record, here is what the economisseds see in today's 558 words of sheer Fed confusion.
Between 1990 and 2010, eventually 37 banks would become JP Morgan Chase, Bank of America, Wells Fargo, and Citigroup. The “Big Four” retail banks in the United States collectively hold 45% of all customer bank deposits for a total of $4.6 trillion... as the biggest got biggest-er all thanks to the very visible hand of The Fed's free money.
For those who are inching closer to the "crash is imminent" camp, we suggest taking a look at the chart below showing the stress levels, or rather lack thereof, 2 months prior to every major crash in the past decade, and extrapolating how far said "stress" may soar to in the coming 8 weeks if, as Citi, JPMorgan and Deutsche Bank today suggest, central banks are on the verge of losing control...
Back in August we noted that John Paulson managed to get himself and his investors involved in two rather dubious "firsts" in 2015: Puerto Rico became the first US commonwealth in history to default, and Greece became the first developed country to default to the IMF. Paulson had invested in Puerto Rican and Greek assets. Now, amid a client exodus, the billionaire is putting up his own holdings to secure a longstanding line of credit with HSBC.
It has been another volatile, illiquid, whipsawed session, driven by the only two things that have mattered so far in 2016, China and oil.... and stop-hunting algos of course.
Courtesy of Bank of America, here is a list of the 100 top hedge funds in the US and their 100 favorite stock holdings - assuming the status quo continues, expect very substantial asset declines among these 100 when we rerun this analysis in 52 weeks time.
The one question on everyone's lips, is whether aside from a "interim low", was Wednesday's flush the market's lows for the foreseeable future, and certainly for the first quarter.Bank of America responds.
Eight months ago, Bank of America chief economist Ethan Harris triumphantly declared victory over the "perma-bears." Today, the "perma-bears" get the last laugh.
According to stocks, a half-recession is precisely where the US was as of roughly noon yesterday, when the S&P touched an intraday low of 1812. This represents a 15% drop from the all time high close of 2,131 last summer. It also represents half the post-World War II average peak to trough decline around recession, which amounts to roughly 30%.
Today, none other than railroad titan Canadian Pacific (whose stock is down 4% despite the torrid surge higher in risk assets) confirmed that not only are things "worse", but the bottom may have fallen out from what until recently was one of Warren Buffett's favorite industries, after missing on both the top and bottom line, but especially during its conference call in which the management team admitted to "tremendous pressure" on the top line, "challenging times" for revenue growth, strong headwinds for the US economy in 2016 and warned another 1,000 workers are about to get the pink slip.
One thing is clear: banks are not only not telling the full story, but the story they are telling is compromised. Still one has to start somewhere with whatever data is publicly available, so courtesy of Reuters, here is a summary of what the big U.S. banks who have reported Q4 earnings so far, say about their energy exposure.
The end of America’s oil “miracle” is coming and there’s nothing Wall Street can do to stop it. At this point in the game, no one is going to finance the oil patch's cash flow deficits and the fundamentals in the oil market are laughably bad. As Bloomberg reports, Wall Street is about to have a serious bout of “indigestion” because recent auctions suggest that “some bankrupt oil and gas drillers can’t give their assets away.”
"What keeps us up at night, however, is a situation where history is little indicator of what’s to come. Although there is no doubt that we do not need to have a recession in 2016 to experience further high yield weakness, we are concerned that this cycle could prove to be not only different, but more severe than past cycles. Should a slowdown today be swifter and deeper, more akin to 2008 than 2002, we are concerned about the ability of the central bank to create enough monetary stimulus to stem a crisis."