"The Chinese market didn’t react as bad as we feared and with the weak export data there is some big hope that he central banks will react quite fast," John Plassard, senior equity-sales trader at Mirabaud Securities LLP in Geneva, told Bloomberg. "It’s a mix of hope of intervention from the Asian central bank, short squeeze and also a relief in some energy and banking sectors, the most shorted sectors." And there are your catalysts for today's surge: hope of more central bank intervention and a global short squeeze.
Debt is a temporary stop gap measure for politicians to kick the problem to a new generation; and worse still, all the new debt has done very little to rescue three decades of falling wages. Simply put, we are bumping up against the limits of both fiscal and monetary policy... and financial markets are just now realizing this.
"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."
Economists keep claiming economic recovery fulfilled, and yet it is found nowhere other than the BLS... and it is certainly not the view of funding and credit markets. In answering why economists and policymakers would throw out the vast and growing volume of especially market-based contradictions to their preferred labor view, we only have to note that this is an existential question for them.
"I spend most of my time, while looking at current prices, thinking about and trying to live six months to one year in the future.... What I can see now is that US growth is slowing, and that the market is likely to price in reduced monetary tightening." ... but... " The future for me is now more uncertain than at any time I can remember"
The Fed's Bill Dudley just unleashed the most cognitively dissonant statement of his career. That superlative is highlighted by theses two headlines:
DUDLEY SAYS U.S. ECONOMY IS IN QUITE GOOD SHAPE
DUDLEY: DON'T SEE NEGATIVE RATES HAVING 'BIG CONSEQUENCE'
Try telling The BoJ's Kuroda that!!
In his latest communication with the outside world, Gundlach said that gold prices are likely to reach $1400 an ounce "as investors lose faith in central banks", Reuters reported. "The evidence that negative rates are harmful and not helpful has piled up to the point that the 'In Central Banks We Trust' mantra has finally been laid bare as a hoax,"
In a replay of yesterday's idiotic opening action, WTI crude spiked on Saudi troops headlines - running stops to yesterday's close - only to dump back below $27 once again...
"Trying to divine the end of the rout is difficult given the globe is in the midst of a series of tightly intertwined, self-reinforcing, and correlated trades and narratives (i.e. oil slumps and drags inflation down with it which prompts CBs to ratchet up accommodation which sinks banks which crushes general market sentiment and the overall price declines tighten financial market conditions and scares corporate execs and actual economic activity begins to deteriorate)."
Janet Yellen's "Humphrey-Hawkins" Testimony: Economic Strains, Tightening Pains, & No Stock Gains - Live FeedSubmitted by Tyler Durden on 02/10/2016 10:56 -0400
Fed Chair Yellen will be presenting her semi-annual monetary policy testimony - sometimes called the "Humphrey-Hawkins" testimony - today (House Financial Services Committee) and tomorrow (Senate Banking Committee). Her prepared remarks offered little new information over the January FOMC Statement but the Q&A will likely be the most market-moving as politicians likely demand she "get back to work" for the good of the nation's shareholders.
With world markets begging for moar, Janet Yellen's prepared Humphrey-Hawkins Testimony was a disappointment:
- *YELLEN: FED EXPECTS ECONOMY TO WARRANT ONLY GRADUAL RATE RISES (everything is fine)
- *YELLEN: JOB, WAGE GAINS SHOULD SUPPORT INCOMES AND SPENDING (everything is awesome)
- *FED REPORT: LEVERAGE RISKS IN FINANCIAL SECTOR `REMAIN LOW' (so don't worry about banks)
- *YELLEN: FINANCIAL STRAINS COULD WEIGH ON OUTLOOK IF PERSISTENT (so, there's chance)
The bottom line this is simply a rerhash of the Jan FOMC Statement and does not offer enouigh dovishness for the market.
The year continues to be bruising for risk assets and recent attempts at stabilisation have been unsuccessful. After a mild rebound, equities and US credit spreads are again close to their year’s worst levels. In addition to the initial concerns about China and energy, two new issues further weigh on risk sentiment: the slowdown in US growth momentum and the tightening of financial conditions especially in European financial credit.
"I don't mean that in a negative way. I am happy."