"I hoped to buy toilet paper, rice, pasta. But you can’t find them. The government is putting us through savage suffering."
Japanese stock markets have crashed 15% (the "most since Lehman") and USDJPY plunging (most since 1998) since Kuroda unleashed NIRP and are down 11% since QQE2 was unveiled to save the world from an absent Fed. So with NIRP and QE (and jawboning) now 'useless' for Japanese monetary policy, there is only one option left - Yentervention.
Following a week of crazy volatility, overnight exhausted markets took a breather.
Day after day we are told that the plunge in oil prices (just like the collapse in The Baltic Dry freight index) is a "supply" issue... it's transitory and global demand is doing fine thank you very much. Sadly, as everyone really knows deep down inside their Keynesian hearts, this is utter crap and as Barclays shows the shocking 18% YoY crash in distillates "demand" - something that has never happened outside of a recession - blows the one-sided argument of the energy complex out of the water.
“We have listened to feedback and as a result decided to change the way these cost savings are to be achieved"...
- Global Stocks Bounce Back After Market Selloff; Asia Stumbles (WSJ)
- New Hampshire Bucks the Establishment to Back Trump and Sanders (BBG)
- Trump shows his U.S. presidential bid is no mere publicity stunt (Reuters)
- Clinton Is Outdone by a Competitor Once Considered a Fringe Candidate (WSJ)
- Deutsche Bank Jumps as Lender Said to Consider Bond Buyback (BBG)
- Bank Executives Leading Surge of Insider Buying Amid Stock Rout (BBG)
As oil stays "lower for longer", and as many more European banks are forced to first reserve and then charge off their existing oil and gas exposure, expect much more diluation. Which, incidentlaly also explains why European bank stocks have been plunging since the beginning of the year as existing equity investors dump ahead of inevitable capital raises.
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...
- European stocks plunge as Lunar New Year offers no cheer (Reuters)
- European Stocks Fall, Credit Weakens as Signs of Distress Abound (BBG)
- Management trouble at world's biggest hedge fund: Bridgewater succession plan in flux as heir Greg Jensen steps back (FT)
- U.S. athletes should consider not attending Olympics if fear Zika - officials (Reuters)
- Geithner Gets JPMorgan Credit Line to Invest With Warburg Pincus (BBG)
- Top Clinton Donor Wants a Law Against $1 Million Gifts Like His (BBG)
As bad as the month of January was for the global economy, the truth is that the rest of 2016 promises to be much worse.
- January Jobs Report Closely Watched for Momentum, Wages (WSJ)
- Oil prices steady, weak fundamentals weigh after volatile week (Reuters)
- How Much Global Oil Output Halted Due to Low Prices? Just 0.1% (BBG)
- Congress Tweet 'Unfortunate,' Lawyer Says as Shkreli Goes Online (BBG)
- Syrians Flee Aleppo to Escape Damascus Offensive Against Rebels (WSJ)
- Dollar Set for Biggest Weekly Loss Since 2009 Before Jobs Data (BBG)
US futures were largely unchanged overnight, with a modest bounce after the European close driven by a feeble attempt to push oil higher, faded quickly and as of this moment the E-mini was hugging the flatline ahead of today's main event - the January payrolls, expected to print at 190K and 5.0% unemployment, however the whisper number - that required to push stocks higher - is well lower, at 150K (according to DB), as only a bad (in fact very bad) jobs number today will cement the Fed's relent and assure no more rate hikes in 2016 as the market now largely expects.
- Stocks cautious after rocky China data, bonds fly high (Reuters)
- Oil falls on China data, fading prospect of OPEC action (Reuters)
- Republican Vote in Iowa Caucus Hinges on Newcomer Turnout (WSJ)
- When Trump tells supporters not to donate, they mostly listen (Reuters)
- Goldman Sachs Employees Shift to Rubio as Bush Support Fades (BBG)
- Four Theories on How Oil Has Hypnotized the Global Stock Market (BBG)
It didn't take much to fizzle Friday's Japan NIRP-driven euphoria, when first ugly Chinese manufacturing (and service) PMI data reminded the world just what the bull in the China shop is leading to a 1.8% Shanghai drop on the first day of February. Then it was about oil once more when Goldman itself said not to expect any crude production cuts in the near future. Finally throw in some very cautious words by the sellside what Japan's act of NIRP desperation means, and it becomes clear why stocks on both sides of the pond are down, why crude is not far behind, and why gold continues to rise.