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Futures Bounce Fades As Oil Treads Water, Italian Banks Turmoil, Chinese Stocks Won't Stop Falling

Futures Bounce Fades As Oil Treads Water, Italian Banks Turmoil, Chinese Stocks Won't Stop Falling

Following the Fed's disappointing "dovish, but not dovish enough" statement which effectively admitted Yellen had committed policy error by hiking just as the US economy "was slowing down" which in turn lowered the odds of a March rate hike to just 18%, it was up to oil to pick up the correlation torch, and so it did, rising in an otherwise mixed session which has seen European stocks slide on continued weakness surrounding Italian banks, many of which have been halted limit down, while Asia was unable to pick a direction after the resignation of Japan’s "Abenomics" minister Akira Amari to

Global Stocks Surge, Oil Soars As Hopes For Central Bank Stimulus Return

Global Stocks Surge, Oil Soars As Hopes For Central Bank Stimulus Return

In retrospect it appears Tom DeMark was spot on with his Wednesday prediction, made just as the Dow Jones was down some 500 points that that very day was "an interim low" to be followed by a 5-8% rebound (at which point the selling would resume). In fact, those trading Japanese stocks saw virtually the entire predicted rebound take place in just one day as the Nikkei soared by almost 6% overnight, or nearly 1000 points, the biggest jump in 4 months, while risk everywhere else around the globe has likewise exploded higher, as crude has stormed back over $31/barrel.

Equities Soar, Oil Back Over $30 On Hopes For More Stimulus Following Disturbing Chinese Data

Equities Soar, Oil Back Over $30 On Hopes For More Stimulus Following Disturbing Chinese Data

Only the most intellectually dishonest can claim that last night's Chinese economic data deluge was anything but miserable. As we showed last night, everything missed:

  • Industrial Production +5.9% (MISS vs +6.0% YoY expectations)
  • Retail Sales +11.1% (MISS vs +11.3% YoY expectations)
  • Fixed Asset Investment +10.0% (MISS vs +10.2% YoY expectations),
  • Q4 GDP growth +6.8% (MISS vs +6.9% YoY expectations).

Even as the real full year GDP of 6.9% was in line, it was still the lowest since 1990...

Chinese Stocks Plunge, Asia At 4 Year Lows But PBOC Currency Intervention Pushes US Futures Higher

Chinese Stocks Plunge, Asia At 4 Year Lows But PBOC Currency Intervention Pushes US Futures Higher

Once again, China was faced with the unpleasant task of deciding which asset class to intervene in: its plunging stock market, or its currency. It chose the latter, and as a result after a turbulent start the Shanghai Composite sank by 5.3% to close just above 3000 and down 15% in just the past 11 days, suggesting that the PBOC is increasingly seeing the CNY1.8 trillion (at least) spent to stabilize stocks as a sunk cost.

Happy New Year: Global Stocks Crash After China Is Halted Limit Down In Worst Start To Year In History

It all started off relatively well: oil and US equity futures were buoyant on hopes Iran and Saudi Arabia would break out in a bloody conflict any minute boosting the net worth of shareholders of the military industrial complex, and then, out of nowhere, like a depressed China in a bull shop, the "mainland" crashed the party following a terrible manufacturing PMI report, which sent Chinese stocks sliding slowly at first, then very fast.

 

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