Back in late 2014 and early 2015, this website soundly mocked any and every economist that suggested that plunging oil prices - in a globalized economy where oil has been financialized beyond recognition and impacts every asset class, the stock market, global trade flows, and international diplomacy - is "unambiguously good."
One month ago, when looking at the overall level of short interest across the market, we reported that according to JPM, the "most painful part of the short squeeze may be yet to come", and sure enough, aided by an unprecedented amount of central bank intervention, the market has since surged, in no small part due to ongoing covering of short positions.
However, one look at the NYSE short interest data reveals something troubling: there are still many shorts out there.
The Fed has backed itself into a corner.
For seven years now we’ve been told the US is in a recovery. However, if this were the case, the Fed would have started raising rates years ago (likely in 2012). No other recovery on record saw the Fed maintaining ZIRP for so long.
There is simply no factually credible argument for why rates should be ZIRP if the economy is expanding. You cannot have claims of a “recovery” or expansion while ZIRP is in place. ZIRP is meant to be an emergency policy meant to pull the economy out of a severe recession, NOT a long-term program.
From Morgan Stanley's Matthew Hornbach
Unbeknownst to me at the time, I learned a valuable lesson at the start of my career that would resurface years later. Nearly 16 years ago, I began working in Tokyo as an analyst on the Japanese government bond trading desk at Morgan Stanley. It was August 2000 and the Bank of Japan raised its overnight policy rate by 25bp for the first time since initiating its zero interest rate policy, in February 1999.
Source: hln.be
We have already reported back to you several times on how desperate the European Central Bank seems to be in its attempts to get the money circulation in the Eurozone going again. Unfortunately all of its previous ‘ideas’ didn’t really work out too well, and the ECB just continues to cut its most important interest rates to discourage the banks to deposit cash at the ECB in overnight deposits.