Business

Last September, in the aftermath of Sweden going full NIRP, we warned that "Sweden Goes Full Krugman, Gets Massive Housing Bubble", in which we showed the unprecedented surge in Swedish home prices, which have been the one asset class to "benefit" the from the Riksbank's ultra loose monetary policy hoping to stimulate inflation, even as overall inflation has failed to materialize.

Since then things have only gone more surreal, and the chart below shows what has happened to Swedish home prices in recent months.

Submitted by Nick Cunningham via OilPrice.com,

Oil prices have shown signs of life over the past few weeks, as production declines in the U.S. raise expectations that the market is starting to adjust. As a result, Brent crude recently surpassed $40 per barrel for the first time in months.

One would think that as we approach the most important event of the week, and perhaps the month, namely the latest FOMC announcement due in just over three hours and one which is expected to confirm that rate hikes are back on the table, something which a few months ago unleashed another round of teeth crushing volatility, that the VIX would be higher.

Not only is it not higher, but instead as the chart below shows, the VIX has just tumbled by 6%, to fresh 2016 low, and a level not seen since mid-December.

For the 7th week in a row, Cushing inventories saw a build (+545k) pushing to new record high stockpiles but that was offset by a smaller-than-expected build in overall crude (+1.3m vs +3.2m and less than API overnight). Smaller-than-expected draws in Gasoline and Distillates are helping to fade the early gains in crude.

DOE

One reason given for the contention that investors should fade Draghi’s latest “package” is that, to quote Deutsche Bank, “we are one hawkish Fed statement away from a re-pricing.”

The argument is essentially this: the Fed reminds the market that more rate hikes are still in the cards (even if there isn’t one today), that leads to dollar strength, which in turn triggers a renewed downturn in commodities and thus a return to the same dynamics that waylaid markets earlier this year.

Here’s how Goldman put it last week: