Three weeks into January things were looking rather grim.
Plunging crude, jitters about the ongoing (and increasingly unpredictable) yuan devaluation, and spillovers to global risk assets stemming from an ill-fated attempt by Chinese regulators to implement a stock market circuit breaker got US equities off to one of their worst Januarys in history.
While the prevailing dour (or perhaps sour) overnight mood was a continuation of the weak oil theme which started yesterday after Iran said the production freeze proposed by Saudi and Russia as "ridiculous", and Saudi oil minister Al-Naimi said that Saudi won't cut supply and that high-cost producers need to either "lower costs, borrow cash or liquidate” (ideally the latter), risk sentiment was further dented when BOJ Governor Kuroda says he won’t target FX rates or stocks, which is clearly nonsense, and further spooked Japanese asset prices (Nikkei -0.85), while s
If you listen to administration officials, the key to winning the war on ISIS is to cut off the group’s funding, some of which the government claims is tied up in stacks of U.S. dollars. At the same time, banking interests and policymakers claim possession of a $100 bill is practically evidence of criminality in and of itself. As these two efforts to stigmatize cash intersect, America faces a dramatic push to eliminate, or at the very least drastically curb, the existence of physical money.
By EconMatters
After short covering Monday, Tuesday pushed the oil market down with no help from OPEC and a Risk Off mode in financial markets. With a bad API report after hours look for weakness ahead of the Department of Energy Report on Wednesday morning.