Business

A growing number of investors are beginning to realize that Central Banks are effectively out of ammo (for now).

Last week I noted that the Bank of Japan’s implementation of NIRP only generated a brief rally in Japanese stocks.  That rally has since been obliterated as Japanese stocks collapsed 10%.

This collapse has finally prompted the mainstream financial media to question NIRP. It’s a shame no one bothered to question NIRP, ZIRP, and QE when the markets were still rallying!

HSBC: Sweden's Experience Shows Negative Rates Haven't Worked

Submitted by Pater Tenebrarum via Acting-Man.com,

Perverse Incentives

We haven’t written about Australia’s residential real estate bubble for some time (readers may want to check out last year’s post “Australia’s Bubble Trouble”, which contains numerous relevant charts and data).

Property auction in Sydney

Following last night's major build (from API), DOE reported a bigger than expected Crude build (3.5mm vs 3.25 exp). Crude prices jerked higher on this news as it was less than the API print of +7.1mm build and Gasoline and Distillates inventories dropped. However, the gains are not holding as Cushing inventories rose 333k barrels (the 15th build in the last 16 weeks.

API:

• Crude +7.1mm (3mm exp)
• Cushing +307k (300k exp)
• Gasoline +569k (-1mm exp)
• Distillates -267k (-700k exp)

DOE:

In recent weeks Bank of America's new chief technician Stephen Suttmeier has been surprisingly bearish, predicting that the rally is over, as Tom DeMark cautioned yesterday, key support levels are not defended in which case the S&P 500 is looking at a substantially greater drop. Today, his skepticism reached new heights, when he warned that should the failure to break out higher persist then the market is facing a drop to as low ast 1575-1600, something which even Goldman now agrees with.

Below is an excerpt from his latest attempt at a diplomatic guide down:

Following this week's ongoing demise of the US manufacturing sector, tumbling to its weakest since October 2012, Markit US Services PMI collapsed into contraction at 49.8, massively below expectations of 53.5. This is the weakest level for the last pillar standing in the US recovery since the government shutdown in 2013, and as Markit even admits, "slumping business confidence and an increased downturn in order book backlogs suggest there’s worse to come."