Here is this morning's market update from JPM's Adam Crisafulli
It's hard to imagine an uglier morning. The two things markets hate most right now (neg. central bank rates and bad bank headlines) occurred overnight as the Riksbank dropped its rate further into neg. territory and SocGen put up bad earnings/guidance.
Yesterday morning, when musing on the day's key event namely Yellen's congressional testimony, we dismissed the most recent bout of European bank euphoria which we said "will be brief if not validated by concrete actions, because while central banks have the luxury of jawboning, commercial banks are actually burning through funds - rapidly at that - and don't have the luxury of hoping for the best while doing nothing." This morning DB has wiped out all of yesterday's gain.
The canary in the coalmine of an increasingly desperate energy industry just croaked. With "unusual timing" and at "distressed prices," Reuters reports that Phillips 66 - the major US refiner owned by Warren Buffett - dumped crude oil for immediate delivery into Cushing storage tonight. This sparked heavy selling of the front-month WTI contract (to a $26 handle) and crashed the 1st-2nd month spread to 5 year lows.
As regular readers are no doubt aware, we like to check in on the hookers from time to time.
By that we of course mean SouthBay Research’s Vice Index, which tracks spending on fun activities in the cash economy.
Fun activities like boozing, gambling, and escort hiring. “Luxury good spending is sensitive to shifts in the economic winds, vice is even more so,” Andrew Zatlin reminds us. “A prostitute costs almost two days of after-tax wages [and] the consumer’s stack of money has to be a certain height before they can get on that ride.”
Earlier this month, Kyle Bass asked a funny question in a discussion with CNBC’s David Faber. To wit: “If some fund manager in Texas is saying that your currency is dramatically overvalued, you shouldn’t care on a $10 trillion economy with $34 trillion in your banks. I have, call it a billion - it’s so small it should be irrelevant and yet somehow it’s really relevant.”