Business

Initial jobless claims dropped notably last week (from 285 to 269k) but the overall trend (away from the noise) appears in tact. The smoother4-week average remains near 12-month highs and as Goldman notes weakness is widespread - "there is only limited evidence that the rise in claims is due to distress in the energy sector." Continuing claims dropped modestly to 2.239mm but, as Goldman adds, "the persistence of the recent move suggests more might be going on, and we are treating the increase as more than just noise."

"Whatever it takes" is not enough, it would appear as the fragility and interconnectedness forced upon the European banking/sovereign finance ponzi has rapidly come home to roost for Draghi and his followers. Peripheral bond risk has flipped from "hold your nose" buys to panic sells with Portugal risk exploding 200bps in the last week. As the European banking system's credit risk rises 2012-crisis-like, it seems belief in a bigger bazooka is fading fast.

It's not just Deutsche Bank...

Smashing European Peripheral risk higher...

"Worse than Lehman" is how one European bond market trader described the carnage this week as the brief respite that ECB monetization and debt-buyback rumors provided yesterday have morphed into utter destruction this morning. European (and US) banks are a sea of contagious red with Deutsche Bank the tip of the collapse spear. Credit risk on Deutsche has exploded this morning with Sub CDS trading up 85bps to a record high 540bps... eerily reminiscent of the pre-Lehman bankruptcy week in 2008.

Time to panic now?

• Gold Roars to One-Year High as Turmoil Drives Safe Haven Demand (BBG)
• Banking Stocks Pummeled in Europe (WSJ)
• Dollar, stocks plunge sparks scramble for safety (Reuters)
• Nymex Crude Slips Below $27 a Barrel (WSJ)
• No Respite for S&P 500 as U.S. Stock Futures Join Global Selloff (BBG)
• Walgreens Threatens to End Theranos Agreement (WSJ)
• Next Task for Clinton, Sanders: Securing the Minority Vote (WSJ)
• Yen Advances to 15-Month High as Korean Tensions Stoke Haven Bid (BBG)

Mutual Funds, ETFs at Risk of a Run Warns Stockman

In one of his starkest warnings yet, Former White House Budget Director (Office of Management and Budget, OMB), David Stockman has warned that banks and the global financial system remain vulnerable and there is likely to be another global financial crisis which will be worse than the first involving "a run on mutual funds and ETFs."

Stockman warns in a Bloomberg interview that Deutsche Bank