Business

The ECB's "whatever it takes" ponzi strategy of keeping the dream alive in Europe's financial system has finally been caught as rapid collapse in the banking system is contagiously spreading to peripheral sovereigns once again. Portugal risk spreads are up 120bps in the last 3 weeks and Spain and Italy are soaring over 35 and 50bps respectively as the almost self-dealing nature of banks buying "risk-free" EU bonds and repoing for cash via The ECB comes home to roost...

Here is how global currency warfare and the global "race to debase" works: ECB cuts rates to -0.3%, the BOJ cuts to -0.1%, then the ECB cuts to -0.7% next.

• Investors dump stocks (Reuters)
• Global Bond Rally Near `Panic' Level With Japan Yield Below Zero (BBG)
• Global Growth Fears Hit Bank Stocks (WSJ)
• GOP Race for Second in New Hampshire Intensifies (WSJ)
• N.H. Primary: Where Each 2016 Candidate Needs to Place to Build Momentum (WSJ)
• ‘Risk parity’ strategy shows strain (WSJ)
• U.N. fears for hundreds of thousands if Syria troops encircle Aleppo (Reuters)
• World's Negative-Yielding Bond Pile Tops $7 Trillion (BBG)

Yesterday's desperate scramble by Deutsche Bank to comfort markets about its liquidity position worked, for about three hours. And then, the bank which really should just keep its mouth shut, did the opposite and reminded an already panicked market just how "serious" things are, in the parlance of Jean-Claude Junkcer, when in an internal memo, the CEO assured his workers that:

• DEUTSCHE BANK CEO: CAP STRENGTH, RISK POSITIONS ’ROCK SOLID’

That was the good news. The bad news:

With China offline for the rest of the week, global markets have found a new Asian bogeyman in the face of Japan which as reported last night saw its markets crash, and the Yen soar, showing that less than 2 weeks after the BOJ unveiled NIRP, yet another central bank has lost control.