BMO's Mark Steele is a man of few words, preferring pictures to make his points... but they matter:
Let’s just keep it simple. When bank risk breaks to the upside, it’s bad for equities...
European bank risk is breaking out...
which has arrested the pullback in U.S. bank risk - which is now soaring...
And that bodes ill for global stocks...
Just 10 days after "Moody's Put Over Half A Trillion Dollars In Energy Debt On Downgrade Review", moments ago S&P decided it wanted to be first out of the gate with a wholesale downgarde of the US energy companies, and announced that it was taking rating actions on 20 investment-grade companies, including 10 downgrades.
The full release is below:
Year-to-date, BofAML's Baraby Martin notes that the market narrative has swung wildly. "US recession...", “global recession...", "China devaluation...", "commodity bust..." and "energy defaults..." have all been blamed as the major drivers of risk assets thus far in ‘16. The bearish concoction has left markets way down from their January levels. In credit, investment-grade spreads widened 16bp last month, and high-yield 36bp – the worst start to the year since 2008.
Dear Bank of Japan, how do you spell unintended consequences:
Here is the full Nikkei report on this absolute stunner of a development:
This was not supposed to happen. None other than The U.S. Federal Reserve Bank of Dallas, in a research paper released in January, said that
a drop in oil prices brought about by rising supply -- like the current one -- should boost global growth by up to 0.4 percentage points. “This is mainly due to an increase in spending by oil-importing countries, which exceeds the decline in expenditure by oil exporters,” the paper said.