Business

Over the past year, and certainly in the aftermath of the BOJ's both perplexing and stunning announcement (as it revealed the central banks' level of sheer desperation), we have warned (most recently "Negative Rates In The U.S. Are Next: Here's Why In One Chart")  that next in line for negative rates is the Fed itself, whether Janet Yellen wants it or not. Today, courtesy of Wolf Richter, we find that this is precisely what is already in the small print of the Fed's future stress test scenarios, and specifically the "severely adverse scenario" where we read that:

As we wrote yesterday when reviewing the latest note from JPM's Mislav Matejka, according to the JPM strategist not only had the window to buy stocks into the torrid S&P500 rebound closed, but traders should "start fading it within days" as JPM stuck "to the overriding view that one should use any strength as an opportunity to reduce equity allocation."

Submitted by Ben Hunt via Salient Partners' Epsilon Theory blog,

When it comes to Wall Street permabulls, no one name sticks out more than that of FundStrat's (formerly JPM's) Tom Lee. Which is why, when even the traditional CNBC host during market up days, turns modestly bearish as he has in recent weeks and admits the investing community is gripped by a "growth scare" it is a notable event. As he writes, "the S&P 500 has been struggling since the start of the year and markets remain extremely on edge given the multitude of risks facing the market."

Last summer, China unleashed an unprecedented array of measures - up to and including the arrest of "malicious short sellers" and prominent hedge fund mangers - to prevent its stock market bubble from bursting. It failed. A few months later, the chaos has spilled over from the relative containment of the capital markets and has engulfed not only the country's FX reserves, and capital account, but also the entire economy.