When it rains it pours...
The market has taken over The Fed's role - forget above 25bps here or there, the cost of funding for even the highest quality US Corporates is exploding...
Simply put, the credit cycle has turned and is accelerating rapidly - crushing any hopes for debt-funded shareholder-friendliness.
Just when we said DB should probably keep its mouth shut, the bank that everyone is suddenly very focused on decided to take to Twitter with the following rhetorical question:
#DAX dropped below 9,000 points yesterday - worst start to a year ever: are the markets overreacting? #DrStephan
— Deutsche Bank (@DeutscheBank) February 9, 2016
Well, judging by this...
... the markets are probably underreacting.
WTI keeps dead-cat-bouncing thanks to the algos and crashing thanks to reality. This morning's reality check on the overnight ramp comes courtesy of a double-whammy from Goldman ("wouldn't be surprised to see WTI in the teens") and The IEA which increased its estimate of excess-supply drastically. This has dragged WTI back below $30 once again and where oil goes, stocks go...
Goldman Sachs Says No Surprise If Oil Price Drops Below $20/Bbl
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.