The surge in credit risk across the global financial system is starting to get to the point where even Bill Miller will be forced to pay attention. With every central banker "all-in" with "whatever it takes" or "no limits" monetary policy, the fact that US, European, Chinese, Japanese, and Middle-East banks are all seeing credit risk spike should be a major concern to all...
European bank risk is at its highest since 2013...
After initial weakness, crude prices have rallied since last night's across the board inventory build reported by API (especially gasoline). Against headline expectations of a 3.8mm build, DOE reported a huge 7.8mm rise with Gasoline also surging 5.9mm barrels. The overnight ramp gains on OPEC rumors have been erased and WTI is back below $30.
API reported:
For over six years, the markets have been moving based on Central Banker actions and words.
The first phase (2009 to 2013) was dominated by action (ZIRP and QE).
The second phase (2013 to the present) was increasingly reliant on words (verbal intervention) as most Central Banks had by then used up 90% of their ammo.
As former Fed Chair Bernanke himself noted in his recent memoirs:
“Monetary policy is 98% talk and 2% action, especially when short term rates are near zero"
In the words of Markit's chief economist, "the US upturn has lost substantial momentum over the past two months," as the golden child of any current bullish narrative - the Services economy - drops to its weakest since October 2013 (PMI 53.2, missing expectations). Plunging backlogs suggest hiring will slow notably and then ISM Services hit at a 23-month low, plunging back towards manufacturing's weakness, with employmenmt at its weakest sicne April 2014 and unadjusted new orders at their weakest since Jan 2014.
In January I penned "My Predictions of Real Estate Corrections following Market Corrections Have Now Officially Come To Pass, 8 Days or So Tardy". A couple of weeks later, the verdict is in even more evident, yet many fail to see the forest for the trees.
This is downtown Brooklyn yesterday...
That's right, thee inventory dense hi-rise buildings going up on the corner of each adjacent block. Of course downtown Brooklyn can absorb an extra 350 units or so per two block area with rates on the way up and banks ready to tighten credit! Here's some more facts for ya...