Submitted by Charles Hugh-Smith of OfTwoMinds blog,
What the central banks cannot do is create productive places to invest the credit they've generated in such excess, or force qualified borrowers to swallow more unproductive debt.
One way to lose a war is to focus on preparing to fight the last war. Preparing to fight the last war is a characteristic of losing generals, militaries and nations. The same is true of finance and economies.
With the market now predicting virtually zero rate rate hikes for the rest of 2016...
... the Fed will have to take a machete to its next exercise in erroneous groupthink known as the "dot plot", when it will have to admit it was dead wrong about the state of the US and global economy.
It's no secret that trillions in global QE and the descent into the NIRP twilight zone have done very little to resuscitate global growth and trade in the wake of the crisis.
Indeed, eight years on and the world is mired in subpar growth and faces a global deflationary supply glut that's driven commodity prices to their lowest levels of the twenty-first century on the way to undercutting central bankers' collective efforts to jumpstart inflation and keep the entire world from becoming Japanified.
It appears The ADP Employment report was not good enough to support fed rate-hikes as across the majors, traders are selling USDs... Gold is also surging. It appears someone is betting large that this week's payroll data will be weak...
Dollar is being dumped against the majors...
And gold is bid...
As Bloomberg reports, ICE's U.S. Dollar Index has tumbled from an almost two-month high set on Jan. 29, when the Bank of Japan’s decision to implement negative interest rates drove investors into the greenback.
Yesterday we reported that following a spike in calls by the sellside to "sell the rally", hedge funds did just that and according to BofA client data, hedge funds dumped the most shares in the past week in two years. Today, JPM's Adam Crisafulli repeats the firm's now default call for 2016, noting that "the bigger picture backdrop for the market remains the same."
Here are the three key backdrops: