Business

Last week, we noted that Italy is rushing to defuse a €200 billion time bomb in the country’s banking sector as investors fret over banks’ exposure to souring loans.

“Italian banks’ share prices have been volatile YTD, given the market’s renewed fears over asset quality and potential developments on a possible bad bank creation,” Citi wrote, in a note analyzing which Italian banks are most exposed. “Total gross NPLs in Italy have increased by c160% since 2009 and now represents c18% of loans (vs c8% in 2009).”

The bounce of the last few days has investors wondering if the bottom is in.

Unfortunately, it very likely is not.

High Yield bonds have lead stocks to the upside. They are now leading to the downside, and the High Yield bond market indicates we have further to fall.

If this is not compelling enough consider that the microcap index, the Russell 2000, which leads the S&P 500 indicates stocks have a LONG ways to fall.

It must have been scary for Boeing for those few months in which the all important Ex-Im bank was taken offline. The result: moments ago BA announced Q4 earnings which while beating expectations (which were sharply lowered in recent months) of $1.27, were still a 31% drop compared to Q4 of last year, driven by a 4% drop in the top line, leading to a substantial decline in gross profit from $3.8 billion to just 2.9 billion, and a whopping 38% plunge in operating cash flow to just $3.1 billion (and $2.5 biliion in FCF).

• Global stocks, dollar struggle ahead of Fed as oil falters (Reuters)
• Bond Bulls Bank on Fed Mention of Market Chaos as Drag on Growth (BBG)
• Fees on Mutual Funds and ETFs Tumble Toward Zero (WSJ)
• China Climbs Back Up Janet Yellen's Worry List (BBG)
• The World’s Favorite New Tax Haven Is the United States (BBG)
• New Jersey Gov. Christie backs Atlantic City takeover plan (Reuters)
• U.S. Universities Raised a Record $40.3 Billion Last Year (BBG)
• With China weakening, Apple turns to India (Reuters)

There were many excuses in Bill Ackman's annual letter to shareholders, in fact some 13 pages worth, which sought to explain how "Pershing Square funds suffered their greatest peak-to-trough decline and worst annual performance ever."

To be sure, Ackman is quick to point out that the 21% plunge in P&L in 2015 was not just due to his infamous tryst with Valeant, although that's where it started: