Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Once the power to manage expectations has been lost, the central bank bag of tricks is empty.
No one knows precisely how and when the global unraveling will impact their corner of the planet, but we do know one thing with absolute certainty: central banks are out of tricks.
Earlier today, we highlighted a dramatic plunge in the Russian ruble which has crashed to record lows against the dollar after staging its steepest two-day decline in nine months.
The sharp (and seemingly inexorable) decline in crude prices combined with Western economic sanctions and geopolitical turmoil have weighed on the currency of late and in the midst of a new leg down in oil, investors appear to be panic selling.
The machines are in control. On the day when inventories surge, demand tumbles, production surges, and credit risk spikes, "traders" are panic-buying crude oil with both hands and feet... except they just ran the stops to the post-Iran open...
Let's see if it holds...
Give me that!!
It belongs to the Chinese now!
h/t @FedPorn
As we previously detailed, two topics we’ve deemed critically important to a thorough understanding of both global finance and the shifting geopolitical landscape are the death of the petrodollar and the idea of yuan hegemony.
In November 2014, in “How The Petrodollar Quietly Died And No One Noticed,” we said the following about the slow motion demise of the system that has served to perpetuate decades of dollar dominance:
WTI Crude has ramped into this morning's DOE data back to the scene of the crime from last night's API ugly data dump. With API reporting a build that doubled expectations, DOE reports a 3.6mm build but worse still yet another major (4.6mm barrel) build in gasoline stocks for the largest 3-week build in history. Crude initially tumbled but the algos took over and ramped to yesterday's highs...running stops (but how long will that last?)