Business

In the most blatant and open admission of direct manipulation, China's Vice President Li told a room full of Davosian elites that China is willing to keep intervening in the stock market to make sure that a few speculators don’t benefit at the expense of regular investors. Following last night's largest liquidty injection in over 3 years (and subsequent plunge in Chinese stocks), it appears the Chinese economic/market "bucket" has more holes than the intervention 'hose pipe' can handle.

As we showed previously, when it comes to banks' exposure to energy, things have gotten beyond nebulous, especially in the aftermath of the (officially denied, even though we stand behind it 100%) report that the Dallas Fed has been "advising" banks how to mark their oil and gas loan exposure in discussions behind closed doors.

From omnipotence to impotence... in 90 minutes

Just as we warned earlier,

As for the market reaction, keep a close eye on the duration of the risk bounce: if risk refuses to push higher from here, or worse - tumbles - the market will have clearly given its verdict on all current and future Draghi jawboning and called the ECB's bluff: no more words, actions are now demanded.

Form a Reuters article on hedge funds which "boast lower losses as markets tumble":

Unless something very unexpected happened in the past few days, we had the impression that Mr. Tilson is male.

Back in September, Draghi set the stage for the unleashing of an imminent QE bazooka, something the market was fully convinced would take place on December 3, pushing the EUR lower by nearly 10 big figures and pushing European stocks to nosebleed levels. When it didn't, and when Draghi unveiled a water pistol instead, the EUR soared by a near record amount, and Euro assets crashed.

Fast forward to today, when as we previewed earlier today, nobody was expecting much if anything from Draghi, to wit: