Business

Earlier we reported that Wells Fargo may have an energy problem because as CFO John Shrewsbury revealed, of the $17 billion in energy exposure, "most of it" was junk rated.

But, while one can speculate what the terminal cumulative losses, cumulative defaults and loss severities on this loan book will be, at least Wells was honest enough to reveal its energy-related loan loss estimate: it was $1.2 billion, or 7% of total - as Mike Mayo pointed out, one of the highest on the street. Whether it is high, or low, is anyone's guess, but at least Wells disclosed it.

"It’s difficult to see the fall stopping today," warned one Japanese equity strategist and rightly so as Japan's broad TOPIX idnex just entered a bear markets (down 20% from the August 2015 highs). With the Nikkei well below 17,000, Kuroda is due to speak at the Diet today as Japanese corporate bond risk surges to 20-month highs.

TOPIX enters Bear Market

And now the Nikkei:

It's not just stocks have a terrible start to the year, in fact the worst start in history: so is the amount of US Treasuries held in custody at the Fed, a direct proxy for the holdings of foreign central banks, reserve managers and sovereign wealth funds who park owned TSYs at the NY Fed for convenience.

Stock markets across the Middle East have collapsed following Iran’s addition of 500,000 barrels of oil, sending markets in Dubai and Saudi Arabia into freefall.  As economic sanctions were lifted from the Islamic Republic, Iran threatened to unleash a huge wave of oil onto global markets, saturating a market that is already drowning in excess supply Yahoo Finance reports: All seven stock markets in Gulf states tumbled as panic gripped traders.

February WTI Crude futures have plunged to new cycle lows at $28.60 (down 2.7%) as Iran supply looms over an already over-glutted global crude market. Brent is down even more (-3.7%). Dow futures are down 60 points at the open.

• *WTI OIL FALLS AS MUCH AS 2.7%, BRENT CRUDE DROPS 3.7%

Feb futures (which have just rolled) are under $29...

And the new on the run March contract is trading $29.60, down 2.6%...

Weighing on US equities... Dow futures down 65 points