Business

There is a certain, and very tangible, irony in the central banks' response to the Global Financial Crisis, which was first and foremost the result of unprecedented amounts of debt: it was to unleash an even greater amount of debt, or as BofA's credit strategist Barnaby Martin says, "the irony in today's world is that central banks are maintaining loose monetary policies to generate inflation…in order to ease the pain of a debt "supercycle"…that itself was partly a result of too easy (and predictable) monetary policies in prior times."

Authored by Gregory Brew via OilPrice.com,

Despite the recent market rally and current bullish streak in oil prices, the years-long competition for market share between OPEC and U.S. shale producers shows no sign of abating, and will likely continue for the next several years at least.

Tracking the lagged rebound in WTI prices, the US oil rig count rose by 9 this week - the biggest weekly rise since June.

And with production at record highs, we suspect OPEC will need to jawbone some more...

And total US Crude output just hit a new record high...

“We had a banking crisis, a fiscal crisis and we spent lot of the tax-payers’ money – in the wrong way, in my opinion – to save the banks” outgoing Eurogroup head Jeroen Dijsselbloem said adding “so that the people criticizing us and saying that everything was being done for the benefit of the banks were to some extent right.”

We have been warning about significant divergences between equity prices and other asset classes for a few weeks (most notably the decoupling from equity risk and credit risk, junk bonds), but as BofA notes its not just these assets that are breaking away from soaring Nasdaq levels, in fact many of the rally's leaders are crashing... in a way we have not seen recently.

High yield risk has suddenly decoupled from equity markets...