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Global Financial Stress Index Spikes Most Since 2011 US Downgrade
Global Financial Stress Index Spikes Most Since 2011 US Downgrade
Did central banks just lose control of the world… again?
For the first time in four months, BofAML’s Global Financial Market Stress index has turned positive – signalling more market stress than normal.
As the spat between North Korea and the U.S. worsened, a measure of cross-asset risk, hedging demand and investor flows awakened from its torpor (after spending 78 straight days below zero – with stress below normal).
The problem the world faces is… did the world’s central bank money-printing safety net just lose its plunge protection power?
For context, this is the biggest spike in the Global Financial Stress Index since the US ratings downgrade in August 2011 – and a bigger shock than the August 2015 China devaluation…
Sunday night futures should be fun: potential war with North Korea, potential war with Venezuela, trade war with China, and civil war looming at home.
Central Bank Soap Opera Hides Financial Globalization
Central Bank Soap Opera Hides Financial Globalization
Stock markets suspect Federal Reserve has interest rate jitters … Hints that the Fed won’t raise interest rates in March are proving to be good news for miners and oil producers’ share prices The Federal Reserve’s William Dudley said further strengthening in the dollar could have ‘significant consequences’ for the health of the US economy. – UK Guardian
Blame it on the dollar!
The Federal Reserve hiked a tiny bit and markets around the world plunged. This is the big story that implies the further loss of Fed credibility.
But there is an even bigger one that we’ll discuss at the end of this article.
Let’s continue with this Guardian analysis. The reporting is along the lines we would expect: We learn that market players have come to the logical conclusion that the Fed is not going to raise interest rates again any time soon.
Or even if they do “raise” them, they’ll have a negligible impact on real rates.
On Thursday, large stocks moved up and reports circulated that Fed officials were continuing to have “second thoughts” about a series of rate hikes. Here, more from the Guardian:
William Dudley, a top Fed official, said on Wednesday that monetary conditions had tightened since December’s quarter-point rise and rate setters would have to take note. Further strengthening in the dollar, added Dudley, could have “significant consequences” for the health of the US economy. Translation: the Fed probably won’t raise in March.
The dollar then sold off yesterday, while commodity prices rose, especially the share prices of miners and oil and gas producers. It was quite a clever statement, helping move the dollar down and the market up.
Even more importantly, it began the process of Fed damage control. The Fed hike had not merely bashed stocks, it had buttressed the dollar.
…click on the above link to read the rest of the article…
Tick Tock
Tick Tock
8 years to fix the malfunctioning heart of the world’s financial and legal systems but nothing was actually done … and now the clock is ticking and there is hardly any time left.
The number of red lights now blinking at us, largely ignored by those who are supposed to be flying this thing, is growing all the time. It is not that any one of them is a clear harbinger of the end but taken together they paint a dismal and coherent picture – of a system eating itself.
What I mean is that every political and financial system, every bureaucracy, public or private is originally set up to do a necessary job. And the duty of those who work in it is to make sure the system doe that job. But when the challenges facing the system change so that the system begins to no longer be able to do its job, those in it have two choices: they can work for the greater good and help change the old system into a new one better fit to the new challenges, or they can ignore the problems, and forget the reason they and the system were created in the first place and instead seek merely to get as much as they can from the failing system before it implodes.
It seems obvious to me that is where we are today, both politically and financially. We are living in the End Times not because some angry supernatural being is coming to punish us, but because we are living in a system, a machine, which we built and therfore can change, but we have forgotten this. Some time in the recent past we crawled inside our machine, closed the last hatch to the outside behind us, and then forget there was an outside.
…click on the above link to read the rest of the article…
