"What happens when the baseline belief of central-market-planning breaks?" Hedgeye CEO Keith McCullough asked in a note to subscribers this morning.
Good question. Here's the answer:
"Breaking bad, the belief system is here. Japan says “negative yields” (and they got them – 10yr JGB -0.04% now). But the BOJ didn’t get Down Yen, Up Nikkei – they got Up Yen, Crashing Nikkei! (Nikkei -5.4% overnight, -22.8% since July)"
Despite the BOJ's best efforts, the Nikkei continues to crash.
Then came the mother of all short squeezes on hedge fund crowd long the Yen.
Over in Europe, the Italian stock market looks dreadful. Central planners at the ECB haven't been able to do anything about it. Sorry Draghi.
"If you thought the central planning experiment in the US and Japan went bad, look at what Draghi is doing to the banks in Europe – Italy’s stock market is down another -1.5% this am taking it’s crash (since July) to -32.8% (if the SPX crashed that % it would be at 1436 fyi)"
Even Germany is crashing from its peak.
The point here? The Fed, ECB and BOJ can't arrest economic gravity. Growth is slowing and it has been despite central bankers' best efforts.
So while Old Wall media continues to talk about China and oil, we're sticking with our process. That's kept our subscribers out of a lot of trouble here at home and abroad.