They Can't Stop the Bleeding

Takeaway: Global equity markets continue to crash alongside faith in central bankers' omnipotence.

They Can't Stop the Bleeding - Global economy cartoon 12.16.2014

 

Whether we're talking about the Fed, ECB, BOJ or PBOC, central planners the world over can't stop the bleeding in global equity markets. 

 

Case in point... more deflation in the Eurozone this morning. The key question for ECB head honcho Mario Draghi ahead of the March 10th meeting is can Draghi snap his fingers and magically change Europe's deflationary reality?

 

Nope. 

 

Here's some related analysis from Hedgeye CEO Keith McCullough from a note sent to subscribers this morning:

 

"European stocks had their slow-volume bounce last week (EuroStoxx600 +1.6% to -9.4% YTD), but resume their crash this morning with the DAX -1.6% (down 13% YTD and -24% from 2015 top) post a #Deflation print of -0.2% y/y for Eurozone CPI (versus 0.3% in January); Swiss 10yr falls to -0.45% as #NIRP (negative interest rate policy) continues to perpetuate #Deflation."

 

Take a look at Germany...

 

 

Here's Spain and Italy...

 

 

In other central planning news, the (up) Yen and (down) Japanese stocks story continues to defy the intent of the BOJ's negative interest rate policy.

 

It's just one more example of the crumbling credibility of central bankers. To be sure, when macro markets wake up to this reality, things are going to get downright nasty. McCullough has dubbed this evolving phenomenon the #BigBangTheory

 

Here's his take on the latest macro market developments out of Japan:

 

"The Yen is ramping (again) vs. USD this morning and that is not a good thing when it comes to the #BigBangTheory as it keeps Japanese stocks (Nikkei -1% overnight and -23.1% since last yr’s high) in crash mode w/ no “G20 help” this weekend."

 

 

Meanwhile, over in China... the PBOC cut the banking system's reserve requirement ratio again by 0.5 percentage points as the economy continues to slow. China's stock market is down 48% since June. Here's what growth slowing looks like in China Shanghai Composite Casino:

 

 

While permabulls pray for more cowbell, we're bullish on growth slowing proxies like Long Bonds (TLT) and Utilities (XLU). 

 

Our message: Fade Central-Planning storytelling...


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