Monday, February 8, 2016

The Central Bank *God* Complex Is Self-Imploding

“We had a bubble in people’s expectations of the power of central banks,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd. “And now we’re seeing that bubble burst.”

Central Banks' latest gambit to save the Ponzi scheme by paying people to borrow money, is back-firing. Who knew that paying people to borrow money would implode banks? As it was in 2008, the banks are the transmission mechanism for global risk. Ponzi schemes collapse when investors demand return OF capital, instead of return ON capital...

This just in: 

"Mitsubishi UFJ fell as much as 7.5 percent in early Tokyo trading Tuesday, heading for the biggest decline since August. Nomura plunged 10 percent, extending this month’s decline to 22 percent, a day after Jefferies Group LLC downgraded the stock on concerns that its overseas operations are losing money."

As it was in 2008, the banks are the weak link in this global clusterfuck. It started with European banks, but Japan's banks have been getting monkey hammered ever since Kuroda went ALL IN with negative interest rates. It turns out that negative interest rates are not conducive to banking profits. 

ZH: Feb. 6, 2016
"The BOJ surprised with a move to negative rates last week, while ECB rhetoric suggests additional easing measures forthcoming in March. While a fundamental tenet of these measures, in particular negative rates, has been to push investors out the risk spectrum, we remind that arguably the impact has been exactly the opposite"

Dollar/Yen: Investors are demanding return of capital aka. carry trade unwind, and don't give a fuck what the BOJ is doing anymore...

Goldman Sachs: Biggest Dow laggard today: