The mystery is why anyone ever had any faith in central banks at all. From Tyler Durden at zerohedge.com:
While Citigroup’s Eric Lee thinks its “ridiculous” to talk fo a US recession, it appears the macro data and markets would strongly disagree: as Bloomberg reports:
Signals by central banks from Europe to Japan that additional stimulus is at the ready are failing to ease investor concern that global growth will keep slowing.
Citigroup’s Economic Surprise Index already indicates data in Group of 10 economies are falling short of estimates by the most since April 2013, and a selloff in crude oil and weakening credit markets are exacerbating the malaise. Yellen suggested that the central bank might delay, but not abandon, planned interest-rate increases in response to recent turmoil in financial markets.
“Over the last few years when we got bad news, equity markets would rally because they would interpret this as potential for central banks to go more dovish,” said Mohit Kumar, head of rates strategy at Credit Agricole SA’s corporate and investment bank unit in London.
“Now that correlation is shifting to bad news is actually bad news. Investors are concerned over central banks’ policy options given the market is driven by factors over which they have little or no control over.”
And so the headline of the day from Bloomberg seems very appropriate:
To continue reading: Why Markets Are Crashing: “Faith In Central Banks Fails”
