Wednesday, February 10, 2016


A 918 Point Stock Market Crash In Japan And Deutsche Bank Denies That It Is About To Collapse

By Michael Snyder
Financial Crisis 2016On Tuesday junk bonds continued to crash, the price of oil briefly dipped below 28 dollars a barrel, Deutsche Bank was forced to deny that it is on the verge of collapse, but the biggest news was what happened in Japan.  The Nikkei was down a staggering 918 points, but that stock crash made very few headlines in the western world.  If the Dow had crashed 918 points today, that would have been the largest single day point crash in all of U.S. history.  So what just happened in Japan is a really big deal.  The Nikkei is now down 23.1 percent from the peak of the market, and that places it solidly in bear market territory.  Overall, a total of 16.5 trillion dollars of global stock market wealth has been wiped out since the middle of 2015.  As I stated yesterday, this is what a global financial crisis looks like.
Just as we saw during the last financial crisis, the big banks are playing a starring role, and this is definitely true in Japan.  Right now, Japanese banking stocks are absolutely imploding, and this is what drove much of the panic last night.  The following numbers come from Wolf Richter
  • Mitsubishi UFJ Financial Group plunged 8.7%, down 47% from June 2015.
  • Mizuho Financial Group plunged 6.2%, down 38% since June 2015.
  • Sumitomo Mitsui plunged 6.2%, down 26% since May 2015
  • Nomura plunged a juicy 9.1%, down 42% since June 2015
A lot of analysts have been very focused on the downturn in China in recent months, but I think that it is much more important to watch Japan right now.
I have become fully convinced that the Japanese financial system is going to play a central role in the initial stages of this new global financial meltdown, and so I encourage everyone to keep a close eye on the Nikkei every single night.
Meanwhile, the stock price of German banking giant Deutsche Bank crashed to a record low on Tuesday.  If you will recall, Deutsche Bank reported a loss of 7.6 billion dollars in 2015, and I wrote quite a bit about their ongoing problemsyesterday.
Things have gotten so bad that now Deutsche Bank has been forced to come out and publicly deny that they are in trouble
Deutsche Bank co-CEO John Cryan moved to quell fears about the bank’s stability Tuesday with a surprise memo saying its balance sheet “remains absolutely rock-solid.”
The comments come as investors grow increasingly nervous about the health of European banks, which have taken a hit on the fall in energy prices and which face rising concerns over their cash levels.
Of course Lehman Brothers issued the same kind of denials just before they collapsed in 2008.  Cryan’s comments did little to calm the markets, and even Jim Cramer saw right through them…
“You know, Deutsche Bank puts out a note saying, ‘listen, don’t worry, all good.’ Reminds me of JPMorgan saying if you have to say that you’re creditworthy then it’s already too late.”
Another thing that Lehman Brothers did just before they collapsed in 2008 was to lay off workers.  We have seen a number of major banks do this lately, including Deutsche Bank
Cryan, 55, has been seeking to boost capital buffers and profitability by cutting costs and eliminating thousands of jobs as volatile markets undermine revenue and outstanding regulatory probes raise the specter of fresh capital measures to help cover continued legal charges. The cost of protecting Deutsche Bank’s debt against default has more than doubled this year, while the shares have dropped about 42 percent.
The following chart comes from Zero Hedge.  Nobody on the Internet does a better job with charts than Zero Hedge does.  I would recommend visiting them right after you visit The Economic Collapse Blog each day (wink wink).  This chart shows that Deutsche Bank stock has already fallen lower than it was during any point during the last financial crisis…
Deutsche Bank Record Low
Deutsche Bank is the biggest and most important bank in the biggest and most important economy in the EU, and it has exposure to derivatives that is approximately 20 times Germany’s GDP.
If that doesn’t alarm you, I don’t know what will.
The biggest financial bubble in the history of the world has entered a terminal phase, and the parallels to the last financial crisis have become so apparent that just about anyone can see them at this point.  Just consider some of the ominous warnings that we have seen recently
Billionaire Carl Icahn, for example, recently raised a red flag on a national broadcast when he declared, “The public is walking into a trap again as they did in 2007.”
And the prophetic economist Andrew Smithers warns, “U.S. stocks are now about 80% overvalued.”
Smithers backs up his prediction using a ratio which proves that the only time in history stocks were this risky was 1929 and 1999. And we all know what happened next. Stocks fell by 89% and 50%, respectively.
Even the Royal Bank of Scotland says the markets are flashing stress alerts akin to the 2008 crisis. They told their clients to “Sell Everything” because “in a crowded hall, the exit doors are small.”
And let’s not forget that famous billionaire retail magnate Hugo Salinas Price has warned that the global economy “is going into a depression“.
The chaos that we have seen this week is simply a logical progression of the crisis that began during the second half of last year.  If you were to create a checklist of all the things that you would expect to see during the initial stages of a new financial crisis, all of the boxes would be checked.
In the days ahead, keep your eyes on Germany and Japan.
Yes, the Italian banking system is completely collapsing right now, but I believe that what is happening in Germany is going to be the key to the meltdown of Europe, and I am convinced that Deutsche Bank is going to be the star of the show.
Meanwhile, don’t underestimate what is taking place in Japan.
The Japanese still have the third largest economy on the entire planet, and their financial system is essentially a Ponzi scheme built on top of a house of cards that has a rapidly aging population as the foundation.
As Japan falls, that will be a signal that financial Armageddon is now upon us.
And after last night, it appears that moment is a lot closer than a lot of us may have thought.

Sears Is Closing at Least 50 More Stores

()  So where is Sears’ promised transformation into a modern day retailer?
The department store company has talked a good talk in the last few years about turning itself from a traditional retailer dependent on big box stores into one that is more digitally oriented, focused on a membership model, and needing less physical space.
But at Sears Holdings SHLD -8.85% , the parent company that also owns Kmart, a continued sales slump is prompting the retailer to say it will close at least another 50 stores, following hundreds of closings in the last few years. Sears also said it is also considering selling off more assets, including its auto services business, to raise much-needed cash.
Holiday comparable sales at Kmart fell 7.2% and 6.9% at Sears, for the worst performance among major department stores including J.C. Penney JCP 0.27% , Macy’s M -0.35% , and Kohl’s KSS -2.84% during the most important quarter for retailers.
“The holiday selling season proved to be challenging, with historically warm weather and intense competition pressuring margins and driving comparable store sales declines, particularly in our apparel and related softlines businesses,” Sears said in a press release.
That’s a pretty strong understatement.Trying to put some lipstick on a pig, Sears said that January was the best month of the quarter since comparable sales fell only 4.5%.
As Fortune reported last week, Sears’ apparel offering has fallen so out of favor with women, the selection at thrift store Goodwill is more popular. Sears said on Tuesday that because its clothes business had really slammed its margins, it planned to overhaul that unit with new sourcing, product assortment, space allocation, pricing, and inventory management practices.
Meanwhile Sears continues to close stores. The company said it would speed up the pace of the closings in the next few months as it shutters at least 50 more. Store fleets have shriveled: Kmart is now down to 950 locations from 1,309 just five years ago, while Sears’ namesake department stores now number 708, from 868 in 2011.
Last year, to raise cash and avoid a liquidity crunch, Sears sold off many of its best store locations to a real estate investment trust, reaping $2.7 billion. In the last few years, it has sold off assets like Sears Canada and the Lands’ End apparel brand. But those assets are limited, and the company urgently needs to turn its core business around.

The Totalitarian Rip-Off

A recent look at some headlines, all less than two months old, gives us a scary view as to what is coming:
  • Bring On the Cashless Future – Bloomberg
  • China buyers go virtually cashless  – The Star
  • Norway’s Biggest Bank Calls For Country To Stop Using Cash – Int’l Business Times
  • Cashless future underway as Canadian consumers have more credit, debit and app options than ever – CBC
  • In Sweden, a Cash-Free Future Nears – NY Times
  • Germany proposes new cash ban and capital controls as Europe rushes towards NIRP – Examiner
With the Western World and China in danger of going into deflation, major banks have already started to charge negative interest rates.
Denmark’s central bank was a pioneer when it first cut its deposit rate below zero in 2012, and the trend has now spread to the eurozone and Japan. The Danish deposit rate now stands at minus 0.65 per cent. – Financial Times
Sweden has followed suit.  The USA is set to follow.  Major Bankers are calling for an abolition of money.  It may the only fix left, now that quantitative easing is failing.  But no one is going to put their money in banks!  Not if it means negative interest rates.
Don’t worry.  Governments will rise to the occasion and soon will be making cash illegal.  People will be forced to put their money in banks or the market, thus rescuing the central governments and the central banks that are incestuously intertwined with them.

Italy hit by banking crisis

Sharp turbulence on the Milan stock exchange in January focused attention on Italy’s deep economic and financial crisis. At the same time, the conflict between the Italian government and the European Union (EU) Commission has intensified. Prime Minister Matteo Renzi (Democratic Party–PD) has responded with new, stepped-up attacks on the working class.
Stock markets across the world experienced a sharp downturn at the beginning of 2016, with the stock exchange in Milan affected particularly severely. Although all European economies suffered as a result of the slowdown of growth in China and the decline of oil prices, “apart from Athens, the Milan stock exchange was … by far the worst affected,” as the Swiss Neue Zürcher Zeitung wrote on January 21.
In mid-January, the stocks of many major banks and corporations fell steeply. The worst losses were to the stocks of Fiat, UniCredit bank, Monte dei Paschi di Siena bank, and Cariger bank.
The value of Monte dei Paschi di Siena (MPS) bank, the oldest bank in the world (founded 1472), fell temporarily by half, and its share price dropped to just 50 cents. The bank had to be removed from trading. On January 24, the government decided to protect the bank from bankruptcy with a guarantee from the Economics and Finance ministry.
The MPS is one of six Italian banks that reportedly hold large quantities of toxic assets. With net wealth of €10 billion, the value of bad loans allegedly totals €24 billion. As the European Central Bank confirmed in a data analysis at the end of last year, there are more than €200 billion worth of toxic assets on the books of Italian banks.
The figures reflect the weakness of the Italian economy after five years of recession. Seventeen percent of loans held by Italian banks today are, according to EU figures, in danger of turning bad. By contrast, according to figures from the Royal Bank of Scotland, in Germany the figure is 2 percent and in France 7 percent.
The following comparison brings out the state of crisis in the Italian economy: while six years ago small and medium-sized businesses had the possibility of paying back 90 percent of their loans, today it is only 72 percent.
Already in November 2015, four smaller banks fell into crisis: Banca Popolare dell’Etruria in Arezzo, Banca Marche in Ancona and two local savings banks in Chieti and Ferrara. The Italian government did not step in to support the crisis-ridden institutions with state loans, because the EU has since banned state help for failed banks.
New EU competition regulations prevent the kind of state assistance financed by taxpayers’ money that was carried out in almost every country after the 2008 financial crisis. In place of the “bailouts,” a so-called bail-in has been established, which means that bank customers must support the bank with their assets.
The New EU regulations, which were allegedly intended to prevent taxpayers’ money being used to finance failed banks, have been exposed as a new claim on the funds of small savers and pensioners. In the case of the four failed banks, 12,500 savers lost their funds.
The bankers have used a provision of the new regulations, according to which not only savers with deposits of over €100,000 could be made liable for a bank in crisis, but also holders of sub-prime bonds. Such junk bonds were evidently sold in large quantities to unsuspecting small savers.
At the end of 2015, as the banking crisis became acute, many of these savers lost everything. Dramatic stories resulted: a 68-year-old pensioner hung himself in Civitavecchia, when he, a former employee of the state energy firm ENEL, realised his savings at the Banca Popolare dell’Etruria had vanished. This case and similar incidents affecting hundreds of savers, mainly pensioners, provoked a wave of protests.
Finally the government—with a view to upcoming municipal elections—established a “solidarity fund” of €100 million for those small savers affected, although this came nowhere near covering all the losses. But this measure by the finance minister intensified the conflict with the EU.
For months, a bitter dispute has played out between the government of Matteo Renzi and the EU. Under the leadership of Germany, the EU has pressured weaker countries like Greece, Spain and Italy to implement a brutal austerity programme.
In the case of the steel firm Ilva, the EU Commission accused Renzi of using too much state aid and thus breaking EU competition law. On the issue of an Italian “bad bank,” which Italy has wanted to establish for some time to allow the banks to dump their bad assets, the EU responded only when the stock market crisis was in full swing.
On January 26, EU competition commissioner Margrethe Westagar finally permitted the Italian government to create a “bad bank.” The agreement signed by Finance Minister Pier Carlo Padoan in Brussels was coupled with such stringent conditions that it proved unable to calm the alarm on the stock market. Bloomberg cited a representative of the investors as saying, “The agreement can help the banks to get rid of part of their dubious outstanding debts, but it will not solve the problem, especially for the weakest finance houses, which without doubt require fresh capital.”
On February 2, the Italian Central Bank issued a record 30-year bond worth €9 billion. This was “the largest issuing Italy had ever done, and the most important over a 30-year period ever undertaken by a European sovereign,” explained Frédéric Gabizon from HSBC. But just two days later, on February 4, the Milan stock exchange fell sharply once again.
Italy’s state debt rose to 132.2 percent of GDP in 2015, well above €2 trillion. Only Greece has a higher level of state debt.
Under pressure from the EU, the Renzi government therefore intensified the severe austerity measures it has been imposing for two years, announcing wide-ranging cuts in the public sector. A new law, which is supposedly to launch a struggle against the “Fannulloni,” the slackers in the public sector, makes it easier for the state to implement layoffs that have already been planned.
The attacks already carried out on pensioners and workers have resulted in a massive polarisation and increased social tensions. The major increase in the retirement age left millions of seniors in poverty. Although the liberalisation of the labour market has slightly reduced unemployment figures, two of every three newly created jobs are temporary and precarious, short-term contracts or low-paying positions.
The official unemployment rate is 11.5 percent, and youth unemployment is 38 percent. But in reality, unemployment is much higher, since more than 36 percent of all working-age Italians are absent from the statistics. They are considered “inactive” because they could not prove they had actively looked and applied for work in the last month. This means that for those aged 15 to 24, a much higher percentage is without work or training.
The bare numbers conceal a development with explosive social consequences. Conflicts are taking place daily between the police and homeless people over occupied houses, and with youth and workers determined to fight for their jobs and futures. One example is the workers at Ilva, who briefly occupied Genoa town hall in early January. Conditions in Italy differ little from those in Greece.
Via WSWS. This piece was reprinted by RINF Alternative News with permission or license.

How Washington’s New Rich Live

The twin explosions of post-9/11 national security extravagance and Citizens United political spending bonanza have reshaped Washington — not only in its political outlook but physically, with this New Class preferring lavish McMansions to show off their newfound wealth, as Mike Lofgren describes.
By Mike Lofgren
In 1927, H.L. Mencken rode by train through the Pennsylvania coal country. The houses he saw along the way were so hideous, at least in his eyes, that he was moved to pen his famous essay, “The Libido for the Ugly.” Mencken was writing about towns inhabited by coal miners and railroad brakemen, but what would he say if he were to visit present-day Washington, DC and take a stroll in its surrounding suburbs?
I’d bet the Sage of Baltimore would direct his limitless venom at the spanking-new particle-board McMansions of Washington’s New Class: the K Street lawyers, political consultants, Beltway fixers and war on terrorism profiteers who run a permanent shadow government in the nation’s capital.
A McMansion in McLean, Virginia, offered for $12.5 million in 2014. [Photo credit: MRIS]
A McMansion in McLean, Virginia, offered for $12.5 million in 2014. [Photo credit: MRIS]
This group does not include federal employees or most elected officials. With their statutorily limited salaries, they cannot afford the bloated monstrosities favored by the New Class. Modest developments like Fairlington or the humble cape cods, ramblers and four-squares of Arlington were built for them in the early post-World War II heyday of the federal bureaucrat.
There is talk of a Georgetown elite, but ever since Pamela Harriman’s death in 1997, that crowd has been as defunct as the Romanov dynasty. Georgetown has elegant but cramped townhouses with creaky floorboards, inadequate wiring and an aura of ever-so-slightly shabby gentility. Who needs that when you can buy a brand-new 12,000 square foot McMansion with cast stone lions guarding the front gate, a two-and-a-half story tall great room and a home cinema with built-in FSB ports?
If that sounds more like the jumped-up suburb of a Sunbelt city like Houston or Atlanta than the traditional, old-money atmosphere of Beacon Hill or the Philadelphia Mainline, it is because that is precisely what the neighborhoods…
Read more

World Equity Market "Wealth" Crashes $6 Trillion Below 2007 Highs

Global equity market investors have lost a stunning $16.5 trillion of their newfound CB-fueled "wealth" in the last six months. This has erased half of the gains from the 2011 lows (but of course leaves all the debt created still in place). However, what is perhaps more troubling given the unprecedented money-printing since the last crisis peak, is that global equity market "wealth" is now down 10% from its November 2007 prior highs.
Trillions of money printed and debt created and equity "wealth" is now down $6 trillion from the 2007 highs...

Put another way - your plan failed CBs!

Goodwill Toronto files for bankruptcy, loses rights to Goodwill name

Toronto Goodwill has shut down and declared bankruptcy.
Rene Johnston / Toronto Star Order this photo
Toronto Goodwill has shut down and declared bankruptcy.
Goodwill Industries of Toronto, Eastern, Central and Northern Ontario has filed for bankruptcy and lost its right to use the Goodwill name, three weeks after abruptly closing its doors.
The news came in two separate announcements Monday. In one, posted on the charity’s website, CEO Keiko Nakamura announced the company had filed for bankruptcy and hopes to restructure.
“We’re considering elements to the number of stores that would reopen … this give us a great opportunity to really look at the real estate that we are in,” Nakamura told the Star.
Goodwill TECNO abruptly closed all 16 of its stores, 10 donation centres and two offices on Jan. 17, throwing more than 400 people out of work. The entire board of directors had resigned two days before.
Nakamura said the company was challenged by a low-profit market that had to compete with other retail businesses.
“We do have seasonal variation with our business, and we were very much hit in the winter when our sales drastically dropped,” she said.
“Our operation has always been a low-margin business, but it does impact cash flow,” she said.
David Soberman, a professor of marketing management at the University of Toronto, said being a low-margin business doesn’t explain all of Goodwill’s problems.
“Walmart and Costco are extremely low-margin businesses, too … It’s the type of business where, if you run a tight ship, you can be fine,” Soberman said.
Bob Klotz, a lawyer with Klotz Associates, said a bankruptcy filing like the one Goodwill Toronto is going through will leave money for employees, but not everything will be paid. Unpaid wages and vacation pay are priorities in cases like this, he said, but severance pay will be much harder for the employees to get.
“It’s quite unpleasant,” he said.
Denis Ellickson, a lawyer with the Canadian Airport Workers Union, which represents the workers, said the employees will see some money, but most likely not everything they’re owed, unless Goodwill Toronto completely emerges from bankruptcy.
“Nobody will be seeing 100 cents on the dollar,” he said.
Nakamura said she didn’t have information on what kind of money the employees will see, but said the payment of employees is one of her priorities.
The other announcement came from Goodwill International, which controls the Goodwill brand and licenses local Goodwill charities like Toronto’s. In their release, the parent company announced it had revoked membership for Goodwill Toronto after reviewing the closure, which it called an “egregious act.”
Goodwill Toronto will no longer be able to use the “Goodwill name, trademarks and logos,” the announcement said.
Nakamura said she’s still looking at “all the implications” of the disassociation, and said Goodwill International indicated the charity could reapply for membership.
“I do think that our services are still very relevant to the communities … whether it’s under the brand of Goodwill or under a future brand name,” she said.
Ellickson said the union was disappointed with Goodwill International’s decision to disaffiliate the Toronto charity.
“It has, we believe, compelled Goodwill to the bankruptcy process,” Ellickson said.
“Without the Goodwill name and brand, it’s going to be very challenging for those individuals who want to see Goodwill or something like Goodwill reopened.”
Soberman said restructuring will be hard for Goodwill Toronto if it has to do it under another name.
“It doesn’t mean that … over the course of several months or years you couldn’t develop another brand … but you’re competing with people like the Salvation Army, Value Village,” he said.
“You’re going to be at a disadvantage if people don’t know what you are.”

Trump: 4.9% Unemployment Is A Phony Number… “The economy is having the worst — it’s so bad. Hey, Bill, every time I go out, I have packed auditoriums, packed rooms because people don’t have jobs. They don’t have the jobs they want.”

Bill O’Reilly asked GOP presidential candidate Donald Trump if President Obama should receive any credit for the latest unemployment rate of 4.9 percent.
TRUMP: “Look, you can’t give credit. The economy is having the worst — it’s so bad. Hey, Bill, every time I go out, I have packed auditoriums, packed rooms because people don’t have jobs. They don’t have the jobs they want.”
O’REILLY: “But it’s 4.9 percent unemployment.”
TRUMP: “It’s a phony number, Bill. The number is 25 percent, and probably higher than that. People are looking for jobs, they can’t find them, they keep looking, they give up, and now they’re statistically employed. Bill, the economy is doing terribly.
Look at even now the stock market, finally, that was the one part of the economy, and finally that’s crashing. These are phony numbers put up by politicians to make them look good. When you hear 5 percent and 4.9 percent, it’s not the right number. Plus, as you probably have heard, the jobs are bad jobs. They’re really low-level jobs and bad jobs, I have seen 15 different reports on that. But the fact is, if you look around for a job for months and months, you can’t get it, you just sort of go home and forget about it, you are considered employed. There are millions of people out there, Bill, that can’t get jobs.”
O’REILLY: “Alright.”
TRUMP: “That’s why I’m filling up these stadiums.”
President Obama was asked about the low workforce participation rate in spite of the low unemployment number.
OBAMA: Part of what was good in this jobs report is the fact that the participation rate, uh, in fact, uh, didn’t drop. That wasn’t the reason why unemployment dropped. More people are entering into the workforce, they feel more confident and they’re finding work. Some of this is still the hangover from what happened in 2007 and 2008.
What do you think about accuracy of the latest unemployment numbers? Share and comment below.

Gold Hits $1,200 as Financials Get Hit

FTSE 100 rallies amid rumours ECB could buy bank stocks - live

European stock markets rebound from two-year lows, buoyed by a recovery in banking stocks, while Australia enters bear market territory 


An information screen displaying the FTSE 100, which has risen above 7,000 mark for the first time and hit a new record high, at the London Stock Exchange in Paternoster Square, London, Friday March 20, 2015.
The FTSE 100 has bounce back from four-year lows as financial stocks rally. Photo: PA
Stocks in Asia continue to slide on Wednesday
• Fears over new financial crisis come back to haunt global markets
Why this market crash is like nothing we've seen before
FTSE closes at lowest since Aug 2012
• Japan's 10-year bond yields fall below zero for first time ever



Fed's Janet Yellen must walk 'invisible tightrope' to convince markets that everything is okay

All eyes will turn to US Federal Reserve chairman Janet Yellen to soothe market nerves, when she begins her testimony in front of the House Financial Services Committee at 3pm.
Economics correspondent Peter Spence writes:
Breaking the current cycle of financial market anxiety will fall to Federal Reserve chairman Janet Yellen, as she testifies before US politicians today.
The US central bank chief is expected to signal that interest rate rises will occur at a slower pace than policymakers had implied when they gave their forecasts for the trajectory of rates at the end of last year.
To satisfy investors, analysts say that the Fed chairman will need to assure markets that the US economy is strong, but not strong enough to necessitate further rate rises.
The Federal Open Market Committee (FOMC) - which decides on US interest rates - elected to increase the Fed’s main rate by a quarter of a percentage point in December.
The well-trailed move caused little commotion at the time. However, signals from officials that they intended to raise rates a further four times in 2016 have generated no small amount of stress.
Read the full report here


Markets extend gains

Just before lunchtime, European stock markets continued to rise ahead of Janet Yellen's Congressional testimony.
Around midday rumours surfaced via a German newsletter that the European Central Bank might buy bank stocks as part of their QE programme; this also lifted markets higher.
Frankfurt's DAX has risen 2.5pc, while the CAC in Paris has advanced 2.4pc and the FTSE 100 is trading up 1.1pc.
Here's a chart of how the German DAX has performed so far today:


Banking sector soars amid rumours European Central Bank could buy bank stocks

Detutsche Bank has surged by more than 16pc today following a torrid two days. Confidence across the banking sector is fragile after stocks slumped earlier this week amid concerns banks may be unable to repay their debts.
However, the sector has staged quite the comeback today amid rumours that the European Central Bank could buy back bank stocks as part of its quantitative easing programme.


Shock fall in UK industrial output lays bare plight of sector

Economists warn of more pain ahead, with "no clear indications that the rollercoaster of risks is likely to abate".
Szu Ping Chan writes:
Britain's industrial plight was laid bare today after official figures showed output at the end of 2015 fell faster than at any time over the past three years.
Industrial production contracted by 1.1pc in December from the previous month, the biggest monthly drop since September 2012 and much worse than the 0.1pc decrease expected by economists.
The Office for National Statistics, which compiled the data, said the decline was led by a 5.4pc drop in electricity and gas production, which was hit by the milder weather.
The oil and gas sector, which has struggled amid falling oil prices and high taxes, suffered a 4.6pc decline in output, compared with a month earlier.
Industrial output is now estimated to have contracted by 0.5pc in the final quarter of last year, from a previous forecast of a 0.2pc fall.
Read more here


Four reasons why stock markets have been getting whacked

Economics correspondent Peter Spence writes:
This week has been a rough ride for investors. Losses on equity markets worldwide have driven the FTSE 100 to its lowest levels in three years, as talk of a global downturn has risen to alarming highs.
The strangest thing, however, has not been the retreat in stocks, but the lack of an apparent catalyst. Traders and analysts alike have been scrambling for an explanation. What could have given cause to the ferocious moves?
  1. Nerves about China’s economic growth
  2. Fears of energy sector defaults
  3. Concerns that the Fed will raise US interest rates too fast
  4. Worries that banks can not cope with sub-zero interest rates
Full report here


Deutsche Bank shares climb as bosses back up tough talk with cash

Tim Wallace writes:
Deutsche Bank’s shares jumped by more than 7pc as markets lapped up reports that the bank is considering buying back some of its bonds in a bid to shore up investor confidence.
Other banks also rallied on the news, with UniCredit soaring 9.4pc, Credit Suisse up 3.4pc and Barclays edging 2.2pc higher.
It comes after two days of rotten trading for the world's biggest lenders, as confidence in the sector slumped over fears that banks might be unable to repay their debts and are headed for another crisis.
Deutsche’s shares have fallen by more than 50pc in the past six months, and by 35pc since the start of 2016.
Read more here


Southeast Asian stocks mixed at close

Ahead of Janet Yellen's Congressional testimony, stock markets in Southeast Asia had a mixed session today.
Singapore's benchmark Straits Times index closed down 1.6pc, after falling by more than 3pc in intraday trade.
Malaysia's main index fell 1pc, while in Thailand and the Philippines, indices were off by around 0.8pc.

ValuesSingapore's Straits Times IndexApr '15Jul '15Oct '15Jan '162250250027503000325035003750


Gold retreats from 7 month highs

The price of gold has dipped 1.3pc to $1,181.70 per ounce this morning as European stock markets climbed, following two straight sessions of losses.
Investors had flocked to the safe-haven precious metal amid concerns about the tumbling stock markets and the state of the global economy.
However, this morning financial stocks have lifted markets from two-year lows. The DAX is up 2.7pc, while the CAC is 2.3pc higher. The FTSE 100 jumped 1.1pc.
Chris Beauchamp, an IG analyst, said: "It looks increasingly like gold has overreached itself. Having spent two days trying to move on beyond $1200, the rally has apparently spent itself.
"A move below $1180 would open the way to $1170 and down towards the rising daily trendline."

Price per ounce (USD)GoldLast PriceApr '15Jul '15Oct '15Jan '16100010501100115012001250


Financial stocks lead FTSE 1.1pc higher

The FTSE 100 snapped its losing streak, after three consecutive trading sessions in the red, helped by financial stocks.
UK-listed banking stocks advanced by more than 1pc this morning, becoming the top sectoral gainer, after they slumped by more than 8pc since Monday amid concerns about the health of the sector.
Mike van Dulken, of Accendo Markets, said: “Equity markets maintaining their ‘recoveries’, as financials regain some poise and bulls have another go at bottom-picking. However, recovery is a big word given the shallow progress by the FTSE and DOW.
"The DAX is the outperformer thanks to a rebound by Deutsche Bank, on whom fears have focused over the last 48 hours."
The top FTSE 100 gainers this morning:


UK industrial output suffers worst drop since 2012

British industrial output suffered its sharpest drop in December since 2012, official data showed this morning.
The ONS said industrial output fell 1.1pc month-on-month in December. This followed a 0.8pc fall in November.
Sterling dipped following the release of the data to $1.4450 against the dollar, before recovering somewhat.
Here's a chart of GBP, see how it slumps at 9:30am when the ONS releases industrial data for December:


European shares rebound from 2-year lows

The recovery in Deutsche Bank shares helped pull European bourses from the doldrums this morning.
European indices have bounced back from two-year lows to make gains more than an hour into trading.
The German DAX has climbed 1.9pc, while the CAC in Paris is also 1.9pc higher and the Spanish IBEX has jumped 2.5pc.
The FTSE 100 is lagging behind its European peers, but it has recovered from an earlier blip, when it fell into negative territory momentarily in early trade.
Britain's blue-chip index is now trading up 1pc.


Shares in Deutsche Bank 10pc higher

After a tumultuous start to the week, shares in Deustche Bank have bounced by more than 10pc this morning - that's its biggest rally since October 2011.
The banking stock slumped in recent days amid mounting concerns it will not be able to maintain its bond payments.
However, this morning the German blue-chip stock jumped following reports it isconsidering a multibillion bond buyback in attemtp to aid the plunging value of its securities.
Yesterday, German finance minister Wolfgang Schauble and Deustche's boss John Cryan insisted the bank is "rock solid".
Here's a chart of the pain Deutsche Bank's shares have suffered so far this week:
Tim Wallace writes:
John Cryan, the chief executive of Deutsche Bank, has come out publicly to claim the bank is “rock solid” following a dramatic drop in the troubled German giant’s share price.
The British banker, who only joined Deutsche seven months ago, maintained that there was no reason to panic and called on his staff to spread that message to clients.
“You can tell them that Deutsche Bank remains absolutely rock-solid, given our strong capital and risk position,” he said in a letter to employees.
His plea was followed by Germany’s finance minister Wolfgang Schaeuble who took the unsual step of also trying to reassure investors in the lender. “I have no concerns about Deutsche Bank,” he said.
Read the full report here


Goldman Sachs backtracks on 2016 recommendations

We're only six weeks into the new year and already Goldman Sachs have abandoned five of its six recommended top trades for 2016.
The investment bank was wrong on the dollar versus a basket of euro and yen, yields on Italian bonds versus their German counterparts, US inflation expectations and more.
According to Bloomberg, the bank's chief credit strategist Charles Himmelberg, issued a note to clients yesterday, in which he said:
"Markets have started out this week by aggressively de-risking, apparently owing to fears that the recent slowdown in global growth could descend into recession.
"Financial credit spreads are spiking, especially in Europe, possibly signaling a reactivation of systemic risk concerns."
The move by the bank to close its call for five of its six top picks for the year, adds to concerns the world economy is suffering.


Yellen set for 'tough examination' from lawmakers

All eyes will be on Federal Reserve chair Janet Yellen's testimony to US Congress later today. Markets will be looking for updates on US monetary direction following the recent market turmoil and the extension of negative rates to Japan.
Rebecca O'Keeffe, of Interactive Investor, said: "Any early movement in markets is, however, just a precursor to this afternoon's main event, billed as possibly the most important debate of the year so far, as Janet Yellen makes her first official public statement since raising rates in December.
"At the House Financial Services Committee today, Janet Yellen can expect a tough examination from lawmakers after the financial carnage that has ensued since the Fed hiked interest rates. Will she insist that the Fed is simply data-dependent, or might there be an acknowledgment that the world simply wasn't ready for higher US interest rates?
"With both the Bank of Japan and European Central Bank still in aggressive easing mode, the Fed appears more isolated than ever in its efforts to normalise US monetary conditions."
Janet Yellen makes her first official public statement since raising rates in December.


Modest gains in Europe... but for how long?

European stock markets have edged higher this morning, despite sharp losses in Asia overnight.
Frankfurt's DAX inched up 0.4pc, while the French CAC rose 0.2pc and the Spanish IBEX added 0.2pc.
London's FTSE 100 opened 0.3pc higher before turning negative less than 18 minutes into trading. The blue chip index is currently down 0.2pc at 5,622.08.
Mike van Dulken, of Accendo Markets, said: "The positive opening call comes after a break-even US session and despite weakness in Asia where both Japan’s Nikkei and the Aussie ASX dropped into bear market, down 20pc from their last peaks with financials and commodity-linked names under pressure from fears of global recession and another banking sector crisis.
"US indices still volatile with futures doing well this morning, while the longer term downtrend is yet to be threatened. Fears were stoked ever higher yesterday by the banking sector while Iranian chat about oil production cuts buoyed crude prices from lows, but not by much and certainly not enough to help general market sentiment."
Here's a chart of how the FTSE has performed so far this week:


That sinking feeling...Maersk profits dive

It's never good when one of the world's biggest shipping lines says profits are plunging. That's because container companies like Moeller-Maersk are widely seen as a bellwether for the global economy. If things are looking bleak for Maersk, that doesn't bode well for the rest of us.
The Danish shipping giant said profits plunged 84pc in 2015, after its oil unit was hit by lower energy prices and its container division got squeezed between sluggish trade growth and overcapacity.
Revenue plummeted from $5.02bn in 2014 to just $791m in 2014.

That compares with a median estimate of $3.7bn in a Bloomberg survey of 16 analysts. The result includes a writedown in the value of Maersk’s oil assets by $2.6bn.
Chief executive Nils Smedegaard Andersen said:
Quote Given our expectation that the oil price will remain at a low level for a longer period, we have impaired the value of a number of Maersk Oil’s assets. We will continue to strengthen the group’s position through strong operational performance and growth investments.
In October, Maersk started cost cutting programmes for both of its two biggest units to address what analysts have described as a perfect storm for the conglomerate, which historically has found support from positive market conditions for at least one the two divisions.
The outlook is choppy, too. Underlying profits in 2016 are expectd to be "significantly below" last year’s earnings.
Maersk Oil will report a loss this year, it said. The unit currently breaks even when oil prices are in a range of $45 to $55 a barrel, the company said.


Are we heading into another major recession?

Maybe. Read this analysis from our friendly market analyst, Michael Hewson, at CMC.
Quote While it is easy to suggest that the current sell-off is an over-reaction where banks are concerned, confidence is everything, and as we know from 2008 once it is gone it is very difficult to get back. With economic growth showing signs of slowing, and interest rates already at record lows and in some case negative, the capacity for banks to build up resilience and improve their profitability is becoming that much more difficult, as central bankers around the world fumble around in the dark.
The extent of the threat to the banking sectors future profitability can be summed up in one number, $6 trillion, and increasing. This is the value of the number of bonds currently with a negative yield, and a number which has doubled in the last two months alone.
Seeing the current turmoil being wreaked in financial markets surely it is inconceivable that central bankers will continue with a policy that in essence yields no discernible benefit, and simply prompts counter reactions of pass the parcel by central bankers across the world, essentially rendering the whole policy ineffective, but doing enormous damage to long-term savers and pension funds.


Another battering for Asian markets

Asian stock markets have suffered another beating, with Japan's Nikkei index reporting sharp losses as investors grew increasingly concerned about the state of the world's economy, the health of the banking system and the prospect of another global recession.
The Nikkei index lost 2.3pc to close at its lowest level since October 2014, extending the 5.4pc collapse on Tuesday.
Sydney ended the day down 1.2pc, while Singapore, returning from a two-day holiday, sank 2.1pc in the afternoon. Markets in New Zealand, the Philippines and India also dipped into the red.
Once again, energy firms lost out after oil prices sank below $28 a barrel yesterday, although Brent crude appears to be staging a bit of a comeback this morning.
Among energy stocks, miner BHP Billiton lost 2.5pc of its value, while JX Holdings in Tokyo was down more than 2pc.
Asia's banks also took a beating, following losses in their European counterparts.
Market turbulence is at a five-month high, having jumped 20pc since last Friday, according to the Chicago Board Options Exchange Volatility Index.



  1. The FTSE slumped to its lowest level since August 2012 on Tuesday and European equities sold off as markets endured another day of turmoil.
  2. Europe's Stoxx 600 index of banks also fell to its lowest level since August 2012, losing another 5.6pc.
  3. The rout continued on Wednesday in Japan, where the Nikkei dropped 2.3 percent.
  4. Australia entered a bear market, with the S&P/ASX 200 Index dropping to its lowest since July 2013.
  5. Investors will be watching closely what Federal Reserve Chair Janet Yellen says before the US Congress on Wednesday.


Japan 'suffering triple punch'

Japanese stocks have plunged for a second day as investors rushed to the safety of the yen.
The Topix index sank 3 percent to 1,264.96 at the close in Tokyo, capping the biggest two-day loss since August and lowest close since October 2014, Bloomberg reported. It pared a loss of as much as 4.4 percent in late trading. The Nikkei 225 Stock Average dropped 2.3 percent to 15,713.39, triggering margin calls among retail traders. The yen traded at 114.66 per dollar, near the strongest since November 2014. Markets in Japan are closed Thursday for a holiday.
Tomoichiro Kubota, a senior analyst at Matsui Securities Co. in Tokyo, told Bloomberg:
Quote Japanese stocks are suffering from a triple punch and it’s difficult to bounce back. We have worries over financial institutions in Europe, problems in the bond market, and concerns aren’t alleviated at all. There’s still a sense of wariness toward commodity-related corporate earnings in the US, so that’s a negative, plus the yen is being favoured as a place of refuge.


Australia enters bear market

Volatility in the markets has extended to Australia, where stocks have sank to a bear market.
The S&P/ASX 200 Index dropped 1.2 percent to close at 4,775.70, its lowest since July 2013, according to Bloomberg. The gauge has tumbled 20 percent from its April peak, the level some traders define as a bear market. Markets from Europe to Japan and China have already fallen into this category.
“There’s a sense of heightened global uncertainty, with more question marks around global growth,” Chris Green, an Auckland-based strategist at First NZ Capital Group Ltd., a brokerage and wealth management firm, told Bloomberg. “There seems to be policy fatigue among central banks and there’s a realisation from investors that the risks to global growth have increased.”
Australian shares have fallen amid concerns about China?s economy and tumbling commodity prices.


Japan's slump continues

Tokyo stocks are continuing to fall, with shares plunging more than 3 percent in afternoon trading on Wednesday.
The benchmark Nikkei 225 index tumbled 3.42 percent, or 550.74 points, to 15,534.70, after a 5.4 percent dive the previous day. The broader Topix index of all first-section shares fell 3.64 percent, or 47.52 points, to 1,256.81.
Chihiro Ohta, general manager of investment information at SMBC Nikko Securities, told Bloomberg News the volatility was expected to continue:
Quote The market is waiting to see what (Federal Reserve Chair Janet) Yellen will say in her testimony on rate hikes given the situation we're in.


All eyes on Yellen

Federal Reserve Chair Janet Yellen will be testifying before the US Congress later on Wednesday and she will need to calibrate her commentary carefully to avoid further stoking volatility.
With equity markets lurching between selloffs and rebounds amid concern over the creditworthiness of European banks and the impact of oil’s decline, investors will be firmly focused on Ms Yellen, after the Bank of Japan’s surprise move into negative interest rates largely failed to assuage market concerns.
Analysts have started to examine the prospect of the US following the euro area and Japan in adopting rates below zero if the economy deteriorates. According to Steven Englander, Citigroup’s New York-based global head of Group-of-10 currency strategy, Ms Yellen should “deflate” some of the enthusiasm around negative rates and that may boost US yields and support the dollar:
Quote Her hope would be to unwind some of the bearishness that has engulfed asset markets, and this would be supportive for U.S. dollar, rates and equities. However, at times market pessimism is so deep seated that good news is viewed only as an opportunity to sell at better levels.
The dollar dropped 0.6 percent to 114.38 yen as of 10:44 a.m. in Tokyo after falling to 114.21 Tuesday, the weakest level since November 2014.
Janet Yellen will testify before Congress on Wednesday.Janet Yellen will testify before Congress on Wednesday.  Photo: Bloomberg


Asian stocks slide

Markets are continue to tumble in Asia amid persistent concern over market volatility,
In Japan, the Nikkei index lost 2.4 percent by the break, extending the 5.4 percent collapse on Tuesday, as the yen climbed against the dollar to levels not seen since late 2014. The Topix fell 2.6 percent - its lowest point since October 2014. Singapore's Straits Times gauge slipped 2.1 percent, its biggest drop in three weeks, while in Australia the S&P/ASX 200 Index dropped 2.3 percent, extending losses at its lowest level since July 2013.
Explaining the markets' slide, Russ Koesterich, global chief investment strategist for New York-based BlackRock Inc, told Bloomberg TV:
Quote Having a large impact on the drop in equities is this growing concern about the sustainability of the recovery, the state of economic growth in China and, increasingly, the state of growth in the US. People are getting worried about the global recession, worried about growth, which is affecting not only oil and stocks but other risky assets as well.


Dow and S&P 500 close lower

US stocks finished a choppy session slightly lower as investors grappled with weakness in overseas equity markets and another drop in oil prices.
At the closing bell, the Dow Jones Industrial Average and S&P 500 were both down 0.05pc, while the tech-rich Nasdaq Composite Index lost 0.36pc.
"The market is trying to find a floor," said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.
"We still believe this volatility is going to continue until commodity prices settle down, and that hasn't happened yet."
Concerns over the health of global banks also weighed on markets.
John Cryan, the chief executive of Deutsche Bank, was forced to publicly claim the bank is “rock solid” following a dramatic drop in the troubled German giant’s share price.
The British banker, who only joined Deutsche seven months ago, maintained that there was no reason to panic and called on his staff to spread that message to clients.
“You can tell them that Deutsche Bank remains absolutely rock-solid, given our strong capital and risk position,” he said in a letter to employees.
His plea was followed by Germany’s finance minister Wolfgang Schaeuble who took the unsual step of also trying to reassure investors in the lender. “I have no concerns about Deutsche Bank,” he said.
Shares in Deutsche tumbled another 4.7pc on Tuesday. The bank’s shares fell to €13.26 and are now down 46pc since the start of the year and 58pc in the last six months. Last month the bank reported a €6.8bn (£5.3bn) loss for 2015.
Deutsche has led the wider banking market down as fears spread over the profitability and financial stability of Germany’s biggest bank. Yesterday Swiss institution Credit Suisse’s shares were down by almost as much, plunging 7.75pc. Spooked investors also sold off shares in other banks, leaving Barclays down 5.2pc, BNP Paribas down 4.8pc and Italy’s Intesa Sanpaolo down 4.9pc.


Tuesday's market wrap

The FTSE slumped to its lowest level since August 2012 and European equities sold off as markets endured another day of turmoil driven by worries a new banking crisis could erupt in a fragile global economy.
Britain's benchmark blue-chip index ended the day down 1pc to close at 5632 points, it lowest finish in more than three years.
In Europe, the pan-European FTSE Eurofirst endured its seventh consecutive day of declines, falling by as much as 2.6pc in intraday trading.
European banks were the biggest casualties with another 4.5pc wiped off the Euro Stoxx 600. The index has now fallen to its lowest point since the height of the eurozone turmoil in the summer of 2012 when investors were forced to take a "haircut" on Greek government debt.
Western markets were gripped by risk-off sentiment after Japan's Nikkei has closed down 5.5pc, and Asian banks declined by 7pc, in early morning trading.
Japan also became the first major world economy to see borrowing costs on its 10-year bonds fall into negative territory - effectively penalising investors for holding government debt.
The flight to safety was triggered by a heady mix of fears - including concerns that central banks were stoking a new crisis by embarking on an unprecedented experiment with negative interest rates.
"[Monetary policy] is trying to stimulate aggregate demand and the honest truth is that it's not capable of doing that in a sustainable way", said William White at the Organisation of Economic Cooperation and Development.
Perennial concerns about an oil glut also sent Brent crude down by 2.2pc to as low as $32 a barrel.
Evidence of a dramatic slowdown Germany only piled onto woes that the world would struggle to get out of an insipid growth trap this year. German industrial production fell by 1.2pc at the end of last year, it sharpest fall since August 2014.
Read all of the news as it happened on Tuesday, February 9