Stocks Rise, Crude Tumbles As All Eyes On NFP

On Saturday we noted that “buy the dip” has now ceased to be a condescending nod to retail investors and/or a critique of central bank largesse. Instead, Wall Street now openly advocates it. Here’s the quote from Deutsche Bank:

“We suspect the Fed’s insistence to raise again will therefore allow bouts of market price adjustment that are contained – whether intentional or not, this will placate those who are worried about the hunt for yield and market complacency. Buy the repression on dips.”

Yes, “buy financial repression” on dips if you want to have any hope of rescuing yourself from the low yield environment that recession hath wrought. “I just can’t rate people who’re upset at the prospect of two-way markets,” Bloomberg’s Richard Breslow said on Friday, adding that “maybe just buying whatever is the applicable dip has become too beloved a crutch. Another form of corporate welfare.”

Indeed Richard, indeed. But Larry Summers wasn’t impressed. The former Treasury Secretary took to his blog to say that although Yellen is right that the prospects have improved, that’s “not to say that it has reached the point of being persuasive.”

Monday is all about the rate hike trade - the Fed has once again managed to convince markets that another hike is indeed a possibility. Even as early as next month’s meeting. Hence oil is down, the dollar fi:

Here’s the USDJPY:

So that’s a three week high and it’s brought to you buy Kuroda, whose comments at Jackson Hole suggest he’s just as ready plunge Japan further into NIRP (because that’s worked so well thus far). Here are the amusing soundbites courtesy of Bloomberg:

  • Bank of Japan Governor Haruhiko Kuroda says “the bank will carefully consider how to make the best use of the policy scheme in order to achieve the price stability target.”

  • Kuroda spoke Saturday in Jackson Hole, Wyoming, at annual policy conference hosted by Federal Reserve Bank of Kansas City

  • “We will act decisively as we move on”: Kuroda

  • Says the “zero lower bound is no longer insurmountable” as a policy constraint “in practice”

  • Kuroda: “It is natural to assume another lower bound exists”

  • Says the current rate is “still far from such a lower bound”

He’s always doing this - he’s the veritable king of the central banker on-liner and most of the time, what he’s saying flies in the face of reality. Why, for instance is it “natural to assume another lower bound exists?” Japanese savers are already buying up safes and hoarding cash and the yen has been moving in the “wrong” direction all year long.

As for the US, here’s what Adam Posen, a former Bank of England policy maker and president of the Peterson Institute for International Economics told Bloomberg: “The fact that we are nowhere close to the 300 let alone 400 basis points you would normally need (to cut) is disturbing.”

Well don’t tell that to Kuroda. He doesn’t need any basis points to cut.

Of course all eyes are squarely on Friday’s NFP print on which some believe the September hike invariably hangs. “This is a Fed that is getting ready to go,” Saxo Capital Markets, Kay Van-Peterson, global macro strategist says.

We shall see.

By the way, stocks are up triple-digits. Buy. The. Dip.

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