Speaking of liquidity, whether it be in surplus in a Laguna Beach shower, or an extreme deficit in the State of California, current concerns in the financial markets center around the absence of liquidity and the effect it might have on future market prices.
In the second half of our interview with Nouriel Roubini,FINalternatives editor-in-chief Deirdre Brennan speaks with the renowned economist about IMF policies, the risk posed by shadow banking systems, and the possibility of a hard landing in China.
In the petroleum markets it was better than expected demand for products due in part to weather but also a surprising increase in gasoline demand that kept the market from falling apart after a much larger than expected increase in crude supply.
Wednesday's FOMC meeting is Ben Bernanke’s swan song, and if tapering is to be announced he would probably go out with falling bond markets, falling equities and a soaring dollar, not to mention disruption of emerging market currencies.
Financial stability, economic growth and jobs creation are likely to be top of the agenda at the G20 summit in Moscow and any commitment to closer global coordination over economic and monetary policies could prove bullish for commodity and risk currencies.
Oil volatility is back and the bulls are no longer going to get a free ride bought and paid for by our friends at the Federal Reserve. Add to that the fears of a China meltdown based on a credit freeze.
It seems to be slowly dawning on traders that the Fed has no plan, and worse, no exit. The surprise is that the investing crowd has been in denial of the facts, which we can only put down to the human desire to be blind to negative outcomes.
U.S. and Japanese central bank quantitative easing programs are placing China between a rock and a hard place in which a revaluation of the Chinese yuan vs. the U.S. dollar may turn out to be the least bad solution.