Signs of Trouble: USD Selling Has Reached Buy Back Levels, Flows Into Equity Markets, China’s Soaring Debt Precedes Financial Crises, Euro Lending Contracts For Eighth Month, Moody’s Downgrades TD, Five Other Canadian Banks…

Bank Of America Sees First Signs That The Rally Could Reverse

The S&P 500 has been grinding steadily higher in 2013 as no real bearish catalyst has yet given investors reason enough to sell stocks.

For weeks, while Wall Street strategists have mused that this may be the beginning of a “Great Rotation” out of bonds and into equities, they’ve also warned that a correction is near.

The chart below shows that historically, 1.8 standard deviations is typically a level where selling reverses, according to Cochinos, which means one big source of dollar weakness, and hence, strength in risk assets, may soon be removed from the market.


Real money selling USD

Meanwhile, flows into equity markets, which have been strong in the past few weeks, are looking stretched, says Cochinos:


Equity fund flows


China’s Soaring Debt Precedes Financial Crises

by John Aziz of Azizonomics blog,

Things don’t look so good for China:


Will we see a Chinese financial meltdown in 2013? Or 2014? Or 2015? With global GDP growth on a definite trend downward, with such a tepid Western recovery, and with global geopolitical tensions still high, the last thing the global economy needs is a financial crisis at the heart of the BRIC growth engine. But the data implies that that may just be what we get….



Eurozone lending contracts for eighth month as cheap borrowing fail to revive spending

Loans to companies and households in the eurozone contracted for the eighth month running in December, showing low official borrowing costs are having little success in reviving investment and spending.

Loans to the private sector fell 0.7pc from the same month a year ago, European Central Bank data showed.

The monthly flow of loans to non-financial firms fell €22bn in December after falling by €7bn in November. The monthly flow of loans to households showed a drop of €3bn after a rise of €6bn in the previous month.

The cheap funds the ECB is pumping through the monetary system are still not reaching households and businesses evenly across the euro zone as some countries struggle to get their stricken economies back on track, though progress has been made….

Russia shuns euro bonds on North-South rift, rotates into stocks

Russia has no intention of buying any more eurozone bonds and may start to run down its holdings, warning that it is far from clear whether monetary union can hold together.


Moody’s Downgrades TD, Five Other Canadian Banks

Toronto-Dominion Bank, Bank of Nova Scotia and four other Canadian lenders had credit ratings cut by Moody’s Investors Service because of high home prices and consumer debt.

Toronto-Dominion, the last publicly traded bank rated AAA by Moody’s, was cut to Aa1, the ratings firm said Monday in a statement. Bank of Nova Scotia fell to Aa2 and the ratings on Bank of Montreal, Canadian Imperial Bank of Commerce, Caisse Centrale Desjardins du Quebec and National Bank of Canada were lowered by one level….



The Spanish Housing Market Is Heading To ZERO!!