OVERNIGHT

A mixed ECB message from Mario Draghi about the limits of negative interest rates confused investors overnight ans sent most Asian shares down.

As Reuters reported:

The euro hung onto hefty gains in Asia on Friday after the European Central Bank eased aggressively but suggested it was running out of room to cut interest rates, even if other stimulus options remained.

The muddled message sent European bond yields surging and snuffed out a nascent rally in risk sentiment, leaving Asian share markets at a loss on how to react.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched up 0.32 percent, while Australia dithered either side of flat.

Japan's Nikkei .N225 took a blow from a rise in the yen and slipped 0.9 percent, though that was above early lows.

Shanghai stocks .SSEC eased 0.8 percent, while China's central bank underlined its commitment to a firm yuan by fixing the currency at the high for this year. 

Markets went on a wild ride overnight after ECB chief Mario Draghi suggestxed there were limits to negative rate policy.

"From today's perspective and taking into account the support of our measures to growth and inflation, we don't anticipate that it will be necessary to reduce rates further," proved to be the offending sentence.

Gold and oil took their leads from the statement with the yellow metal hitting a 13-month high at $1282.51 an ounce and both Brent And Texas Intermediate edging higher.

OVERNIGHT

Stocks were mostly up in Asia Thursday owing to a rally in energy.

The Nikkei gained 1.1%, the Hang Seng Index tweaked ahead 0.7% and the Australian S&P/ASX 200 was up 0.2%. U.S. oil rallied overnight to a three-month high, helping energy shares elsewhere. New Zealand cut interest rates, an unexpected move that buoyed shares there 0.5%. The Reserve Bank of New Zealand cut rates 25 basis points to 2.25% and left the door open for more cuts. The moved pushed the New Zealand dollar lower.

Many of the pundits don't like to hear it, there's a currency war going on and it will be a real surprise if the ECB later this week doesn't do its part to expand it.

In a mostly expected move South Korea left its benchmark interest rate unchanged, pushing the won down slightly. The Shanghai Composite Index settled down 0.7% as meeting there continue to be watched closely by investors Though some say the government might give sticks a boost soon by buying shares.

Two upcoming central bank meetings--the ECB and the Federal Reserve--still hang over markets as investors remain cautious. 

POWER AND CONTEMPT

You gotta love the Donald. One guy with a crazy, beau-fount Betty Crocker hairdo can rattle so many cages, cause such international angst.

Take the editorial page people at the WSJ. If they were any more pathetic, they'd be pitiful. But first lets take a headline in today's Journal about China: "For China, Politics Trumps Economics." Think that through for a second. You don't even have to think that carefully though. Do you think politics doesn't "trump" economics in the U.S. or the EU or Russia?

Such nonsense comes out of the bowels of MSM daily. Two of the three main editorials in today's WSJ are on Trump. This is almost their daily fare. Another headline in today's paper essentially blames "white people" for Trump's popularity. Though it might be difficult for you, imagine a major MSM outlet blaming black or Hispanic or Asian people for someone's public traction.

So far in the last week we've read editorials in the WSJ referring to Trump supporters--and in some instances directly labeling--as bigots, racists, fascists, gun nuts, crude, uncivil, to name just a few of their well-chosen-agenda-driven epithets. One brave dude there, hiding behind his editorial facade, compared him to Mussolini and the early black shirts. Hitler is another common comparison we've seen.

When some of his e-mailers responded with some fairly rough language--hardly uncommon in American political history--he contemptuously and cowardly accused them of adopting the MO of their leader. That should tell you much of what you need to know about their opinion of your ability to think and speak for yourself.

We want to be clear here, we don't have any skin in this race. If you study the history of Japanese samurai, you know they were taught to enter battle with an empty mind. There's a word in Japanese to describe this state that escapes us at the moment. It's one of the great paradoxes of not just fighting but life in general. If your mind is full of the left hook, chances are better than good you won't see the straight right coming.

The list of lame and limp past presidents from left and right is long. Trump's not even there yet. Some might say he can't do any worse than the current White House occupant. But that would be called partisan by some. Others might conjure up the ghost of Nixon. If you believe that even today Nixon wouldn't have any defenders, you should enjoy your naiveté.

Our point here is simple. The fear of a Trump presidency by any and all standards--historical, economic, social or otherwise--is more over-bloated than the current equity market. In fact, it's a direct insult to the public at large, left, right or over the top. And in part it's why a guy like the Donald can have such appeal. The media moguls, bureaucrats, politicians, central bankers, academic economists and outer space college professors, have only one opinion of you and by now it should be clearer than crystal--contempt.

As we said at beginning: You gotta love the Donald. One guy with a crazy beau-fount Betty Crocker hairdo can rattle so many cages, cause such international angst. That's power. And that's what the entrenched cognoscenti are fighting so feverishly and so fervently not to surrender.

You might have even in this centralized-controlled world the right to give up your power, but in the process at least for now no right to surrender that of others.

ANOTHER CHINA VIEW

The turmoil in China continues. The recent trade data caught many off guard, coming in as it did at six year lows. The recent announcement it would be closing many steel plants, up to 60% in one area by 2020. The fate of the yuan. Will they try one last ditch effort to muddle through or let it fall are both concerns. The recent crackdown on businesses to prevent the ongoing flight of capital is another, proving that capital flight, notwithstanding what many so-called pundits claimed was overstated, is a growing problem.

It may indeed have slowed, but as a story earlier today from Business Insider shows necessity and invention are still alive and doing quite well. Last year according to some reports around $700 billion to $1 trillion fled the country.

Capital has been flowing out of China at unprecedented rate over the past six months. Amidst concerns about the economy and the potential for further weakness in the Chinese renminbi, many investors are running for the exits.

With regulators closely monitoring cross boarder flows, heightening the risk of more stringent capital controls being put in place, investors have become increasingly inventive when it comes to getting money out of China.

Take the practice of fake invoicing, for example. 

Based on recent anomalies between Chinese and Hong Kong trade figures, it appears many investors are now trying to get their capital out through non-traditional means, overstating the value of imported goods from Hong Kong to circumvent Chinese capital controls.

It’s the exact opposite scenario to what was seen in past years where firms in Hong Kong were overstating the value of imported goods from China in order to get capital in there, avoiding capital controls in an attempt to speculate on further strengthening in the renminbi.

Just two of the problems China face is the slowdown of growth and market turmoil. Like we always say volatility is a two-way street. It can be your friend or your nemesis. Volatility always brings out the financial vultures. Unless there's some kind of dramatic change, the Chinese government can expect more of the same.

businessinsider.com/fake-trade-invoicing-in-china-is-back-this-time

theepochtimes.com/n3/1986351-the-good-the-bad-and-the-ugly-scenarios-for-china's-economy

OVERNIGHT

Chinese shares took a hit overnight as falling commodity prices and an announcement that a northern China official made about pending steel plant closures in what would be a consolidation move. Weak copper, nickel and oil prices added to investor concerns.

The Shanghai Composite index at one point was down nearly 3% threatening to end the session down after six straight days of gains. The WSJ reported:

Shares of Chinese steel producers plunged after the official news agency Xinhua reported that the governor of Hebei, a northern Chinese province near Beijing, said the province will aim to close 60% of its steel factories by 2020.

That report sparked selling of steel-related stocks. Shanghai Hualian Mining was down 7.6%, and Shandong Jinling Mining was down 8.5%.

Hong Kong’s Hang Seng Index fell 0.6%, hit by weakness in shares of oil producers.

Elsewhere in the Asia region, stocks were mostly down as investors shied away from risk amid a slump in commodities and oil prices.

Japan’s Nikkei Stock Average lost 1.3% and Korea’s Kospi was down nearly 0.2%. Australia’s S&P/ASX 200 rose about 0.7%.

There are also lingering concerns about upcoming central bank meetings this week, particularly the ECB. Oil prices came under pressure Tuesday in the U.S. as it dropped 3.7% closing at $36.44. There's a conflict between as doubts grow that major producers can actually pull off an output freeze and news that U.S. production is expected to decline next year.

China's February trade performance that came out yesterday has also caused some skittishness among investors after export figures hit six lows. That was far worse than expected.

NORTH VERSUS SOUTH

It never changes, north versus south.

San Franciscans look down their long PC noses at their southern neighbor, Los Angeles. In the European Union it's always been the snooty north against the less well-off south. Brussels versus Greece could draw a fair-sized UFC crowd. In fact, maybe that's is what's needed and will eventually come about. There's a nearly global north-south water struggle many are unaware of going on also.

In Magic Mario Draghi's stumbling, bumbling attempt to right the rudderless Good Ship European Union, the southerners will once again feel the squeeze is on. Banks there are already hurting to use a kinder, more gentle depiction. Negative interest rates will simply pour more water on the heads of the already drowning.

Banks make much of their money on the spread in interest rates, no different in its way than carry trades in currencies. Borrow money at a lower rate in one currency and invest it at a higher rate in another currency, hoping the spreads remains steady as it goes.

A narrower spread hurts depositors but it may even hurt banks more. And that's what those southern European banks need, more pain and more "we told you so" And then there's the almost ignored problem of fixed versus variable mortgage rates. In the north their mostly fixed, in the south variable.

This can have a big impact on mortgage rates as banks with variables on their books yield less income the lower rates float. Since margin rules or covenants on these loans can't be changed, the squeeze gets tighter. As noted in one scribe today, at least one southern bank there is now paying its mortgage holders for the privilege of holding their mortgages.

It's game in America seemingly growing more popular by the moment as banks pony up funds to the
Fed for holding their reserves. Just the obverse is true with fixed rate mortgages. Banks holding them worry about rising rates.They also don't like a lot of inflation. Up to a point zero rates are a lenders paradise; you're constantly paying them back with an appreciating currency. Inflation favors the borrower.

What much of this is about is unintended consequences bureaucrats and regulators never seem to see before they dictate our futures. As public confidence in these institutions that in essence are answerable to no one fades, disgruntlement will grow. It's a healthy disgruntlement, not what MSM shills would have you believe.

Nearly all change has an element of disgruntlement to it. Appreciation for personal and local sovereignty will also grow. And like any good spellbinding mystery the outcome become clear. China's elite know and fear this the most. They are not alone.

You're on your own.

OVERNIGHT

Upcoming central bank meetings ruled overnight trading as investors took some profitts uncertain about what will come out of those meetings.

Like closing positions ahead of a long 3-day weekend, you don't want to give back hardgotten gains following a decent rally. The thought of negative interest rates unsettles many market participants as concerns about them grow.

Reuters reported: Asian shares fell on Tuesday as investors took profits after a month-long rally and investors grew wary of the market's near-term prospects ahead of major central bank meetings.

Led by China, MSCI's broadest index of Asia-Pacific shares outside Japan fell more than a percent. Japan's Nikkei and South Korea's KOSPI fell more than a percent each.

"We have seen a big move in markets in a very short period of time and investors are calling time ahead of the ECB and the Fed meetings in the coming days," said Kay Van-Petersen, global macro strategist at Saxo Bank in Singapore.

The European Central Bank is widely expected to ease at Thursday's policy review, but there is a lot of uncertainty about how far it would go. Meanwhile, ahead of a U.S. Federal Reserve policy meeting, fed fund futures were barely pricing in one more hike this year.

Meanwhile, Chinese shares fell particularly those in the property sector as rumors the government might attempt to tone down speculation in the nation's high-end property markets. The market was also effected by weaker export and import numbers.

PINCHING YOUR POKE

What happens in a place doesn't despite a popular Las Vegas ad a few years ago always stay there.

If you're concerned about your future and your inexorable slide toward retirement, assuming you get one, you might want to pay more attention to what's going on in Europe and those incessant promises politicians are always waving in front of voters, especially in this election year.

The story line says it all: "Europe Faces Pension Pinch." The headline writer of this tale should get an award for understatement. Pinch is to soft as tsunami is to storm. And that's what European governments face, a huge shortfall storm that will soon being playing in a neighborhood near you.

Here's a brief paragraph that summarizes the sad tale.

State-funded pensions are at the heart of Europe’s social-welfare model, insulating people from extreme poverty in old age. Most European countries have set aside almost nothing to pay these benefits, simply funding them each year out of tax revenue. Now, European countries face a demographic tsunami, in the form of a growing mismatch between low birthrates and high longevity, for which few are prepared.

Europe’s population of pensioners, already the largest in the world, continues to grow. Looking at Europeans 65 or older who aren’t working, there are 42 for every 100 workers, and this will rise to 65 per 100 by 2060, the European Union’s data agency says. By comparison, the U.S. has 24 nonworking people 65 or over per 100 workers, says the Bureau of Labor Statistics, which doesn’t have a projection for 2060.

Don't let those numbers fool you, 42 per 100 versus 24 per 100. There's no comfort there because government figures are like tout sheets at the race track. You never get what you pay for. This is a crisis. A similar situation faces retirees in the U.S. See state funded retirement plans like Illinois, for example.

The state is broke, but the one thing bureaucrats and Chicago mayor Rahm Emanuel understand is snoozing bears. Death certificates require a signature.

And later this week the European Central Bank will most likely pour some more petrol to the already blazing debt flames with more negative interest rate moves. Martin Wolf should be smiling about then. Negative interest rates in less stuffy circles is just another form of kick the can, the antithesis anything that vaguely looms well for your retirement future.

As the chasm in the future between the young and the elderly grows wider and more hostile, you can thank your bureaucrats and politicians. Meanwhile, with the rise of robots taking more and more jobs, will employers face higher taxes to cover the shortfall? The revenue has to come from somewhere.

Confiscating your retirement, some might call pinching your poke. Either way it'll hardly when it happen feel very soft.

Then I ducked my head, and the lights went out, and two guns blazed in the dark,

And a woman screamed, and the lights went up, and two men lay stiff and stark.

Pitched on his head, and pumped full of lead, was Dangerous Dan McGrew,

While the man from the creeks lay clutched to the breast of the lady that's known as Lou.

These are the simple facts of the case, and I guess I ought to know.

They say that the stranger was crazed with "hooch," and I'm not denying it's so.

I'm not so wise as the lawyer guys, but strictly between us two —

The woman that kissed him and — pinched his poke — was the lady that's known as Lou.

RATTLED CAGES

Concerns over The Donald as he is known in some New York quarters continue to grow.

Here are two stories from the Internet today about Republican presidential candidate Donald Trump as he continues to rattle lots of cages especially since his Super Tuesday performance. This is after all an election year and politics and markets particularly with the increasing government inference and rise of regulations investors need to keep their eyes on their pocketbooks as they will no doubt take a hit whoever the victor is.

Going from what many thought was just a clown show to what is now perceived even by his detractors as a serious candidate this indeed will be an interesting and exciting run to offset what's been doled out in the boring past.

Football season may be over with March Madness soon to follow, but what could turn out to be a spellbinding run to November awaits. If the race is even close, you can expect the newspapers lining the bottom of those cages to get changed a lot more often. 

Hollywood eat your boring heart out.

businessinsider.com/r-foreign-diplomats-voicing-alarm-to-us-officials-about-trump-2016

marketwatch.com/story/democrats-start-to-worry-about-trumps-appeal-2016-03-07

IRON ORE RALLY A SURPRISE

The price of iron ore jumped overnight, making its largest one day move in history, according to Business Insider. That pushes the metal up nearly 67% since hitting a low last December. Though it could be just another fluke related to upcoming meetings in China since sudden spikes have happened before it came unexpected and continued a recent upward move in prices.

That iron has been in terrible straights for a long time owing to the global recession is hardly news.

The iron ore market made history on Monday, recording its largest one-day increase on record.

According to Metal Bulletin, the spot price for benchmark 62% fines rose by $9.99, or 18.6% to $63.74 a tonne, the highest level seen since June 15 last year.

Whether in percentage or dollar terms, it was the largest increase ever recorded going back to when spot pricing was first introduced in mid-2008. From the all time low of $38.30 a tonne struck on December 11 last year, the benchmark price has now risen by 66.4% businessinsider.com/iron-ore-biggest-ever-one-day-gain-chart-2016-3?