Bank of America on oil and the money supply.
BoA has come up with a statement or a report with two major concerns for the world economy. One, OPEC has failed to prevent the massive drop in the price of oil. Not only does this end OPEC as an organization (by default), it will cause massive defaults and bankruptcies in the shale industry. That will shock the markets and a trillion + is deleveraged.
Two, the Federal Reserve is stopping the money train that was called quantitative easing (QE). Europe and Japan's plans will at best cover 35% of what the Fed was doing. That will also shock world markets, particularly emerging markets.
***The Opec oil cartel no longer exists in any meaningful sense and crude prices will slump to $50 a barrel over the coming months as market forces shake out the weakest producers, Bank of America has warned.
Bank of America said quantitative easing in Europe and Japan will cover just 35pc of the global stimulus lost as the Fed pulls back, creating a treacherous hiatus for markets. It warned that the full effect of Fed tapering had yet to be felt. From now on the markets cannot expect to be rescued every time there is a squall. “The threshold for the Fed to return to QE will be high. This is why we believe we are entering a phase in which bad news will be bad news and volatility will likely rise,” it said.
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