CNBC reported late today that the Fed is telling banks to prepare for the possibility of negative interest rates.
“For the first time ever, the governing agency and U.S. central bank is requiring banks to include, in a round of stress tests commencing this year, to prepare for the possibility of negatively yielding Treasury rates. A source familiar with the tests told CNBC.com that the scenario is purely hypothetical and not a forecast. However, the development is part of a larger scenario of a world where zero rates are morphing into negative rates.”
Two weeks ago the Bank of Japan introduced negative interest rates after the European Union did the same last year.
Meanwhile, it was another plunge in the price of oil that had investors seeing volatility with a capital “V” today. Earlier in the day, the market was down 100 points- then up 100. At the end of the day the markets finished with its 2nd straight day of losses for this week. The cost of a barrel of crude oil fell nearly 6% percent to close just below $28 barrel. It had been down by as much as 8%. The International Energy Agency (IEA) said that it did not expect global demand for oil to grow quickly enough to erase the over-supply of crude any time soon. The energy watchdog agency said that, “the world will store unwanted oil for most of 2016 as declines in U.S. output take time and OPEC is unlikely to cut a deal with other producers to reduce ballooning output, said the energy watchdog.”
John Carey, a Boston-based fund manager at Pioneer Investment Management Inc. told Bloomberg.com:
“It’s quite a tussle between the bulls and bears. Some people think this is a temporary setback and that the market maybe got a little ahead of itself — that nothing is really wrong with the economy and this is a good buying opportunity. Others think the market is indicating a slowdown in months ahead.”
CNBC asked the question:
“Who’s responsible for the turmoil on the market & where is investment money going?”
* Bank of Japan
* European banks
* Crude Oil
See more below.
Here are the final numbers from Tuesday, 2/9/16 on Wall Street
Dow Jones Industrial Average: 16,014.38 (-12.67 / -0.08 %)
NASDAQ: 4,268.76 (-14.99 / -0.35 %)
S&P 500: 1,852.21 (-1.23 / -0.07 %)