‘If you are going to be wrong, be wrong quickly with a de minimis loss of capital’.” — unknown

1. China Dips Into Foreign-Exchange Reserves By $99.5B in January — the Peoples Bank of China discloses that its foreign-exchange reserves fell by almost $100B in January. The reserve drop in January to $3.23T, marking the lowest level since 2012. Beijing has been fiercely struggling to underpin the yuan amid slower economic growth, plunging stocks and increasing capital outflows that have been burning through the reserves.
2. S&P Lowers Ratings On Four Banks With Big Oil Loan Exposure — four regional banks had their ratings cut by Standard & Poor’s last week on their exposure to loans in the energy sector amid falling oil prices. S&P lowered ratings by one notch on BOK Financial Corp. (BOKF) to “BBB+”, Comerica Inc. (CMA) to “BBB+”, Cullen/Frost Bankers Inc. (CFR) to “A-“, and Texas Capital Bancshares Inc. (TCBI) to “BB+”.
3. Trump, Sanders Captured New Hampshire — Republican Donald Trump and Democrat Bernie Sanders swept to convincing victories in the New Hampshire primaries las Tuesday night, providing them momentum for future contests and sending shock waves through both parties. With voters putting their faith in anti-establishment politics, New Hampshire’s verdict sets up a tough fight for Republicans in South Carolina on Feb. 20 and for Democrats there on Feb. 27.
4. Sweden Cuts Main Interest Rate Further Below Zero — Sweden’s central bank cut its main interest rate even further below zero as it sought to hold down the national currency to support a recovery in the inflation rate toward a 2% target. The bank, known as Sweden’s Riksbank, lowered its main repurchase rate to minus 0.5% from minus 0.35% and said it still had scope to drop it further if needed. The Riksbank, along with the Swiss, Danish, European and most recently Japanese central banks have now all gone lower. Negative interest rates in a country discourage foreign investors from holding that country’s currency and that pushes the value of the currency down. That in turn pushes import prices up, giving the inflation rate a further boost.
5. OPEC Ready for Output Cut — Reuter reported that UAE’s oil minister said “OPEC members are ready to cooperate on a cut”. Saudi Arabia signaled it may limit output but won’t commit unless Iran does the same. US crude hits 13-year lows earlier this week at around $26.00 a barrel.

The week ahead — Economic data from Econoday.com: