| The world's most important oil price is about to change for good, a $3 trillion threat to global financial markets looms in Japan and the US's biggest financial institutions may face a multi-billion-dollar tab. — David Goodman After years of wrangling, the world's most important oil price is about to be transformed for good, allowing crude supplies from west Texas to help determine the price of millions of barrels a day of petroleum transactions. The shift is because the existing benchmark, Dated Brent, is slowly running out of tradable oil for it to remain reliable. As such, its publisher S&P Global Commodity Insights — better known by traders as Platts — has been forced to make a dramatic overhaul. From cargoes for June onward, West Texas Intermediate Midland, oil from the Permian will become one of a handful of grades that set the Dated benchmark. Here's why that matters. Bank of Japan Governor Haruhiko Kuroda changed the course of global markets when he unleashed a $3.4 trillion firehose of Japanese cash on the investment world. Now Kazuo Ueda is likely to dismantle his legacy, setting the stage for a flow reversal that risks sending shockwaves through the global economy. Just over a week before a momentous leadership change at the BOJ, investors are gearing up for the seemingly inevitable end to a decade of ultra-low interest rates that punished domestic savers and sent a wall of money overseas.
That mountain of offshore investments, worth more than two-thirds Japan's economy, risks unraveling under the new governor Ueda, who may have little choice but to end the world's boldest easy-money experiment just as rising interest rates elsewhere are already jolting the international banking sector. The US's biggest banks could face big bills as the Federal Deposit Insurance Corp., staring at almost $23 billion in costs from recent bank failures, consides steering a larger-than-usual portion of that burden their way, according to people with knowledge of the matter. The agency has said it plans to propose a so-called special assessment on the industry in May to shore up a $128 billion deposit insurance fund that's set to take hits after the recent collapses of Silicon Valley Bank and Signature Bank. Behind the scenes, officials are looking to limit the strain on community lenders by shifting an outsize portion of the expense toward much larger institutions, according to people with knowledge of the discussions. That would add to what already may be multibillion-dollar tabs for the likes of JPMorgan , Bank of America and Wells Fargo. European stocks climbed, partly catching up with a rally on Wall Street Wednesday that pushed the tech-heavy Nasdaq 100 into a bull market. US futures edged higher, as did a gauge of Asian equities. Treasuries were little changed, while a gauge of the dollar and index of commodities both slipped. The US publishes initial jobless claims numbers at 8:30 a.m. New York time, with economists expecting the number to tick up after two weeks after declines. The nation also releases its third reading of fourth-quarter GDP data. Later, there's a trio of Fed speakers, with Tom Barkin, Susan Collins and Neel Kashkari all due to make comments. Here's what caught our eye over the past 24 hours: It hasn't been a particularly heavy week on the economic data front. But today we get Initial Jobless Claims and it will be closely watched for any hints of weakness due to the economic volatility. Expectations are for a tiny week-over-week increase, from 191K to 195K. Anything in this ballpark would be considered very strong, but still direction matters. Earlier in the week, Bloomberg Macro Strategist Simon White noted that there's been an uptick in the percentage of US states with higher claims than there were a year ago, which is an interesting kind of first-derivative hint of weakness. There are other indicators of softening out there. Mike McDonough, the Chief Economist at Bloomberg Financial Products has been tracking the labor talk on S&P 500 earnings calls, and noted recently that there are now more mentions of job cuts than labor shortage on a three-month rolling basis. One caveat here is that, well, S&P 500 companies may not reflect the broader economy right now. We know, for example, that tech is facing its own stresses. And also if a lot of the activity taking place is at smaller, service-oriented companies, then what happens at large corporations may not be entirely reflective. Still, it's worth watching the shift. Meanwhile yesterday, this headline really drove home how impressive and surprising the rally in risky assets has been lately. *NASDAQ 100 RISES 20% FROM DECEMBER LOW TO ENTER BULL MARKET Perhaps one way to think about things is that we've had this big downturn in rates over the last month, despite clear evidence of a cooling or slumping economy. And so all else being equal, that's a nice condition for stocks to be in. Here's a look over the last 90 days of 2-year yields vs. the NASDAQ-100. Of course, this gets back to the theme we've been talking about all week. If the economy isn't slowing, why have rates come in so fast? The tension makes for all the more reason to keep a close eye on any hints of deteriorating data. Follow Bloomberg's Joe Weisenthal on Twitter @TheStalwart. | 
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