As we've written on and warned about before, deflation is winning. We're starting to see very serious cracks in the façade, beginning with oil, then various peripheral currencies — especially from emerging market oil exporters — and now equities.
The essence of deflation is not falling prices (those are symptoms), but with falling credit creation in the financial and banking systems.
Less credit, means less buying. It is less buying that leads to lower prices, which are what the central banks squawk about endlessly, but about which they actually could not care less.
The central banks have ignited a huge amount of borrowing with their zero interest rate (ZIRP) policies, but it was all the wrong sort. There was extra borrowing by sovereign entities that have no chance of ever paying it back. That's going to hurt someday, maybe soon.
And there was borrowing to speculate on stocks, which in 2014 hit a new all-time record. Things are only slightly down from that recent peak:
(Source)
This is the sort of borrowing that goes bad in a hurry. When stocks are being sold, the debt that was used to buy them has to be paid back, which means that more stocks get sold to free up the money to pay down the debt
The more stocks that get sold, the more margin selling there is. Until the whole thing finds some new, lower floor.
In the overnight markets (Sunday night into Monday a.m.) there was a concerted effort in the futures market to ignite some buying. S&P 500 futures were up more than 15 points at the open at 9:30 a.m. EST.
And there was even some buying for a while.
by cmartenson 
