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Thanks to the just released February diary of Fed chief Yellen, we now know exactly when she called Bank of England Governor (and former Goldman Sachs employee) Marc Carney and ECB President (and former Goldman Sachs employee) Mario Draghi.
Can you guess when?
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The stock market has regained all of its loses year to date as economic indicators continue to flash red, corporate profits continue to plunge, consumers continue to spend less at retailers, real wages continue to fall, and housing sales continue to decline. The entire dead cat bounce has been generated through corporate stock buybacks, Wall Street lemmings trying to make up for their terrible year to date investing performance, and central bankers who will stop at nothing to verbally manipulate markets higher – since their monetary machinations over the last seven years have been a miserable failure in reviving the real economy.
As John Hussman points out, the market is poised to deliver nothing over the next decade, with a 40% to 55% “dip” in the foreseeable future. I wonder how many barely sentient, iGadget addicted, non-questioning, normalcy bias dependent zombies are prepared for a third Federal Reserve generated market collapse in the last 15 years? Continue reading »
Having discussed the market’s disturbing reaction to Mario Draghi’s desperate “all in” monetary gamble – one which saw an early bout of euphoria followed by one of the most aggressive Euro spikes in history, second only to the “December debacle” and the Fed’s March 2009 announcement of QE1, we were waiting for the just as important reaction by the ECB’s nemesis: the one country that not only has seen hyperinflation first hand (and appears to recall it vividly), but is just as aware where the ECB’s monetary lunacy ends: the Germans.
We got it from Germany’s Handelsblatt, when in an article titled “The dangerous game with the money of the German savers”, the authors provide a metaphorical rendering of what is happening in Europe as follows:
They also paint an oddly accurate caricature of the man behind this last ditch monetary policy:
And write the following:
A determined ECB chief Mario Draghi plows ahead with his negative interest rate policy. The positive effects on the economy are low. Great, however, are the risks: this is the greatest redistribution of wealth in Europe since World War II. Continue reading »
Well, the people wanted a “bazooka-sized” surprise from Draghi, and they got it.
Moments ago the ECB announced not only a 10 bps cut to the deposit rate expected pushing it to -40%, but also announced a 5 bp rate cut to the refinance (pushing it to 0.00%) and the marginal lending rate (now at 0.25%), and also boosted QE by €20bn to €80 billion per month, the addition of afour new targeted TLTROs each with a maturity of 4 years, but the most surprising announcement was that the ECB would also for the first time include investment grade euro-denominated bonds issued by non-bank corporations along the list of assets that are eligible for regular purchases.
In other words, Draghi finally delivered his bazooka. Continue reading »
Today’s current inflation data dump from across the European nations appears to confirm forward inflation expectations trend (plumbing new record lows). With a considerably bigger than expected decline in prices , pushing Germany, Spain, and France back into deflation, pressure is mounting on Mr.Draghi. As one EU economist exclaimed, “the data send a clear message to the ECB and the only question that remains now is how bold action would be.”
Save us Mario from spending less on the things we need…
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“The conditions in the economies of the rest of the world have undoubtedly proved weaker compared with a few months ago, in particular in the emerging economies. Global growth forecasts have been revised downwards. This slowdown is probably not temporary.”
Undoubtedly, the most amusing this about the prospect of more easing from the ECB (as telegraphed by Mario Draghi last week) and the BoJ (where Haruhiko Kuroda just jeopardized his status as monetary madman par excellence by failing to expand stimulus) is that both Europe and Japan both recently slid back into deflation despite trillions in central bank asset purchases.
In other words, the market expects both Draghi and Kuroda to double- and triple- down on policies that clearly aren’t working when it comes to altering inflation expectations and/or boosting aggregate demand. Indeed, both Goldman and BofAML said as much last week. For those who missed it, here’s Goldman’s take Continue reading »
Now that Mario Draghi has telegraphed more easing from the ECB come December, the question is what exactly the bank will announce. Will Draghi cut the depo rate further into negative territory? How long into 2017 will PSPP be extended? Given the scarcity of purchasable paper, will the ECB expand the universe of eligible assets and if so, will Draghi go full-Kuroda knowing full well that you never, ever go full-Kuroda?
There has been a litany of layoff announcements recently: Biogen said yesterday that it would axe 11% of its people. ESPN would lay off 4% of its people. Twitter a couple of days ago said it would slash its workforce by 8%. Microsoft and HP are currently very busy shedding tens of thousands of workers.
Caterpillar announced over 10,000 layoffs last month. Intuit kicked off a new round of layoffs this summer. Permanently troubled former highflyer Groupon is laying of 1,100 folks. Even startups. Zomato, based in India, is laying of 300 folks, many of them in the US. Flipagram laid off 20% of its workers. And on and on. Even Snapchat. Continue reading »
– Greek Financial Advisor Suing “Politically Motivated” ECB For Crushing Greek Banks (ZeroHedge, July 10, 2015):
The European Central Bank’s decision to reject the Bank of Greece’s request for increases in Emergency Liquidity Assistance (ELA) has, in a nutshell, crushed Greek banks for what appears to be purely political, nogitating-based motives. Greek financial advisor Alcimos (infamous for their heretical comments on the referendum) commenced proceedings before the General Court of the Court of Justice of the European Union, requesting the annulment of the ECB decisions.
The global and European economies are increasingly dominated by bureaucrats taking arbitrary decisions on capital allocation, with little regard for rules or process. The decisions of the ECB to reject the applications of the Bank of Greece for additional funding under ELA could have only been politically motivated, and therefore in clear violation of the ECB’s independence as enshrined in Article 123 TFEU. It is time for EU bureaucrats to stop acting as autocrats. Continue reading »
A little under 24 hours before Europe opens for trading, and just under 12 hours before the open of equity futures, and things are not looking good.
– Draghi Freezes Greek ELA, Varoufakis Tells BBC “Looking At Imposing Capital Controls, Closing Banks” (ZeroHedge, June 28, 2015)
– EU FinMins Admit Real Concern, Will Do ‘Whatever It Takes’ To Avoid Market Unease (ZeroHedge, June 27, 2015):
It is clear from the EU Finance Ministers’ template-like comments to the press what the real worry is in Europe (and the world). It’s not The Greeks (Schaeuble: “No other decision was possible, no problem with Greek referendum… need to see what happens next”), it’s something else:
- *SCHAEUBLE SAYS DOING EVERYTHING POSSIBLE TO AVERT MARKET UNEASE
- *PADOAN: INSTRUMENTS IN PLACE TO COUNTER POSSIBLE CONTAGION
- *DIJSSELBLOEM: OUR INSTITUTIONS ARE PREPARED TO TAKE ANY ACTION
- *STUBB: “I DO NOT SEE A RISK OF CONTAGION”
- *SCHAEUBLE SAYS WE’LL DO EVERYTHING TO FIGHT CONTAGION THREAT
- *PADOAN: IF INSTABILITY, ECB HAS INSTRUMENTS TO INTERVENE
And then there’s this utter rubbish: Continue reading »
– Goldman’s “Conspiracy Theory” Stunner: A Greek Default Is Precisely What The ECB Wants (ZeroHedge, June 22, 2015):
“… the immediate aftermath of such a non-payment will be to push bond yields up across the periphery. This rise in the fiscal risk premium (Exhibit 3) will of course be limited, because the ECB will likely accelerate QE, including via the Bundesbank. That will push rate differentials, especially longer-dated ones, against EUR/$. We estimate that the initial fiscal risk premium effect could be three big figures, while the subsequent QE effect could be worth around seven big figures”
– Will The ECB Finally Use The Greek “Nuclear Option” This Wednesdsay? (ZeroHedge, June 15, 2015):
This was not supposed to happen: by now the Greek insolvency “can” should have been kicked, and the Greek government, realizing the money has run out for both the government and the banking system, should have folded to Troika demands, and allow the Troika money to return repaying obligations to the Troika in exchange for more spending cuts.
Instead, the “game theoretical” approach of bluffing until the end, and beyond, has put both countries in a corner from which neither knows how to escape, and with the “final deal deadline” passing this weekend we now have quotes such as this from the EU: Continue reading »
– Bundesbank Blasts Draghi For Breaking Bailout Taboo (ZeroHedge, May 14, 2015):
“The head of Germany’s Bundesbank ripped into the European Central Bank on Thursday, saying emergency funding for Greek banks broke the taboo of financing governments and it was not up to central banks to decide who was or wasn’t in the euro zone,” Reuters reports.
– Compare And Contrast: Putin vs Draghi (ZeroHedge, April 17, 2015):
Spot the difference:
(Click on image to enlarge.)
- A topless protester gets “two thumbs up” and a smile from Vladimir Putin.
- A terrified Mario Draghi reels from a fully-clothed female protester.
– Mario Draghi, Collateral Scarcity, And Why The ECB Will Soon Buy Corporate Bonds (ZeroHedge, April 16, 2015):
Mario Draghi, perhaps blinded by confetti, doesn’t see a scarcity of collateral while HSBC thinks that’s a bit “strange,” and Morgan Stanley doesn’t really see what the problem is even as their own analysis shows that it is now “impossible” for Germany to fully implement their portion of the program under the capital key. Meanwhile, FT thinks it’s possibly important that thanks to the absurd consequences of NIRP-dom, the ECB may soon take the plunge into euro corporate credit sending yields on corporate bonds negative.
– Josephine Witt: Why I ambushed ECB chief Mario Draghi (International Business Times, April 16, 2015):
You may well have seen the coverage of my intervention in the ECB press conference yesterday, during which I jumped on the table and showered Mario Draghi with confetti. Many people have contacted me on social media since then, asking me why I did it, how I got into the ECB’s inner sanctum so easily, and what stunts I plan in future.
Here, I’ll attempt to answer those questions as comprehensively as I can.
First, the inspiration. Four weeks ago I saw the anti-ECB protest by Blockupy in Frankfurt, my home city. The demonstration was greeted with a massive, draconian police response in the form of tear gas, water cannons and riot shields.
I was shocked. I thought: “the ECB doesn’t have any political mandate, it’s never been elected. Why are the police defending them with such brutal force?” I wanted to to try and take the criticism against the ECB’s policies to the very heart of the organisation, inside their buildings. Continue reading »
— Josephine Witt (@josephine_witt) April 15, 2015
I would say, the #ecb ‘s security service is just as good as putins… 🙂 finally outside police station!
— Josephine Witt (@josephine_witt) April 15, 2015
— Josephine Witt (@josephine_witt) April 16, 2015
— Josephine Witt (@josephine_witt) April 15, 2015
We own our own lives –
and in the face of the overwhelmingly powerful external
environment of the ECB’s monetary police,
sometimes it’s hard to remember.
We own our own lives –
and they’re not the chips in the ECB’s gambling game,
not to be played with, not to be sold, not to be devastated.
We own our own lives!
-will be the outcry of those who face repression,
when we begin to see our poverty not as personal defeat or unchangeable destiny.
master of the universe,
I come to remind you that there is no god,
but there are people, behind those lives,
and if you rule instead of serving,
you will hear our outcries louder, brighter, inside and outside your halls, everywhere, and you shall deserve no rest. Continue reading »
Moments ago the ECB issued the following statement:
Statement on incident at ECB press conference
The European Central Bank’s press conference was briefly disrupted by a protester today, who jumped on to the stage and threw confetti. Staff from the ECB are investigating the incident.
Security staff took immediate and effective action.
Initial findings suggest that the activist registered as journalist for a news organisation she does not represent. Like all visitors to the ECB, she went through an identity check, metal detector and x-ray of her bag, before entering the building.
ECB President Mario Draghi remained unharmed and calmly proceeded with the press conference.
– Draghi Attacked By Protester Screaming “End ECB Dick-tatorship” (ZeroHedge, April 15, 2015):
It was bound to happen sooner or later: moments ago Mario Draghi was attacked by what appears to be a female (non-Greek) protester screaming “End ECB Dick-tatorship” while delivering his prepared remarks.
– Albert Edwards’ “WOW!” Chart, Or Why “Draghi Makes Greenspan Look Like A Rank Amateur” (ZeroHedge, March 12, 2015):
Back in January, when European stocks were only starting their unprecedented QE ramp, we presented the “Driver Behind The European Stock Surge” in which we showed that ever since Mario Draghi’s “whatever it takes” speech in July 2012, European equity prices were up 50% (even higher now) even as corporate earnings had actually declined by 7%. Continue reading »
– Presenting The Buyers Of More Than 100% Of New German And Japanese Bond Issuance (ZeroHedge, March 9, 2015):
We already know that the Bank of Japan will monetize 100% or just over of all Japanese gross sovereign bond issuance (source). As for Germany, on a run-rate basis, and assuming allocation based on the abovementioned capital key, it means that for the next 12 month period, assuming no major funding changes in Germany, the ECB will swallow more than a whopping 140% of gross German issuance! Or, said otherwise, the entities who will buy more than all gross German and Japanese issuance for the next 12 months, are the ECB and the Bank of Japan, respectively. Continue reading »
The Fed and the ECB know exactly that it is totally insane what they are doing, unless you want to destroy the middle class and the entire financial system, which is exactly what they are doing and deliberately so.
– The ECB’s Lunatic Full Monty Treatment (Acting Man, March 6, 2015):
In short, the entire citizenry of the euro area has already become poorer due to the efforts of the ECB. The explicit goal of the central bank is now to make them even more so. What is the point of such a policy?
There is of course a point to this seeming lunacy: it is all done to support the profligate governments of Europe’s welfare states and keep the formation of the socialistic super-state in Europe on track. Whether this is seen as good or bad by the average citizen is not even up for debate: it is simply what the political and bureaucratic elites have long ago decided is good for the citizenry, since they think they know best. One might say that it is up to said citizens to elect someone who would do things differently, but that runs into the practical problem that many, even most, of the political groups offering an alternative are even bigger etatistes than the current elite. Whether they are of the socialist or the nationalist (more precisely, national socialist) variety matters little in this context. One would have to expect them to implement even more central economic planning.
The ECB may succeed in increasing economic activity and prices in Europe (especially the latter) by stepping up the pace of monetary pumping even more. However, this will not create any new wealth and will ultimately only sow the seeds of the next crisis. Since many economic regions in Europe are already very poor structural shape, it is also possible that that not even the illusion of economic growth can be created anymore. Bondholders should however be happy, as they can now unload the debt of governments that are up to their eyebrows in debt that will never be repaid in real terms on a buyer with unlimited buying power.
– Caught On Tape: The Moment Mario Draghi Gets Heckled, “You’re Biased…” (ZeroHedge, March 5, 2015):
Perhaps echoing two entire nations’ frustration, one reporter loses his cool when Mario Draghi explains how everyone else in Europe gets free money except Greece and Cyprus…
Having explained that The ECB’s Bond-Buying program wil lnot include Greek and Cypriot bonds, “feisty” veteran Greek journalist Aristidis Vikettos unloads on Draghi… “You’re Biased…” he exclaimed, leaving Draghi speechless
As In-Cyprus reports, there was a lot more going on behind the scenes…
Mario Draghi was left speechless on live television when a feisty veteran journalist accused him of bias during really tense moments at a press conference, following the conclusion of the ECB Governing Council meeting in Nicosia. Continue reading »
– Europe to start €1.14trn ‘easy money’ program on March 9 – ECB President (RT, March 5, 2015):
The European Central Bank will kick off its monthly €60 billion purchases of government bonds and private sector assets next Monday, said the head of the ECB Mario Draghi.
“Following up on our decisions of 22 January 2015, we will, on 9 March 2015, start purchasing euro-denominated public sector securities in the secondary market. We will also continue purchasing asset-backed securities and covered bonds, which we started last year,” Draghi said in a press-release published Thursday after a news conference in Cyprus.
The programme will last till September 2016, Draghi confirmed. The €1.14 trillion package is hoped to avert deflation and save the eurozone from a triple-dip recession. Continue reading »
– “In The End Capital Controls Will Probably Have To Be Imposed” – Eurogroup Official (ZeroHedge, Feb 17, 2015):
With less than 24 hours until the ECB’s meeting at which Mario Draghi and company are set to decide if i) they will increase the current Greek emergency liquidity allotment from €65 billion as a result of the ongoing bank deposit run or ii) reduce – or even outright cancel it – to send Tsipras a message that the time for negotiations is over, Europe is no longer playing Mr. nice guy. In fact, judging by the latest report in Reuters, which may well be nothing but another planted trial balloon (in the aftermath of today’s latest Telegraph revelations one should read everything presented in the media, here certainly included, with a cape-size ship full of salt) Greece can kiss goodbye not only any a loan extension without a bailout “programme” resumption, but also any hope that tomorrow’s its ELA will be increased. Continue reading »
From the article:
“In short: anyone betting that tomorrow the ECB will extend the Greek last-ditch source of liquidity no questions asked, may want to not hold their breath. And once Greek ELA access is withdrawn, well… Cyprus was called a “blueprint” for a reason.”
– As Bank Run Accelerates, Greek Depositors Pray To Saint Mario (ZeroHedge, Feb 17, 2015):
As we have consistently shown over the past month, the battle between Greece and the Eurozone is all about leverage, and specifically who has more of it. Furthermore, as we laid it out previously, the best way to quantify this duel of leverage is through two easily observable metrics: the level of Eurozone risk asset prices (if Greek contagion fears were dominant, the Eurostoxx would be tumbling), and the pace of deposit outflows from Greek banks (if the Greeks fear the ECB is about to yank all money they would pull their cash from the bank, in the process forcing Tsipras and Varoufakis to the negotiating table willing to sign anything Europe throws at them).
ECB leverage measured in Greek ATM lines;
Greek leverage measured inversely in the level of the Stoxx 50
— zerohedge (@zerohedge) February 5, 2015
Which is why in a Eurozone in which all price levels are now controlled by the ECB, it is not surprising that no amount of huffing and puffing has managed to derail the Stoxx or the Dax even briefly from their relentless surge to all-time highs. Continue reading »