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Category Archives: ECB

1 down. 1 to go.

The biggest economic events of December were/are the Dec 3 ECB announcement and the Fed’s Dec 16 announcements.  1 down. 1 to go. Yesterday the ECB announced several new policy measures to help prevent inflation from becoming deflationary. As we all know, the delivery fell short of market expectations and risk assets plummeted. Indeed, safe havens like core European sovereign bonds plummeted, as did […] Read the rest of this entry »

Note to the BoJ and ECB: please spike the punch bowl now

  According to the Greedometers, someone will have to spike the global central bank punch bowl within the next week (2 at the most). Otherwise things get ugly again — like August but uglier. Just so we’re clear, we both know you’re fighting a losing battle. But if you don’t want things to melt down on your watch, you’re going to need to spike […] Read the rest of this entry »

Central bankers gone wild. And yet….

Last week’s BoJ increase in QE is an indication of how desperate things are in Japan. The short version of what the BoJ is doing: printing money to fund its budget deficit printing money to buy Japanese and global equities in the public pension fund The pension fund is changing their asset allocation to 50% JGBs, 25% Japanese stocks, 25% int’l stock.  The net […] Read the rest of this entry »

ECB Bank Stress Test: Crap! It went well….

To no surprise, the ECB bank stress test shows the eurozone financial system is sound.  If you’re hoping for an ECB full QE program soon, you’re not going to like this. The ECB released the results of their bank stress test this morning. Based on the analysis at the end of 2013: 25 banks out of 130 failed. €22T of bank assets were examined. […] Read the rest of this entry »

ECB Statement: no change. Dance, Mr Draghi.

The ECB released a press statement: no change. It’s now all on Draghi’s press conference (starts in 35 min) to dance and threaten simultaneously. The central banker dance.    

German Unwanted Pregnancy

ECB President Draghi is making the press asking for Greek and Cypriot bank loans (junk rated) to be bundled and bought by the ECB.  Germany, you are already more than a little bit pregnant with European bonds (your share of the ECB’s current 2T euro balance sheet). Your unwanted pregnancy is only going to develop further. Much much further if the ECB gets what […] Read the rest of this entry »

Is ECB QE already priced-in?

  Spain (2.1%) and Italy (2.4%) have nearly identical 1oyr yields to the U.S Tnote (2.4%):       With record-low yields in Italy and Spain –isn’t ECB QE already priced-in?   Oh, and for reference purposes, the 10yr yields on France (1.27%) and Germany (0.93%):   Plus peripheral-core european bond yield spreads are near record lows — while the short end is all […] Read the rest of this entry »

ECB today: Jaw Jaw Jaw

The ECB just issued a press release. Nothing new. No QE.  A little air is being let out of S&P500 futures — and European stock markets. Looks like Draghi is going to try to jawbone his way to the October stress test whitewash without QE.  His live press conference comes up in 10 minutes…. BLS June employment report on deck too….    

EU Inflation ticks up = ECB QE delayed

Initial reports (called flash reports) about June inflation at the consumer price level (CPI) in Europe show a marked bounce. Early reports show an EU average CPI of 1.0% at an annualized pace — a large bounce from May’s 0.6%. Doubtless the weakened euro currency played a significant role here. Alas 1 month does not make a trend. So we’ll see how far this […] Read the rest of this entry »

ECB bluff being called

There have been several banking system stress tests in Europe. To refer to them as a whitewash would be an undeserved compliment. The ECB knows this and has committed to a much-improved whitewash –ahem– financial system stress test.  Late last year the ECB began laying the foundation for this when it indicated it would conduct its own financial system stress test and announce the […] Read the rest of this entry »