Wall Street Responds To Mario Draghi's "Big Shock"

The European Central Bank’s decision to taper bond purchases is a shot in the arm for the euro, analysts say, and as Bloomberg reports, while policy makers say they may still expand the size or duration of quantitative easing, investors may be inclined to be skeptical.

Mario Draghi Explains His Dovish Taper (Hawkish Easing) - ECB Press Conference Live Feed

In a surprise for markets, Mario Draghi gave (extended QE) and took away (tapered purchases) the punchbowl in what we are sure will be described as 'significant additional easing' even though bond traders are clearly disappointed. Having had 45 minutes to judge the market's reaction (steeper curves, lower EUR, higher bank stocks), we wonder what tape-bomb he will drop during the Q&A to spoil the party.

European Bond Yields Spike, Bank Stocks Soar, EUR Tumbles After Draghi Surprise

Having rallied into today's ECB meeting on hopes of geting more "whatever it takes" from Mario Draghi, his surprising tilt to the hawkish taper has sparked selling across European bond markets (pushing Bund yields to 11-month highs). EURUSD kneejerked higher on the statement but faded back quickly. Yield curves across Europe are also steepening dramatically and bank stocks are loving it.

ECB Stuns Markets, Announces Tapering Of Bond Purchases To €60 Billion

"From April 2017, the net asset purchases are intended to continue at a monthly pace of €60 billion until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim."

Draghi’s Risk Is He Speaks And No One Listens

There are going to be two outcomes today stemming from the ECB meeting. We’ll learn what President Draghi has to say. And then what the market wants to hear. Not in terms of expectations, a la analyst previews, versus actual comments. But how portfolio managers choose to interpret his answers, no matter what he says. And it makes his task all the more tricky.

Frontrunning: December 8

  • Draghi Expected to Lay Out Plans for More ECB Stimulus (WSJ)
  • Bonds Fall as Investors Turn Wary on ECB Stimulus; Euro Gains (BBG)
  • European Stock Traders Look to Draghi to Break Santa Curse  (BBG)
  • Trump to nominate Pruitt to lead U.S. environmental agency (Reuters)
  • Trump's choice of China envoy a positive sign for ties, Xinhua says (Reuters)
  • Syrian Rebels Pin Hopes on Trump (WSJ)

What Time Will The ECB Tip Its Hand

With traders' fingers poised over the buy (and to a lesser extent) the sell button, waiting for the ECB to lay out the mechanics of its QE extension with or without tapering, the question is what time is more important: the 1:45pm CET (7:45am ET) statement release or the 2:30pm CET press conference. Courtesy of Bloomberg here are some thoughts on which time will be more relevant. 

Global Equity Euphoria Prepares To Meet Mario Draghi

There’s seemingly no stopping the equity side of the “Trumpflation” trade in what may be developing into an epic year end blow-off top. The euphoria which took the S&P 500, Russell 2000 and the Transports to all-time highs yesterday, and the Dow to less than 500 points away from 20,000 carried over into Asian stocks (+0.8%) as they followed bullish trend, while European stocks rose for a fourth day.

Here's What Happens When A Currency Completely Breaks Down

But regardless of the form, money is only credible as long as everyone agrees that it has value, i.e. there’s a large enough market size of people willing to use it. This fundamentally comes down to trust and confidence. But Venezuela’s example shows how quickly that very thin veneer of trust and confidence can shatter, plunging a country into chaotic hyperinflation.

BofA Warns Trumpflation Might Break The "Buy The Dip" Trade

A strategy of holding cash and buying any 5% dip in S&P until markets retrace the loss has outperformed the S&P consistently since 2014, but as BofAML warns, the changes in inflation market dynamics post-Trump may "handcuff" The Fed and pull a key support out of the market that helped create the "buy the dip" trade.

The Next Domino Falls As Predicted... Here's What Comes Next

A populist tsunami is washing through Europe. It will drastically change the Continent’s political landscape in a way not seen since before World War II. This wave will flush away traditional “mainstream” parties and usher in anti-establishment populists who want to leave the euro currency and the European Union.

India Confiscates Gold, Even Jewelry, In Raids On Hidden Money

"The rich will pay what they need to escape harassment; the rest will suffer." Global financial repression picks up steam, led by India. After declaring large denomination notes illegal, India now targets gold. It’s not just gold bars or bullion. The government has raided houses, no questions asked, confiscating jewelry.

Saudi Journalist Banned From Media After Criticizing Trump

Saudi authorities banned journalist Jamal Khashoggi from writing in newspapers, appearing on TV and attending conferences, the Alkhalij Aljadid reported in Arabic after comments he made that were critical of Donald Trump’s ascension to the US presidency.

Yuan Strengthens After Rebound In China Exports, Trade Balance Disappoints

It appears that devaluing your currency against by over 10% in a year against your major trading partners does have some affect (albeit delayed). China Exports (in Yuan terms) grew at 5.9% in November (the fastest growth since March) (well ahead of the expected 1% decline). Imports, however, also soared (by 13%) in Yuan terms. However, in USD terms, Imports rose by the most since Sept 2014 (and exports managed a small rise) as China's trade surplus slipped and missed expectations. Offshore Yuan is strengthening modestly on the print.

Trump Is Correct – Boeing Is Gouging The Taxpayer On The New Air Force One

So the MSM, and our government for that matter, is ok with a replacement Air Force One being six times as expensive as its predecessor, and about as costly as four new copies of already ridiculously overpriced stealth bombers. And the MSM is also somehow critical of the president-elect for bring this to light. Is it any wonder they feel the need to defend their bias by calling alternative coverage “fake”?