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QE: The More The Merrier
From Nic Lenoir of ICAP
Even quasi-officially bailed out Greek bonds took a beating this morning. There are discussions being reported according to which such and such German politician will vote against the bail-out proposed this past weekend, so obviously it doesn't help, but still! I suppose that since some other PIIGS are supposed to shell out some of the money for the bailout and the market suspects they can't even take care of their own debt, it's a bit like a CDO insured by a company on the verge of default. That leaves very little leeway for the ECB.
Many market participants expect the European Central Bank to renew its 1Y LTOR liquidity operation maturing in June to calm the markets. However I would argue at this point that while it will help liquidity, it won't solve all the problems. Europe has allowed the situation to deteriorate so badly that right now short of printing money and buying local sovereign debt, the ECB won't really provide much of a fix to the crisis. Whether it is desired or they should cut their losses and disband the Euro is another topic of conversation. Since an entire generation of European politicians view the Eurozone as their baby they are unlikely to give up that quickly. By the same token Weber who is simply a raging maniac and Trichet (he did run a bank into the ground already, can he do it with a central bank???) are VERY VERY reluctant to the idea of quantitative easing. We should therefore expect more drama until they finally pull the trigger. The markets are geared up for some announcements tomorrow: let's see if European politicians have learned the lessons of bailout voted down in Congress or the refusal to bail Lehman against market expectations.
We see that technically the CAC has broken down and a retest of the support trendline now resistance should be sold. AUDJPY broke its support this morning as well. The JPY had been curiously weak in this panic environment but with Tokyo back from holiday we would expect some flight to safety from Japanese investors. Same observation being made for the Nasdaq future where a retest of the neckline fo the H&S just above 1,990 should be sold. The Dax is holding the fort for now, keep a close eye on the 100-dma which has been a key pivot and note that so far the support broken on the CAC is still quite a bit away on the downside.
Good luck trading,
Nic
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This weekend, every Greek is at home... if they intend to protest, that will be the worst day! (Not sunday, because they are still very orthodox)
So expect a major sell off on Friday
In the immortal words of Buzz Lightyear: "To infinity and beyond!!"
QE. It's what's for dinner.
The QE II mug is up! T Shirt it coming. Visit the Zazzle store to benefit ZH!
www.zazzle.com/Howard_Beale
Mug: http://www.zazzle.com/qe2_mug-168276692449671943
T-Shirt: http://www.zazzle.com/qe2_tshirt-235639985429802950
You can change the colors, size of the mug etc. It's all to benefit ZH and get something fun in the process.
So...they will print money to buy sovereign debt, what's the big deal? I thought that was the whole new world order plan, global domination throught debt slavery? I would go long verichip and hedge with gold and lead... this is a cool one as well.
http://organic-fish-farms.escapeartist.com/visit-us/
No, debt slavery is only one stage in the plan. Of course everyone is going to default - I hope you can see it, for certainly the power-elite are planning on this outcome.
Look, the entire point of the credit-leverage exercise is to ultimately claim the underlying collateral when the ponzi comes to its conclusion. It's why the credit-money system was created in the first place - as a device of plunder.
The reason the ride keeps getting ratcheted higher is to ensure a greater collapse, thus greater odds of death. If you fall and break a leg climbing Mt Whitney, you have a near 100% chance of surviving. But near the peak on Everest? Not so much - in fact, maybe a 100% chance of dying.
That's why, as Denninger points out, if we had allowed a system-wide collapse back in 2008, things would have sucked 1930s style, but we might have still eventually made it out alive. Now, by transferring the risk to sovereigns, the eventual collapse is going to bring down nations.
As was planned. Look at the people behind the intellectual framework (economists) that provides seemingly legitimate cover to justify these actions, the investment banks who did the actual day-day work, the central banks which established the core foundation, and our so-called "representatives" who delivered the legal protections (based on our country's laws) to complete the coup de grace.
wow. you make it sound like a work of diabolical genius...
Well, the average IQ of the tribal members who pulled this off is over 150. It's the lack of enforcement within the group against this type of criminal behavior that keeps getting other group members whacked throughout history.
debt leverage...underlying asset...OK, so will i get a condo in Santorini courtesy of the IMF and FED?
this group...the tribe as you term them are lacking enforcement of criminal behavior. I ssume they are typically above all the man-made laws most nations deal in. Within the group, there must be some form of acknowledgement of a higher law. Such as 'reap what you sow', gravity...entropy etc. I would bet most of the tribe accepts the higher law and few are in denial of it. I am also thinking some component of this law is a non-interference idea, like just let them follow their chosen path to it's inevitable end. not sure where i am going with this but it does seem more clear. It's all part of the plan, it's allowed even though it will ultimately fail and I hope you learn the truth during the process of self destruction...hmmm...
let's see if European politicians have learned the lessons of bailout voted down in Congress or the refusal to bail Lehman against market expectations.
Nic, are you suggesting that the power of the sovereign be placed into the hands of collective market psychology? I appreciate that the actions and what passes for the development of considered opinion and governing action on the part of said sovereigns leaves much to be desired, but to turn the power of the state over to market expectations, or some derived expression of the same seems to take focus group politics to a whole new level.
Even then his 'fix' is kick the can down the road. Extend and pretend. Just go ahead and Q/E now is the theme. Just keep pretending.
When I was 2 1/2 years old and while being carried in my dad's arms while at the mall, I told him that Santa Claus isn't real, but it's FUN to PRETEND.
This sort of pretend isn't fun. More Q/E won't make things merrier, but I love how ZH likes to hit the head on the nail of what they're thinking.
I remember later on as a 4 year old I made my 8 year old sister cry by convincing her of the truth of Santa Claus. Well it was the truth, and I wasn't trying to make her cry, but I did make her cry.
Beware the Q/E gift. Point out the bs, and have plans in place for the river that is cried. Who cares if the market wants to believe the bs. The market will always accept free money.
Eventually they have to realize the truth and cry all the way home. Either now, or 50 percent worldwide austerity later...if the world is LUCKY.
If we want to believe bs, it shouldn't be in the financial markets. There is no financial Santa Claus coming. It's Ben Bernanke and Trichet putting fraudulently printed dollars/euros in your stocking. Get it?
What happened when you told her about the Easter Bunny and the Tooth Fairy? I'm enjoying the reminiscing.
crying would be the preferable response to learning the truth...humans are also prone to an alternate course of self discovery which would be anger. I will let you tell half the population their ferns are imaginary and now they have to pay in a hard assets...i dont think they will be crying.
Yes Starfish. Imagine if the Greeks had the US Constitution and the Second Amendment.
Damn our founding fathers had insight.
Fed Is Still At It
Even more interesting is that the Fed’s holdings of mortgage-backed securities rose from $1.068609 billion on March 31st — the day the Fed’s buying program was supposed to have ended — to $1.099763 on April 28th, the last reporting weak. That’s almost $30 billion in new purchases at a time when the Fed was supposed to have been selling.
http://blog.atimes.net/?p=1458
No - that's just settlement / book-keeping activity. They weren't purchasing after the date. If they WERE, they would announce it - that's a green shoot!
Europe has allowed the situation to deteriorate so badly that right now short of printing money and buying local sovereign debt,
This appears to be something the ECB is specifically prevented in its articles from doing.
Article 123
(ex Article 101 TEC)
1. Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as `national central banks ') in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public under takings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.
2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions.
This what the ECB meant earlier in the week with the phrase "Break the rules...", yes?
wait - aren't rules for us, not them?
And of course Trichet has already gone back on his committment to not buy the Greek garbage and is larding up on the stuff so this article is already dated and incorrect. Still don't think this guy knows what he's doing? Of course everyday this is like a classic "evil house" horror flick where the spirit slams the doors on our heroine once she knows she has to flee. Indeed--she probably already feels like she is being guided to "the room" where the "spirit of the house" wants her to go and she does not. I'm not betting on the unhappy ending just yet but I sure can see explosion of complexity where once "it seemed so transparent."
Anyone read the latest Martin Armstrong?
He believes AUD/USD is gonna go throught the roof eventually as AUD won't be affected as much as the USD.
Comments?
The proprietary indicators I use can identify trend changes before they occur and they have been warning of a USD rally since last year.
Just posted a new EURUSD chart: showing long term trendline with important support around 1.2770
http://www.zerohedge.com/forum/latest-market-outlook-0