European Central Bank

Exposing The ECB's Illusory Independence

"...the pretense of independence serves as a fig leaf for interventions that are not only politically driven, but that are also utterly inconsistent with the principles of liberal democracy."

Frontrunning: June 2

  • Global stocks struggle as ECB and OPEC meetings loom (Reuters)
  • Iran Resists Saudi Gesture for Unity as OPEC Fractures Reappear (BBG)
  • Clinton to blast Trump on North Korea, NATO in foreign policy speech (Reuters)
  • Hillary Clinton Shifts to California as Race Tightens There (WSJ)
  • Puerto Rico’s U.S. Rescue Won’t Come Soon Enough to Halt Default (BBG)

Preview Of Today's ECB Announcement

With the ECB announcement due in a few minutes, followed by Draghi's press conference, today's ECB meeting should be a relatively dull affair as they are currently in 'wait and see' mode with regards to previous policy actions. As RanSquawk notes, general consensus among analysts is that the ECB are to keep rates on hold this month and avoid added stimulus.

Global Markets Flat, Coiled Ahead Of Today's Risk Events: OPEC And The ECB

There are just two drivers setting the pace for today's risk mood: the OPEC meeting in Vienna which started a few hours ago, and the ECB's announcement as well as Mario Draghi's press statement due out just one hour from now. Both are expected to not reveal any major surprises, with OPEC almost certainly unable to implement a production freeze while the ECB is expected to remain on hold and provide some more details on its corporate bond buying program, although there is some modest risk of upside surprise in either case.

Global Stocks, US Futures Slide On Mediocre Manufacturing Data, Yen Surge

Following the latest set of global economic news, most notably a mediocre set of Chinese Official and Caixin PMIs, coupled with a mix of lackluster European manufacturing reports and an abysmal Japanese PMI, European, Asian stocks and U.S. stock index futures have continued yesterday's losses. Oil slips for 4th day, heading for the longest run of declines since April, as OPEC ministers gather in Vienna ahead of a meeting on Thursday to discuss production policy. The biggest winner was the Yen, rising 1%, with the USDJPY tumbling overnight and pushing both the Nikkei 1.6% lower and weighing on US futures.

Quantitative Easing And The Corruption Of Corporate America

Since the turn of this century, debt-financed share buybacks have severely tested the character of those charged with growing publicly-traded U.S. firms. Should she ignore the potential for further QE-financed share buybacks to exact more untold economic damage, it would be akin to intentionally corrupting Corporate America. The time, though, has come for these wayward companies’ banker and enabler, the Fed, to hold the line, no matter how difficult the next inevitable test of their character may prove to be. It’s time for the Fed to defend the entire Union and end a civil war that pits a chosen few against the economic freedom of the many.

Monetary Lunacy: The ECB Could End Up Funding Bayer's Purchase Of Monsanto

Today we find an even more striking example of just how broken the global bond market has become thanks to the ECB because as Reuters writes, Bayer could receive financing from none other than the European Central Bank to help fund its takeover of the world's largest seed company, US-based Monsanto, according to the terms of the ECB's bond-buying program.

Three Weird Consequences Of NIRP

Negative interest rates are all the rage at central banks, a symptom of the deflation that is slowing spreading worldwide. Explicit or not, negative rates have odd and counterintuitive consequences. Imagine the entire banking system trying to stand on its head, and that's kind of how a deflationary, NIRP-driven world will look. Here are three early signs.

Academic Skullduggery – How Ivory Tower Hubris Wrecks Your Life

Monetary policy may seem technical as clever people debate among themselves whether the optimal policy rule should be one part inflation and one part output gap or one part inflation and two part output gap with various degree of flexibility in its interpretation. In reality it is just a bunch of academics looking at an extremely simplified mathematical representation of the world under the pretense of knowing the consequences of their actions. They do not. It is all made up as they go along and the repercussion for their hubris will be borne by all of us. It is glaringly obvious to us that the extraordinary decisions made by our money masters over the last decade will end in an extraordinary correction of malinvested capital. Applying the scientific method of natural science on a social system is the gravest error of them all.

Eurozone Business Growth "Unexpectedly" Slows Down To 16 Month Low

It wasn't just Japan's PMI which overnight printed at a disappointing 47.6, missing expectations and signaling the sharpest decline in operating conditions since December 2012. Overnight Markit showed that the Chinese credit-induced global slowdown is coming far faster than most (if not Morgan Stanley) expected, when the Eurozone flash PMI printed at 52.9, the lowest level in 16 months. As Reuters put it, this offers "the latest evidence that a strong acceleration in growth in the first three months of the year was only temporary" and likely

SaxoBank CIO Warns "Central Banks Can Do Nothing"

Saxo Bank chief economist Steen Jakobsen said that zero rates, zero growth, zero productivity, and zero reforms have left a great many countries adrift in a “new nothingness”. The products of this nothingness, said Jakobsen, include apathy, stagnation and “an economic outlook based more in peoples’ heads than in reality”.

Mutiny Among The "Magic People" - India Central Banker Admits "The Ammo Is Almost Gone"

The self-described "magic people" who "give to the markets" are facing a mutiny this morning as Raghuram Rajan, the head of the Indian central bank, admits central banks and governments of rich countries are running out of ammunition for stimulating their economies... but they can never admit as much. Crushing the dreams of "extreme monetary policy"-setters, Rajan goes on to discuss the sanity of 'helicopter money' warning that people will not be 'stimulated' to spend but will question: "What kind of world are we in when the central bank prints money and throws it out of the window?"

IceCap Asset Management: "The Trend Continues"

"As we continue to search the world for changes in trend, we must objectively report that there have been no changes to trends in economic growth. Around the world, growth continues to GRIND lower. Countries that were once high fliers, have now become low fliers. Countries that were once Steady-Eddies, have now become Wobbly Willies. And Countries that were once Nervous-Nancies have become Panicking Patty’s."