European Central Bank

Frontrunning: February 7

  • Senate to Vote on DeVos Confirmation Amid Fiery Debate (WSJ)
  • Investors Cut Back on Commercial Property (WSJ)
  • Euro, European bonds unnerved by French politics (Reuters)
  • Trump’s Dodd-Frank Do-Over Diverted to Slow Lane (BBG)
  • In GOP, Divide Grows Over Pace of Obamacare Repeal (WSJ)

Schauble Agrees With Trump That Euro Is "Too Low" For Germany, Blames Mario Draghi

The euro exchange rate is, strictly speaking, too low for the German economy’s competitive position,” Wolfgang Schauble told Tagesspiegel. “When ECB chief Mario Draghi embarked on the expansive monetary policy, I told him he would drive up Germany’s export surplus . . . I promised then not to publicly criticise this [policy] course. But then I don’t want to be criticised for the consequences of this policy.”

Meanwhile, Over In Zimbabwe...

They’ve threatened to throw anyone in jail who’s caught trading bond notes at anything other than the official 1:1 exchange rate. Naturally these threats have only spurred the creation of a black market where Zimbabwe’s bond notes are bought and sold at their real values. Right now the bond notes are trading at 5% to 10% below the US dollar. But this is just the beginning.

With The Greek Crisis Back, There Are Five Possible Scenarios From Here

Greek yields have surged in the past week as the country didn’t secure a positive review at the Eurogroup on 26 January. Additional noise came from indications that the IMF still views the Greek debt as unsustainable without further measures from the Greek government. In short, the crisis is back. There are five possible scenarios from here.

The Other 'Ban' That Was Quietly Announced Last Week

Most of the world is in an uproar right now over the travel ban that Donald Trump hastily imposed late last week on citizens of seven predominantly Muslim countries. But there was another ban that was quietly proposed last week, and this one has far wider implications...

GoldCore's picture

the common currency and the Eurozone itself will not survive the financial and political turmoil already besetting the European monetary union and set to deepen in the coming months and years.

El-Erian Warns "Investors Are Underestimating Sudden Policy Shifts"

"...the more central banks persist in erring on the side of too much stimulus rather than too little, amid changing economic and fiscal conditions, the greater the potential need for a sudden shift in monetary policy that, while economically warranted, could be quite jarring for markets... and investors may be underestimating as judged by market metrics, including measures of implied volatility."