Prepare For ECB Disappointment: 'We Do Not Expect Any Additional Easing To Be Announced", Goldman WarnsSubmitted by Tyler Durden on 11/06/2014 07:29 -0500
"we do not expect any additional easing to be announced in addition to the various measures adopted between June and September. We expect Mr Draghi’s remarks to be focused on the Comprehensive Assessment of Euro area banks, and on the fact that the decline in oil prices is lowering headline inflation in most advanced economies."
With last night's latest Japanese flash crash firmly forgotten until the next time the trapdoor trade springs open and swallows a whole lot of momentum chasing Virtu vacuum tubes, it is time to look from east to west, Frankfurt to be precise, where in 45 minutes the ECB may or may not say something of importance. As Deutsche Bank comments, "Today is the most important day since.... well the last important day as the ECB hosts its widely anticipated monthly meeting." Whilst not many expect concrete action, the success will be judged on how much Draghi hints at much more future action whilst actually probably doing nothing.
The legendary Hungarian-American investor, George Soros, told Handelsblatt that the European Union and euro currency zone could unravel if member countries can't agree on a unified response to Russia's aggression in Ukraine. "Wake up Europe," he chides, adding that Western economic sanctions against Russia, which are limiting the ability of Russian businesses to obtain financing on the global market, are a necessary evil, concluding "Freedom sounds like a free good, but you have to be ready to defend it."
What if we were as skeptical of the reports on the ECB as we are of the Fed ?
- From Yes We Can to Probably Not (BBG)
- How Mitch McConnell did it (Politico)
- Tough road ahead for Obama after Republicans seize Senate (Reuters)
- Election 2014: Who were the big winners and losers? (USA Today)
- GOP Senate Takeover Puts Fed on Hot Seat (WSJ), and other fables
- GOP Won by Recruiting the Right Candidates (WSJ)
- McCain could shake up U.S. defense in powerful new Senate role (Reuters)
- Investors Pulled Record Amount From Pimco’s Flagship Fund in October (WSJ)
- Taliban group threatens to attack India following border blast (Reuters)
- Oil Import Decline to U.S. Revealed by Louisiana as Truth (BBG)
what is strange is that while traditionally such a major downward growth revision would have been sufficient to send futures soaring - why: because in a world where only central banks are left, it means more central bank global bailouts of course - this time the adverse update actually had the impact of sending futures to their lows of the session, granted just a few tiny points since the market is clearly disconnected with even the most pro forma, non-GAAP version of reality, but the reaction direction was clearly unexpected. Perhaps this is explained by the ongoing devastation in both WTI and Brent, which were trading at $76.70 and $82.50 at last check, both down almost 3% as the plan to use Saudi Arabia to crush Russia has instead backfired and the Saudi princes are now openly looking at destroying the US shale infrastructure, as we forecast in the worst, for Obama, scenario.
With the Swiss gold stored at the Bank of Canada, now having been transferred out of the Bank of Canada’s Ottawa vault to an unknown location, the Swiss public would be wise to question the SNB on this move. The Swiss gold stored at the Bank of England in London seemingly being ‘actively managed’ one of the world’s largest centres for unallocated gold trading, the Swiss public would also be wise to enquire on this issue. And with significant historical quantities of Swiss gold that were stored with the US Federal Reserve Bank in New York no longer there after the SNB seemingly brought their US vaulted gold holdings to zero, the Swiss public need to question why these particular holdings were targeted for sales from 2000-2005 and not domestically held gold.
Lack Of Daily Central Bank Intervention Fails To Push Futures Solidly Higher, Yen Implosion ContinuesSubmitted by Tyler Durden on 11/03/2014 06:47 -0500
While it is unclear whether it is due to the rare event that no central bank stepped in overnight with a massive liquidity injection or because the USDJPY tracking algo hasn't been activated (moments ago Abe's deathwish for the Japanese economy made some more progress with the USDJPY hitting new mult-year highs just shy of 113.6, on its way to 120 and a completely devastated Japanese economy), but European equities have traded in the red from the get-go, with investor sentiment cautious as a result of a disappointing the Chinese manufacturing report. More specifically, Chinese Manufacturing PMI printed a 5-month low (50.8 vs. Exp. 51.2 (Prev. 51.1)), with new orders down to 51.6 from 52.2, new export orders at 49.9 from 50.2 in September. Furthermore, this morning’s batch of Eurozone PMIs have failed to impress with both the Eurozone and German readings falling short of expectations (51.4 vs Exp. 51.8, Last 51.8), with France still residing in contractionary territory (48.5, vs Exp and Last 47.3).
Prepare to once again hear the word "decoupling" a whole lot more.
After peaking in 1999 at 37%, the prosperity line has gradually declined since, and is now sitting at 34%. In between there was a housing boom and a global financial crash, both with noticeable effects on the line. That decline may not sound like much, but it will take years to rebuild all that wealth – assuming that the economy is moving in the right direction. And it was exactly at the bottom of the earnings scale that things got pretty bad. People earning less than $35,000 per year went from 31% at the turn of the century to 34% today, more or less matching the decline in percentage points at the top of the table. The new century brought a lot more discomfort to a growing number of Americans, fueling a lot of talk recently about income inequality in the country. Therefore, despite all the subsequent economic growth, large fiscal stimulus packages, unprecedented Federal Reserve intervention and booming capital markets, we could say that PROSPERITY IN AMERICA PEAKED IN 1999!
Bankruptcies in Japan more than doubled in the first nine months of 2014 compared with the same period a year ago. Japan has embarked on a radical monetary experiment to spur inflation. But it may backfire and lead to stagflation and in a worst case scenario a German ‘Weimar’ style hyperinflation ...
Greenspan told the CFR that "gold is a good place to put money these days given it's value as a currency outside of the policies conducted by governments." "Gold has always been accepted without reference to any other guarantee." When asked where the price of gold was headed in the next five years he said “higher --- measurably" ...
QE destroys societies, economies and financial systems, it doesn’t heal them. So maybe it’s a touch of genius that the great powers of global finance have first pushed Keynes into the academic world and then academics like Bernanke and Yellen into positions such as head of the Fed, making everyone blind to the fact that what they think is beneficial, including many who think they’re real smart, actually hurts them most. This whole thing is so broken and perverted it’s getting hard to understand why anybody would want to continue clinging on to it. But then, what does anybody know? 95%+ of people have been reduced to pawns in someone else’s game, and they have no idea whatsoever.
Whether it is European banks (Greece and Italy) plunging again, lower-than-expected crude inventories, or expectations of an uber dovish Fed this afternoon, the US Dollar has suddenly gone bidless against the major currencies.
As Deutsche Bank observes, the Fed has been wanting to hike rates on a rolling 6-12 month horizon from each recent meeting but never imminently which always makes the actual decision subject to events some time ahead. They have seen a shock in the last few weeks and a downgrade to global growth prospects so will for now likely err on the side of being more dovish than in the last couple of meetings. They probably won't want to notably reverse the recent market repricing of the Fed Funds contract for now even if they disagree with it. However any future improvements in the global picture will likely lead them to step-up the rate rising rhetoric again and for us this will again lead to issues for financial markets addicted to liquidity. And so the loop will go on for some time yet and will likely trap the Fed into being more dovish than they would ideally want to be in 2015.