Monetary Policy

Every Government In The EMU Will Soon Be Paid To Borrow

“It is only a matter of time,” says Nick Gartside, chief investment officer for fixed income at J.P. Morgan Asset management. The ECB is about to drive borrowing costs below zero for every government in the EMU and in the process lock in guaranteed losses for both itself and PSPP participating NCBs.

Overnight Wrap: Euro Plummets As Q€ "Priced In", Futures "Coiled" Ahead Of Payrolls

The question stands: how much longer will the Fed allow the ECB to export its recession to the US on the back of the soaring dollar, and how much longer will the market be deluded that "decoupling" is still possible despite a dramatic bout of weakness in recent US data. Look for the answer in today's BLS report, which - if the Fed is getting secound thoughts about its rate hike strategy in just 3 months - has to print well below 200,000 to send a very important message to the market about just how much weaker the US economy is than generally perceived. For now, however, the ECB is getting its way, and the question of just how much European QE is priced in, remains open, with peripheral bond yields dropping to new all time lows for yet another day, while the EURUSD has plunged to fresh 11 year lows, sliding below 1.094, and making every US corporation with European operations scream in terror.  Looking at markets, US equities are just barely in the red, coiled to move either way when the seasonally-adjusted jobs data hits.

The Global Problem: Monetary Policy Can't Fix An Economy's Structural Problems

What with all the praise being heaped on central banks for "saving" the world from economic doomsday in 2008, it's only natural to ask which structural problems their unprecedented policies solved in the past 6 years. After all, "saving" the world from financial collapse was relatively quick work; so what problems beyond imminent implosion did the central banks policies solve in the past 6 years? Answer: none. zip, zero, nada. The truth is central bank policies of zero-interest rates and free money for financiers have made many structural problems worse.

Euro Slides, Futures Flat Ahead Of Mario Draghi's Press Conference And Q€ Cheat Sheet

It has been a while since we have seen the USDJPY rampathon push US equities higher, so in a day dominated by central banks (first the BOE momentarily), and then the ECB's much anticipated announcement of the actual QE launch at the Draghi press conference at 1:30pm CET (taking place, ironically enough, in the place that was the blueprint for the Eurozone's capital controls, Cyprus), it only makes sense that after weeks of stage fright, the USDJPY algos reminded the world they are alive and well, and proceeded to ramp the key FX pair above 120, even though the currency that everyone will be talking about today is the Euro, hugging 1.10 as of this moment, but the real question is what happens after Draghi gives the asset buying green light: has all of Q€ been priced in already in FX, and will the EURUSD resume its surge higher, or is parity next stop?

ECB Will Cut Rates To Minus 3%: JP Morgan

Should a tail event such a deflationary spiral or Grexit occur, limits on ECB asset purchases will put Mario Draghi at a disadvantage as other central banks race to the bottom. JP Morgan says this will force the ECB to cut interest rates for cash deposits to minus 3% while the dollar will appreciate by 20%, reaching parity with euro in 2015.

Markets Stumble After China Slashes Growth Target For 2015, Warns "Downward Pressure Growing"

You wouldn't know it if you looked at the price of oil, but arguably the world's largest economy just unloaded a kitchen sink of fears, warnings, and downgrades on its economy; the most notable being:

*CHINA SETS 2015 GDP GROWTH TARGET AT ABOUT 7% (from 7.5% in 2014)

In a report to be delivered to the government tonight, Premier Li Keqiang warned China may face more economic difficulties in 2015 vs 2014 and downward economic pressure is still growing (despite Western 'analysts' proclaiming China fixed). The currency is weakening on the news and AsiaPac stocks are lower and as Chinese stocks open lower (despite hints at more easing), millions of newly minted "can't lose" Chinese investors begin to worry.

StalingradandPoorski's picture

What people and central bankers do not understand, is that you can't devalue your way to prosperity. Absolutely nothing has changed since the last crisis. The same too big too fail banks have only gotten much bigger. The same people that were in charge leading into the crisis and during it, are the same people who are in charge of fixing it. New regulations were established to try and regulate the industry, but they will be proven to be ineffective. Why? Because the Volcker Rule and Dodd-Frank have had all the important elements removed, thanks to the massive lobbying power of the TBTF banks and the Fed.

"Patient" - What's In A Word?

Is Janet Yellen "patient" or not? And is "patient" a nudge-nudge, wink-wink code for a period stretching beyond the next few FOMC meetings or is it just a tacit admission that the Fed will start checking its parachute harness only after the plane’s engines have at last caught fire?  The last time they did this - with the benefit of hindsight - the supposed golden era was the one in which were actively sowing the seeds of our own ruin, it might give pause for thought about quite how much harm our masters' stubbornly accommodative stance is causing us again today.

Bernanke Wants The US President To Declare "Economic Emergencies" In Future Crises

"Presidents should get the power to declare economic emergencies along the lines to declare war... [and] take extraordinary actions and not put that all on the Fed." - Former Fed Chairman Ben Bernanke

For those of us who remain horrified and disgusted by the 2008-09 Federal Reserve and U.S. government bailout of the kleptocratic oligarchs who created the crisis, the above comments by the mastermind of this historic theft should be extremely concerning.

Swiss Franc Plunges On FinMin "Minimum Exchange Rate" Comment

Just what are the Swiss up to...

*SWISS FINANCE MINISTER WANTS NEW MINIMUM EXCHANGE RATE: HZ

A confidential paper signed by Swiss Finance Minister Eveline Widmer-Schlumpf, discussed in government last week, said that new minimum exchange rate should be "considered," Handelszeitung reports in a prerelease of an article to be published Thursday.

Poland Cuts Rates More Than Expected, 21st Central Bank "Policy Ease" Of The Year

Just hours after India's 'surprise' rate cut (which saw the SENSEX surge and then dump to close red), Poland has surprised the market with a bigger-than-expected rate cut. Despite two-thirds of econmomists expecting a mere 25bps cut, the Polish Central Bank slashed its benchmarket 7-day rate to just 1.5% - the lowest on record. Today's cut "makes up for inaction in previous months" after Poland held rate flat in January and February (but echoes Poland's Oct 'surprise' greater-than-expected ease of 50bps. Polish stocks dropped on the news (but recovered), banks are weaker, and the Zloty is selling off on this news (pushing back towards record lows)...

 

Crude Parallels: A River Of Denials

Recency bias no doubt once again playing a role, but more likely it is this new-ish trend to deny any damaging economic possibility as it might disrupt the balance of financialism. Any system that cannot even countenance just a small possibility of contrary thought is not robust or “resilient” at all. As we saw in 2008-09, oil liquidations were entirely appropriate for economic conditions; how can “everyone” deny outright something even slightly similar?