Monetary Policy

Here's What Happens When Central Banks Go Broke

Far from being some trivial problem that can be fixed by pressing "print", central banks operating from a negative equity position face the possibility of i) losing their independence as they have to be recapitalized at the behest of the government, ii) being forced into policy decisions (or, perhaps more appropriately "in"decisions) that they might not otherwise make, and iii) losing the ability to control the narrative, thus heightening market concerns about the loss of omnipotence.

Is Mario Draghi About To Go Full-Kuroda? RBS Says ECB Could Buy Stocks

Now that Mario Draghi has telegraphed more easing from the ECB come December, the question is what exactly the bank will announce. Will Draghi cut the depo rate further into negative territory? How long into 2017 will PSPP be extended? Given the scarcity of purchasable paper, will the ECB expand the universe of eligible assets and if so, will Draghi go full-Kuroda knowing full well that you never, ever go full-Kuroda?

Futures Continue Surge On Global Draghi Euphoria, Tech Earnings

Yesterday morning, when previewing the day's tumultuous events, we said that "Futures Are Firm On Hope Draghi Will Give Green Light To BTFD." And boy did Draghi give a green light, that and then some, when his press conference unleashed one of the biggest one-day US equity rallies in 2015. This morning it has been more of the same, with global market momentum on the heels of Draghi's confirmation that Europe's economy is again backsliding (it's a good thing, if only for stocks), leading to momentum for US equity futures, which together with soaring tech/cloud, earnings if no other, are on their way to take out recent all time highs.

 

Draghi "MOAR QE Please" Press Conference - Live Feed

Update: DRAGHI SAYS ECB DISCUSSED A FURTHER LOWERING OF DEPOSIT RATE

Draghi hints at December QE expansion, noting that "the degree of monetary policy accommodation will need to be re-examined at our December monetary policy meeting." 

What Will Mario Draghi Announce Tomorrow: Here Is What Wall Street Thinks

Tomorrow morning Mario Draghi is widely expected to if not announce an extension, or expansion, of the ECB's QE program, than to at least jawbone sufficiently, and push the EURUSD lower from its recently anchored level in the 1.10-1.20 range. But what are the specifics of Draghi's announcement: will he merely expand the monetization limit per security, as he did in early September, will he increase the universe of eligibile securities, or will he simply extend the maturity of the non-open ended QE from September 2016 to some indefinite date? The following list, courtesy of Bloomberg, summarizes what the sellside universe believes Draghi will unveil in just under 12 hours.

Did Paul Volcker 'Save' A System That Was Simply Not Worth Saving?

Paul Volcker announced his intention to squeeze inflation out of the system soon after he became Fed chairman. Too bad he didn’t save a better system. Not many men can resist the appeal of free money. Americans proved they were no better at it than others. Falling interest rates and the paper dollar gave them a way to impoverish themselves – by spending money they hadn’t earned. They took the opportunity offered to them. They borrowed and spent... and drove the entire world forward at a furious pace. But now that stage is over.

Goldman Is Getting Nervous: "There Are Significant Risks To Our Forecast For Gold Price Weakness"

The "very serious people" are starting to get nervous, because while most other "commodities" have seen their prices plummet in the biggest crash since Lehman, gold just went green for the year. Enter Goldman Sachs: "While our base case remains for higher US real rates and lower gold prices, there are significant risks that our forecast for gold price weakness is pushed out, should the Fed surprise us and remain on hold in December."

Undermining Property Rights In San Francisco

We have ceased to live in a free market economy a long time ago. The only sector of the economy that has managed to remain relatively free in many ways is the technology sector, because it innovates so rapidly that it tends to stay a step or two ahead of politicians and the oligarchies giving them their orders. They simply cannot catch up quickly enough with regulating all these innovations to death. Lately technology has begun to invade the turf of a number of established service businesses... and that appears to be a problem for the crony 'capitalist' crowd.