Monetary Policy

Tyler Durden's picture

Euro Tumbles As Draghi Says "ECB Will Do What It Must To Raise Inflation" But Drop May Not Last

Yesterday, there was pent up expectation that the ECB's latest minutes, by being structurally dovish and thus the opposite of the Fed's own minutes, would unleash another round of EUR weakness. This did not happen, and instead not only did the EUR jump during the day, but the USD saw an unexpected round of all day weakness. Many were surprised by this response. It turns out Mario Draghi was merely biding his time, and in a speech released moments ago, titled "Monetary Policy: Past, Present and Future" delivered at the European Banking Congress, Draghi pulled another "whatever it takes" card, and promptly sent the Euro currency reeling, if only for the time being.

Tyler Durden's picture

China's "Minksy Moment" - $1.2 Trillion In Ponzi Financing

“Some Chinese firms have entered the Ponzi stage because return on investment has come down very fast. As a result, leverage will be rising and zombie companies increasing.”

Tyler Durden's picture

Inflation, Unemployment Soar As Brazil Remains Trapped In Stagflationary Nightmare

Just a day after a dismal read on GDP, the latest data out of Brazil shows a spike in both inflation and unemployment, as the country's economic outlook continues to deteriorate at an alarming pace.

Phoenix Capital Research's picture

The Fed Has Set the Stage For a Stock Market Crash

The Fed has conditioned investors to ignore fundamentals, valuations, and the business cycle. As a result, we are in another bubble that will burst as all bubbles do.

Tyler Durden's picture

The Fed Has Made A "Policy Mistake" And The Inevtiable Result Will Be A Recession, BNP Warns

"The reason for our recession concern is not so much because of what the Fed is about to do – likely embark on a slow hiking cycle beginning in December – but because it did not start the tightening much sooner."

Tyler Durden's picture

Swap Spreads Just Hit A New Record Negative Low: Goldman's Explanation Why

Having detailed the "perverted nonsense" that is the collapsing and negative US swap spreads (here, here, here, and here) and noted money manager's concerns that the big question remains whether there is "something bigger brewing under the surface that so far hasn’t been pinpointed yet," it appears Goldman Sachs feels the need to 'explain' the anomaly in what appears an effort to calm fears about the broken money markets. Of course, we don’t have to figure out what the “market” is saying about a negative spread because it isn’t saying anything other than “something” is wrong and even Goldman admits this signals funding and balance sheet strains are worsening since August.

Tyler Durden's picture

House Passes Fed Transparency Bill; Obama Will Veto

Moments ago, the in a 241-185 vote, the House passed passed H.R. 3189, aka  Fed Oversight Reform and Modernization Act. The bill would make changes to how the Fed conducts monetary policy and regulatory activities and would direct the Fed to take a rules-based approach to interest rate decisions; require audits of more Fed functions such as monetary policy; and place restrictions on its emergency lending powers. In other words, everything that the banks that are direct and indirect stakeholders in the Fed would fight to the death to prevent.

Tyler Durden's picture

"This Isn't Going To End Well" - Junk Bonds Under Pressure

There are seemingly always “good reasons” why troubles in a sector of the credit markets are supposed to be ignored – or so people are telling us, every single time. Some still recall how the developing problems in the sub-prime sector of the mortgage credit market were greeted by officials and countless market observers in the beginning in 2007. Meanwhile, the foundation of the economy continues to look rotten (the newest round of Fed surveys has begun with another bomb and other manufacturing-related data continue to disappoint as well). This isn’t going to end well, if history is any guide.

Tyler Durden's picture

Traders Are Buying The Other "Fed Policy Error" Hedge

What else do you buy when monetary policy failure concerns loom...

Tyler Durden's picture

Global Markets Surge Overnight On Fed Minutes Optimism; ECB Minutes Set To Keep Rally Going

While it is still unclear just why the FOMC Minutes which are said to have made a December liftoff "more likely" unleashed a dramatic market rally, one which sent both stocks and TSYs higher, the sentiment continued overnight, with both Asian stocks surging on the US momentum, as well as Europe, where the DAX gapped solidly above the 200 DMA as most European shares advanced, led by resources, travel stocks. U.S. futures continue their ramp higher, and at last check were another 8 points, or 0.4%, in the green.  But if the Fed Minutes were enough to unleash the latest leg in this rally, than the ECB's own minutes due also today, should send futures back over 2100 without much difficult, regardless of their actual content.

Tyler Durden's picture

Did Goldman Sachs Just Find The Smoking Gun In Today's FOMC Minutes?

The market's reaction to today's FOMC Minutes was, to some, a little odd given the "December is on" hawkish narrative being sold to the public. Stocks rallied, longer-dated bonds rallied, gold managed gains, and the US Dollar sold off... not exactly the reaction one would expect from a 'hawkish' Fed statement. But there is one thing that would explain those moves... and it appears Goldman Sachs found it buried deep inside the 12 pages of Minutes...

Tyler Durden's picture

FOMC Minutes Show Fed Is All-In For December Rate Hike (But Depends On Data)

With everything red since the October 28th "hawkish" FOMC meeting - which greenlit a December rate hike and convinced the world that everything is awesome in America (well why else would The 'smart' Fed raise rates?) - today's minutes suggest an FOMC that is perhaps not quite as "whatever it takes" committed to a December liftoff...


But bear in mind there is a lot of data between now and December 16th (including payrolls) and what if stocks drop? Pre-Minutes: 68% rate-hike odds, S&P Futs 2064, 10Y 2.28%, EURUSD 1.0640, Gold $1070, WTI $40.45

Tyler Durden's picture

The Poisonous Cocktail Of Main Street Woes And Federal Reserve Liftoff

Sure, the stock market had a great October with the Dow Jones Industrial Average jumping by 8.5%, but the disconnect between Wall Street and Main Street is too stark to ignore, and the Federal Reserve is about to pop the easy-money financial bubble.

Tyler Durden's picture

Global Stocks Tread Water After Two Consecutive Terrorist Scares; Oil Rises, Industrial Metals Tumble

If this weekend's gruesome terrorist attack on Paris ended up being hugely bullish for stocks, then two subsequent events, a stadium-evacuation scare in Hannover (where Angela Merkel was supposed to be present) and a raid in north Paris which left several dead in the ongoing manhunt against the alleged ISIS mastermind, appear to have but some question into if not stocks then algos whether a rising wave of terrorist hatred across Europe is truly what central bankers need to unleash more QE. That said, we expect the current weakness to last only until the traditional USDJPY carry ramp pushes stocks traditionally higher.

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