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EUR Plunges On Draghi's "Downside Risks" Jawbone
After leaving rates unchanged and following Kuroda's efforts overnight, it appears Draghi had to do something in his press conference. Despite Barroso's assurances that the worst of the crisis is over, ECB's Draghi admits:
- *DRAGHI SAYS ECONOMIC WEAKNESS EXTENDED INTO BEGINNING OF YEAR
- *DRAGHI SAYS RISKS TO ECONOMIC OUTLOOK ARE ON DOWNSIDE
- *DRAGHI SAYS RECOVERY IN 2H IS SUBJECT TO 'DOWNSIDE RISKS'
- *DRAGHI: WEAKNESS IS EXTENDING TO COUNTRIES W/OUT FRAGMENTATION
- *DRAGHI SAYS ECB WILL ASSESS DATA AND STANDS READY TO ACT
This 'negativity' jawboning, which is really nothing new to anyone who looks at real data, has battered EURUSD 80 pips lower and implicitly smacked S&P 500 futures down 5-6 points as the verbal currency wars continue.
Full Introductory Statement:
Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. HICP inflation rates have declined further, as anticipated, and price developments over the medium term should remain contained. Monetary and loan dynamics remain subdued. Inflation expectations for the euro area continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. At the same time, weak economic activity has extended into the early part of the year and a gradual recovery is projected for the second half of this year, subject to downside risks. Against this overall background our monetary policy stance will remain accommodative for as long as needed. In the coming weeks, we will monitor very closely all incoming information on economic and monetary developments and assess any impact on the outlook for price stability. It is essential for governments to intensify the implementation of structural reforms at national level and to strengthen euro area governance, including the implementation of the banking union. They should also build on progress made in fiscal consolidation and proceed with financial sector restructuring.
We are also closely monitoring money market conditions and their potential impact on our monetary policy stance and its transmission to the economy. As said on previous occasions, we will continue with fixed rate tender procedures with full allotment for as long as necessary.
Let me now explain our assessment in greater detail, starting with the economic analysis. The outcome for real GDP in the fourth quarter of 2012 was weak, with Eurostat’s second estimate indicating a contraction of 0.6% quarter on quarter. The decline was largely due to a fall in domestic demand but also reflected a drop in exports. Recent data and indicators confirm that the economic weakness extended into the early part of the year. Looking forward, euro area export growth should benefit from a recovery in global demand and our monetary policy stance should contribute to support domestic demand. Furthermore, the improvements in financial markets seen since last summer should work their way through to the real economy, notwithstanding recent uncertainties. Together, this should help stabilise euro area economic activity and lead to a gradual recovery in the second part of the year. At the same time, necessary balance sheet adjustments in the public and private sectors, and the associated tight credit conditions, will continue to weigh on economic activity.
This economic outlook for the euro area remains subject to downside risks. The risks include the possibility of even weaker than expected domestic demand and slow or insufficient implementation of structural reforms in the euro area. These factors have the potential to dampen the improvement in confidence and thereby delay the recovery.
According to Eurostat’s flash estimate, euro area annual HICP inflation was 1.7% in March 2013, down from 1.8% in February. The ongoing decline in annual inflation rates mainly reflects the energy component of the price index. Looking ahead, price developments over the medium term should remain contained in an environment of weak economic activity in the euro area. Inflation expectations are firmly anchored and in line with price stability over the medium to long term.
Risks to the outlook for price developments continue to be broadly balanced over the medium term, with upside risks relating to stronger than expected increases in administered prices and indirect taxes, as well as higher oil prices, and downside risks stemming from weaker economic activity.
Turning to the monetary analysis, the underlying pace of monetary expansion continues to be subdued. The annual growth rate of M3 moderated to 3.1% in February, down from 3.5% in January. The annual growth rate of the narrow monetary aggregate, M1, increased to 7.0% in February, from 6.6% in January. At the same time, MFI deposits in a number of stressed countries strengthened further in February.
The annual growth rate of loans (adjusted for loan sales and securitisation) to non-financial corporations and households remained broadly unchanged in February, at -1.4% and 0.4% respectively. To a large extent, subdued loan dynamics reflect the current stage of the business cycle, heightened credit risk and the ongoing adjustment of financial and non-financial sector balance sheets. At the same time, available information on non-financial corporates’ access to financing indicates tight credit conditions, particularly for small and medium-sized enterprises in several euro area countries.
In order to ensure adequate transmission of monetary policy to the financing conditions in euro area countries, it is essential that the fragmentation of euro area credit markets is reduced further and the resilience of banks strengthened where needed. However, considerable progress has been made since last summer in improving the funding situation of banks, in strengthening the domestic deposit base in stressed countries and in reducing reliance on the Eurosystem as reflected in repayments of the three-year LTROs. Further decisive steps for establishing a banking union will help to accomplish this objective. In particular, in the light of recent experience, we must emphasise that the future Single Supervisory Mechanism and a Single Resolution Mechanism are crucial elements for moving towards re-integrating the banking system and therefore require swift implementation.
To sum up, taking into account today’s decision, the economic analysis indicates that price developments should remain in line with price stability over the medium term. A cross-check with the signals from the monetary analysis confirms this picture.
As regards fiscal policies, euro area countries should build on their efforts to reduce government budget deficits and continue to implement structural reforms, thereby mutually reinforcing fiscal sustainability and economic growth. Fiscal policy strategies need to be complemented by growth-enhancing structural reforms. Such reforms should be ambitious and broad-ranging, encompassing product markets, including network industries, labour markets and the modernisation of public administration. To support employment, wage-setting should become more flexible and better aligned with productivity. These reforms will help countries in their efforts to regain competitiveness, set the foundations for sustainable growth and support the return of macroeconomic confidence.
Charts: Bloomberg
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Blah Blah Blah Blah.
same shit different day,
He should have gone with the fairy pixiedust speech.
"Gradual Recovery" - 5 sec.
Risks and Disclaimers - 15 min.
Tyler needs to update this fast...EUR just got a huge boner.
Hahah.. Typical.
If you want to know where the action is, look at the EURJPY/USDJPY ratio and the DOW/S&P ratio.
Bullish for more bull!
I guess that's the Draghi's reaction to the unexpected ZH questions. "There's no plan B, the Euro will rule for the next Thousand years." So much shit coming out of his mouth.
EUR Soars, Reverses Entire Plunge Plus Some... just because
You know its bad when in the back of your mind you are hoping a war with North Korea will trigger some market price discovery.
Let's call a spade a spade here. The North Korean brass is probably upset that Washington shut off the whiskey spigot.
This is nothing that a few crates of Jack Daniels - not even the good stuff, the black-and-white label stuff that you drank in HS with your buddies out in the woods - wouldn't fix.
As I've been saying since forever, Mr Draghi and whoever gives him orders should be able to understand that businesses and consumers need energy and raw materials to produce and consume finished products........not electrons in a bank account.
QE harms economic activity - PERIOD
@ekm
This explains central bankers very well:
https://en.wikipedia.org/wiki/Cargo_cult
consumers without money can not buy and consume no matter how much they would like to even if producers are ready to produce with alot of idle capacity
they very well know it but they can't give up the QEs.
my fiat is beter than your fiat
When the shit gets real, you have to scream, "Oh my God, Oh my God, Oh my God, help!" *
*This is the corallary to Juncker's "When it gets serious, you have to lie."
No, bitcoin, a nexter-than-next generation tech immateriality that allows nerds to swap book bits for dvd bits while waiting at the bread queue, will save the developed world.
@morning
There are some bitcoiners looking for their BTC this morning. Instawallet was hacked and "lost" their BTC.
http://arstechnica.com/business/2013/04/in-wake-of-bitcoin-spike-mt-gox-...
no, it's we who are the dinosaur sociopath mal-inserted aberrations, we with our miscreant practices.
amen, fratres.
And............wait for it........
It's gone. Sorry. Thanks for playing.
"The Art of War, Draghi style" or "How to lower your currency without printing"...
Sounds like Bernankle wrote the speech for him. All together now....PRINT !
If we all print....then.... everybody will grow their economies right?
Zimbabwe did it first...and look what happened to their stock market. One must be surprised if Zimbabwe doesn't beat everyone with their Mars landing.
A strong dollar will really help usa exports......he he he.
bullish, more and longer QE ahead, the japanese way
zerohedge @zerohedge 8m
Draghi: "Bail in by itself is not a problem" - Draghi to say Draghi was misunderstood in 5...4...3...
Did he really say THAT?????
WTF... It most certainly IS a problem for anyone stupid enough to have ANY money in a bank
no one is listening.
All anyone cares about is if 'FREE MONEY' was mentioned.
Sure it's not a problem for any Central Bankster Overlords....anyone with money in a bank though it's a bit of a problem though losing 80% of it so a bankster can get a bonus.
Growth enhancing structural reforms...penal vacuum pump.
That's not my bag, baby!
recovery in 2H?
that is quite fast.
I saw an ad for a McDonalds cashier, now they want a Bachelors minimum and 2 years experience. How long until they demand burger flippers have an MBA from an Ivy League school?
I bet Ivy League MBAs, especially finance MBAs, will suck at that too. They will cook up and peddle a derivatives burger that will smoke McDonalds into thin air in no time.
McDonald's want ad demands bachelor's degree, two years experience for cashierhttp://washingtonexaminer.com/mcdonalds-want-ad-demands-bachelors-degree-two-years-experience-for-cashier/article/2526145
(includes a video)
young people are screwed
"...whatever it takes..."
stands ready to act = watch it burn
No where to hide from those beachez. Gold intervention continues, despite fundamentals and strong demand.
Frankly, who cares. He spoke of downside risks last time and nobody paid the blindest bit of notice, as the multi-asset brigade took money of their clients and drove the market higher on the grounds that we had all been saved.
No Plan B. Naturally.
Zero Hedge Q1: "Is there a plan when a country decides to leave?" . Q1: "no answer, partial answer" but better answer yet: "NO PLAN B"
Draghi: "No plan B..." WTF
Even i have one. And C and D.
Kudos TD for getting a mention at the presser. All us skeptics about Euro break-up, BAH!
someone BTFD 'cause it's back to the 8:00 price
..... and Maria Bartiromo says later today: "We're well off the morning lows sparked by Draghi's somewhat downbeat assessment of the European economy and the higher than expected unemployment claims. Many on Wall St. are saying this is actually good news because it tamps down any expectations for QE to be tapered back this year."
Everything is good news in the new utopia.
....and the market takes her word for it. EUR/USD surge 100 pips
The lower the Euro, the better for Germany. So what if southern Europe, vacationland for northern Europe, gets cheaper?
Funny how "Downside Risks" also means "The people have figured out they don't need a central bank, bank, or government for currency"
http://bestbitcoinsites.wordpress.com
zerohedge just got their ass handed to them by Draghi
zerohedge just got their ass handed to them by Draghi
look at the numbers this morning.....usd dollar index heading towards 84, pms bloodied again, stocks couldnt care less about whether americans have jobs..........its all so SURREAL.........
No Kito, it's beatiful. We won. We did it! Crude getting crushed. Metals smacked around. My almight dollar buys more today and my stocks are providing me with more almighty dollars!
(I am so nuts now I am almost half serious).
You sound like Colonel Kurtz.
No one knew he was really a daytrader.
yep fonz, ben is pure genius.....there can be no question about that..................
YOU ASSHOLE!!!! YOU'RE STEALING THE THUNDER FROM FACEBOOK PHONE DAY!!!!!
Zuckerberg it putting on a fancy hoodie to talk about Facebook's new Android phone that let's you update your status without having to launch the Facebook app. IT'S GOING TO CHANGE THE WORLD!!!!!!!!!!
It's also going to send FACEBOOK TO $1000 A SHARE!!!!!! OMG, OMG, OMG.
.........
I pray North Korea launches a nuke and it wipes San Francisco off the map. Epicenter Silicon Valley. Would you miss it? Really, would you miss it?
that fancy hoodie is drone proof
I was disappointed that the East Coast was out of range.
It's back up to 1.2847 with the longest wicks I have ever seen on a daily EUR$ chart: Open - .2847, High - .2857, Low - .2743.
Dafuq.
You want a hammer today? You'll get a reversal tomorrow, with reality reasserting itself by means of economic data out of EU: Retail, German Factory orders sa & nsa, Italian deficit to GDP ratio.
Not to mention, that the whole setup is at the end of a falling three methods formation, within a general bearish flag going back to Feb 25.
Heh-heh.
Draghi vs Mark Carney? The incoming governor of the Bank of England - Mark Carney - has written extensively on why he thinks long term low interest rates are damaging and should be feared. This puts him in a contrasting position wiht Mario Draghi. What Carney does with interest rates when he gets to the Bank of England will be interestng to watch.
To see the views of Bank of Canada Governor Mark Carney, soon to arrive at the Bank of England, google: “Living with low for long” or see http://www.bis.org/review/r101216a.pdf
For more on low interest rates you can google: ZIRP and Zombies - The Undead Bankers and Industrialists Walk Among Us or see http://tinyurl.com/9wng9vf
His hands will be completely tied, he may want to raise rates and if he did many would applaud. However he can not....the consumer, the banks, the government are bust - all limping along on ZIRP (ok not the consumer...no ZIRP for serfs) If he raises rates it will be gamne over. So what will he do.....PRINT & PRINT * find new ways to PRINT. Thats what his job interview consisted of --" how much can you print?"
In other words, the FED is printing $85 billion a month and now, Japan is doing about the same, so it is our turn now. No one is going to beggar us.
Iffe capitaaalee ...non c`è più .... we willeee priiiinte moooree!
Secondo me è carino quando parla inglese......un amooore lui!!! Bello de casa!!!
meno male si daffare il nostro pluridecorato frankofortiano
Mkts Going back down now.. just change the time stamp on post. It's all good.
bullish
It took less than 40 minutes for the euro to go from 127.47 to 128.82.
Nice reversal - not.
euro's trend is still down - considering it was 1.37 at the start of Feb.
http://bullandbearmash.com/chart/spot-euro-daily-trend-support-1260/