This page has been archived and commenting is disabled.

Rupert Murdoch's Drop Boxes: Where Central Bankers Post Front-Runners On When To "Buy"

Tyler Durden's picture




 

Submitted by David Stockman via Contra Corner blog,

The Wall Street Journal appears to be saving money by dispensing with journalists and using human drop boxes instead. Thus in the New York markets the “Hilsenramp” signal is already a well-known event which occurs at approximately 3pm on/during/after Fed meeting days, and is posted under the byline of “Jon Hilsenrath”. In simple packaged form it provides fast money speculators with a message from the B-Dud, otherwise known as William Dudley, President of the New York Fed, on why the Fed will back-up another run at still higher record highs.

So today comes a drop box message with respect to ECB policy posted under the byline of “Brian Blackstone”. Self-evidently, the staff of the Bundesbank is negotiating with Mario Draghi in public. The latter backed himself into a corner last meeting by committing to a dramatic new easing round in June in order to avoid being finally called on his 2012 promise to do “whatever it takes”, which so far has been nothing.

But the ECB is still not ready to bend over for outright bond-buying Bernanke/Yellen style—so it has kindly deposited in Murdoch’s drop box alternative measures that would be acceptable. These apparently include negative deposit rates, a year’s extension of the so-called fixed rate full allotment loan facility, a new long-term fixed rate loan program for commercial banks and some purchases of asset-backed securities.

In other words, the Bundesbank is splitting teutonic hairs on the matter of money printing. It resolutely opposes buying government debt directly—least it encourage the demonstrably and incorrigibly debt-addicted politicians of the EU to become even more fiscally enebriated. Instead, it will inject freshly minted funds into EU banks so that they can do the dirty work with the newly opened space on their balance sheets—that is, buy the government debt.

So the Germans are not going make a stand for monetary sanity, either. They are just negotiating the terms of surrender by using Murdoch’s drop box. Specifically, they are painting a bright marker on the ECB staff’s upcoming inflation forecast—the very same marker that Draghi laid-out in his recent post-meeting statement.

In that regard, the ECB staff like all central bank forecasting outfits professes to know the path of European inflation to the decimal point. To wit, 1.0% this year and reaching exactly 1.7% in about 30 months from now by the end of 2016.  But according to today’s drop box message from the Bundesbank that forecast just won’t do. Only if the ECB staff peers more deeply into its crystal ball and finds a more significant shortfall from the ECB’s presumably wholesome target of 2.0% inflation is it willing to bless more oomph on the printing presses:

But these steps aren’t a done deal, and depend critically on the ECB’s forecasts for inflation through 2016 that are due when the ECB meets on June 5. The central bank currently expects inflation to average 1% this year, 1.3% next year and 1.5% in 2016. ECB staff economists expect that, by the end of 2016, inflation will be around 1.7%.

The Bundesbank expects forecasts for this year to be marked down.

 

If the ECB keeps its 2016 projections unchanged then Germany’s central bank would be reluctant to support new stimulus measures, the person said.

 

The number of steps on stimulus it would back depends on how far the 2016 inflation projections undershoot current estimates, the person said.

The answer is thus reasonably evident. The ECB staff needs to re-set the inflation path so that the year-end 2016 number does not exceed 1.255%. Presumably then even the historically inflation-phobic bubba would call for moooar money and inflation.

Needless to say, in a world pregnant with geo-political, financial and economic disorder—including the accelerating slide toward meltdown in China, old-age bankruptcy in Japan, and cold war resumption on the Ukrainian front—-the idea that the ECB staff can forecast CPI inflation 30 months down the road to the third decimal place is farcical; it’s the central bankers equivalent to counting the angels on the head of a pin.

But that doesn’t matter because today’s drop box messages are not actually about the distant and unknowable economic future. They are about the need for another surge of front-running by the fast money traders in order to sustain the utterly lunatic  condition under which Spain’s 10-year bond is trading at a lower yield than its equivalent US treasury note.

Obviously, the promise of a new round of easing by the ECB in June is just what the doctor ordered. And today’s drop box messages are just what is needed to “build confidence” among fast money traders so that their current heavily long positions in peripheral government debt will be maintained and  enlarged.

Just to make sure that signals are clear, Murdoch’s drop box carried a second message today under the by-line of “Richard Barley” . After a lot of sophistry as to why five year Spanish debt yielding under 2% (“inflation-adjusted”) is actually a bargain due the fact that headline inflation has computed lower than trend for a few months now, the post gets to the meat of the matter. Spanish, Italian and even Greek bonds are a “buy” because the German’s are caving and the Draghi’s money machine is fixing to crank into a higher gear:

The euro-zone bond rally is remarkable. Spanish 5-year yields have fallen from north of 7% in 2012 to below those of U.S. Treasurys; Irish 10-year yields, which came close to 14% in 2011, are below those of the U.K. The market hasn’t lost the plot on credit risk, though. The current levels reflect the problem of very low euro-zone inflation and the big-bazooka policy response investors think might be coming.

 

…. On an inflation-adjusted basis, (Spanish) yields are higher than in the U.S. and U.K. Spain’s dollar-denominated bonds due 2018 yield around 2.07%, according to Tradeweb, more than five-year Treasurys due 2019 despite having a shorter maturity.

 

That reflects the true force driving bond markets…. the European Central Bank seems set to loosen policy in June, with the Bundesbank onside….

 

Given that array of forces, it wouldn’t be surprising to see euro-zone yields—including Germany, Spain and Ireland—fall further still versus those of the U.S. and U.K.

Once upon a time markets processed real world information and there was a need for independent financial journalists with actual investigative and analytical skills. But Murdoch did not become a multi-billionaire for nothing. In today’s central bank dominated financial markets he has apparently learned that human drop boxes will do just fine.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 05/13/2014 - 21:18 | 4757362 km4
km4's picture

couple of good reads

 

Live Chat: How Did the Government Come to Spy on Millions of Americans? | United States of Secrets | FRONTLINE | PBS http://www.pbs.org/wgbh/pages/frontline/government-elections-politics/un... via @frontlinepbs

The White House’s Nazis | New Eastern Outlook http://journal-neo.org/2014/05/14/the-white-house-s-nazis/

 

 

Wed, 05/14/2014 - 07:02 | 4758152 Tao 4 the Show
Tao 4 the Show's picture

Kremlin Man 4,

It is indeed important that the true nature of western machinations is coming out. The problem is that this revelation subconsciously implies the other side are the "good guys". It is human nature to wish that there is at least one side of good guys. The truth, of course, is that subtle and elaborate deception flows from all sides.

The most interesting future for the world will occur if people wake up to this overarching truth far beyond the articles you posted.

Tue, 05/13/2014 - 21:28 | 4757387 NoDebt
NoDebt's picture

I'm not entirely sure what I just read.  I'm going back for another pass.

Tue, 05/13/2014 - 21:37 | 4757410 NoDebt
NoDebt's picture

Still can't do it.  I used to think I was a resonably intelligent guy, but no longer.  Stockman just blew past me with a list of names and concepts woven in a way that can't be followed only within the context of this article.

Sorry, but this must be one of those "inside baseball" articles.  It can't be followed with simple boolean logic as NOT ONE FUCKING LINKAGE is defined between the players in his story.  They're just all thrown on the table as a disjointed story is told in the backround.

Fuck it.  I'm out.  I don't have the IQ for this rabbit hole-casing shit, obviously.

 

Wed, 05/14/2014 - 08:02 | 4757418 OC Sure
OC Sure's picture

 

 

Zugzug.

Tue, 05/13/2014 - 21:54 | 4757474 stant
stant's picture

It's called front running. They always have the info before us it's just more complex now.

Tue, 05/13/2014 - 22:08 | 4757513 Seize Mars
Seize Mars's picture

No Debt

Yah, the article was a little nonoptimal but your comments were woth loggin in.

LOL!!

Wed, 05/14/2014 - 03:25 | 4758029 Ghordius
Ghordius's picture

your IQ is perfectly ok. David Stockman is just dazzling with bullshit in this article

fact is that some people are willing to make enourmous bets on what the ECB will do or not, and this generates lots of infomercials on it

take this, for example: "...the staff of the Bundesbank is negotiating with Mario Draghi in public. The latter backed himself into a corner last meeting by committing to a dramatic new easing round in June in order to avoid being finally called on his 2012 promise to do “whatever it takes”, which so far has been nothing."

just plain bullshit. propaganda for EUR QE

Wed, 05/14/2014 - 09:42 | 4758552 RaceToTheBottom
RaceToTheBottom's picture

Normally I love Stockman, but this one is out there. 

He might be suffering from war stress.  He has been at the front lines for a bit.

Tue, 05/13/2014 - 21:36 | 4757411 OC Sure
OC Sure's picture

The font change distracted me from the content but I think the gist was that people get rich by exchanging information.

Tue, 05/13/2014 - 21:37 | 4757414 nmewn
nmewn's picture

QE, euro-style...aka..."Look, my shirts cleaner!"

Tue, 05/13/2014 - 21:31 | 4757396 maskone909
maskone909's picture

I guess it pokes fun at the central banks use of joirnalist puppets

Tue, 05/13/2014 - 21:34 | 4757405 jesse livermoore
jesse livermoore's picture

Blue horseshoe loves anacott steel

Tue, 05/13/2014 - 21:40 | 4757428 newworldorder
newworldorder's picture

Calling Dr Holter, the justice department and his Bankster friends. Why O' why cant this type of information be protected better by the government? Why must the MSM be dragged through the gutter of the great unwashed? After all we paid a great deal of hush money protection. The horror of it all is unbearable.

Tue, 05/13/2014 - 21:42 | 4757435 IridiumRebel
IridiumRebel's picture

But he owns Fox News....i'm a gettin all my info from da Faux News! I'm so confuest....

Tue, 05/13/2014 - 21:59 | 4757490 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Hey check out MSNBC, CNN, ABC, NBC, CBS and the utlra fair and balanced NPR. They always have cutting edge news without any politcal agenda.

BTW how many journalists ran to Alaska to find dirt on Sarah Palin after her selection as a Vice President candidate? Perfect example of how the media sources above approach the news as opposed the vile and evil FOX.

Tue, 05/13/2014 - 22:39 | 4757598 IridiumRebel
IridiumRebel's picture

I watch TV all day everyday. Can you wipe the drool from my jowls?

Tue, 05/13/2014 - 22:05 | 4757497 Yen Cross
Yen Cross's picture

     Well if the European bond yields continue to drop that should be usd positive through higher treasury yields vs European bonds... The ECB doesn't have any good collateral to hold so they'll probably print and let the banks pledge the ponzi sovereign bonds they buy for collateral on additional fiatskys to buy moar ponzi bonds.

  P.S. fuck that asshole Ewald Nowotny! He's an idiot and if I ever met his worthless jawboning ass I'd cave his face in!

Tue, 05/13/2014 - 22:03 | 4757498 Atomizer
Atomizer's picture

HFT pigeon message service 

Wed, 05/14/2014 - 01:59 | 4757972 JailBanksters
JailBanksters's picture

Ok, so we all know the Banks are Front Running their own Investors, and Now the Central Banksters are Front Running the Banks.

This just enforces the Club theory, It's a big Club and your not in it.

Wed, 05/14/2014 - 07:59 | 4758235 AdvancingTime
AdvancingTime's picture

 If things get rough across the globe expect eyes to return to problems in Europe, where they continue to talk. I have not written much about the Euro-zone as of late because nothing is really happening. The Euro-zone is engaged in a talkathon.

With fear of an immediate collapse off the table the members of the Euro-zone much like their political counterparts in America just talk about solutions without any action. For us in America news from across the pond dribbles out in small doses with almost daily media boost of promises that things are getting better. For more on all of "what is not happening" see the article below.

http://brucewilds.blogspot.com/2014/04/euro-zone-update.html

Wed, 05/14/2014 - 08:15 | 4758258 jmcadg
jmcadg's picture

So finally Draghi is going to put his hands in our pockets and the code words are Brian Blackstone.

Surprisingly likely in this bizarro world they call global finance and economics.

Whodda thunk!

What happens when the wires print up the words Jon Blackstone?

Is that the end of civilisation as we know it?

Wed, 05/14/2014 - 08:52 | 4758333 db51
db51's picture

Fuck this shit.   I'm clicking on that ad about Russian and Thai women wanting to hook up with old crinkled up white men from the USA because they think they're hot and want one for a Baby Daddy.   That's a whole lot easier to understand than this crapola.  Simple.   Got Bucks - Get Fucks.   End of Story.

 

Works for Clinton, Putin and all those other ugly fucktards.   Even Hillary's got some great carpet to munch.  Easy storyline, and didn't require a drop box.

Do NOT follow this link or you will be banned from the site!