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A Closer Look Why Futures Bounced 30 Points Off The Lows On Today's ECB BTFD Bailout
As commented previously, the reason for today's 30 point rip in emini futures from the lows hit just 4 hours ago, was a test of the ECB emergency BTFD service, today provided courtesy of Reuters which, just after the European close, gave what is ever more incorrectly called the "market" its dose of upward momentum ignition, when it reported that, in addition to the previously announced "private QE" which includes ABS and covered bond purchases, that Goldman's head of the European central bank would also go ahead and monetize corporate bonds, taking a step even further than the Fed, which at least is confined to public securities, and directly influencing private asset prices.
The reason is well-known: in Europe there is a scarcity of unencumbered public debt, something we observed years ago...
... and certainly ABS...
... which means that for Draghi's intervention to be felt, if only in the markets if not the economy, he will be forced to go down the capital structure until finally the ECB has no choice but to monetize equities.
Because when it comes to fixing the economy, helping the poor and "fixing inequality", nothing succeeds like artificially inflating the EuroStoxx 50 higher yet again.
In any event, here is the catalyst for today's market move, which Reuters attributes to "several sources familiar with the situation " and "one person familiar with the work inside the ECB, speaking on condition of anonymity" :
The European Central Bank is considering buying corporate bonds on the secondary market and may decide on the matter as soon as December with a view to begin buying early next year, several sources familiar with the situation told Reuters.
The ECB has already carried out work on such purchases, which would widen out the private-sector asset-buying programme it began on Monday - stimulus it is deploying to try to foster lending to businesses and thereby support the euro zone economy.
"The pressure in this direction is high," said one person familiar with the work inside the ECB, speaking on condition of anonymity.
Asked about the possibility of making such purchases, an ECB spokesman said: "The Governing Council has taken no such decision." The ECB's policymaking Governing Council could discuss the possibility of making such purchases at its December meeting, two of the four sources Reuters spoke to said. All four said such plans were being discussed.
The policymakers could decide at the December meeting to go ahead with the purchases, but such a step is not certain. Should the Council decide in December to proceed, the purchases on the secondary market could begin in the first quarter of 2015, one of the sources said.
The ECB began buying covered bonds on Monday, part of a private-sector asset-purchase programme that will also see it buy bundled loans known as asset-backed securities (ABS) later this year.
However, there is concern at the ECB that these measures may have an insufficient impact to help support the economy. "In the view of many Governing Council members, the economic picture has recently taken a turn for the worse," one of the sources told Reuters.
And while we await Germany to throw up all over what is a clear Reuters trial balloon floated by "one person familiar with the work inside the ECB, speaking on condition of anonymity" to see what the market reaction is to even more stimulus (as if it is unclear), here is what we said before when we observed the "new normal" market drivers which have pushed the E-mini 100 points higher in the past week:
To summarize: the S&P 500 is now almost 100 points higher from last Tuesday as the global central bank plunge protection team of first Williams and Bullard hinting at QE4, then ECB's Coeure "ECB buying to start in a few days", then China's latest $30 billion "targeted stimulus", then the Japanese GPIF hinting at a 25% stock rebalancing in the pension fund, and finally again the ECB, this time "buying of corporate bonds on secondary markets", rolls on and manages to send stocks into overdrive. Even as absolutely nothing has been fixed, as Europe is still tumbling into a triple-drip recession, as Emerging Markets are being slammed by a global growth slowdown and the US corporate earnings picture is as bleak as it gets.
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So now the news matters and fundamentals are important?
Is he about to board a plane?
Do they have snow plows in southern Italy? I know they have nailguns....
Not one powerful enough for Draghi's thick skull
is that a snowplow on the runway, oh thats right all clear for takeoff...
Then they buy equities. Then your car. Then your house. Then your first born
Already sold them first second and third born as debt slaves....
Mossad must have found some down and out airport worker. Run financials on the dude and his siblings, and check for a few cases of vodka stashed on his porch
I shouldn't have given Draghi my Hazmat suit!
signed, "the clipboard guy"
Only a matter of time now...
lets see what the half life of this is......
Whatever it takes to keep the three ring circus going.
Engagement ring, wedding ring and suffering?
By way of Central Bank clowns. Who knew Ronald McDonald would head the ECB?
FASCISM
Clowns are atleast funny.
we the people have no say anymore, unless...
Draghi/Ronald thinks he's funny as hell.
Germany will announce they're against the plan over the weekend.
......but angela will have settled the matter with mario beforehand
This is scary because it indicates just how fucked up everything is - if the ECB is going down the monetizing of equities they must be getting absolutely desperate.
DavidC
apparently a trial balloon on corporate bonds, not equities...yet.....
Something is afoot. Too mich jawboning.
Any crackpot deflationists still out there?
Right here bitch, trillions of fiatscos to reflate a flat tire back to 40 P.S.I. and keep it there?? Really???
Maybe the proper term is Reflationist.
As a serious question, help me understand what a Reflationist is......?
I wonder how people will perceive these markets if there were no banalysts telling us what happened and why?!
This is not true, the Fed monetised all kinds of shit in 2008, & probably still holds a pile of shit. Where did this information come from?
I wonder if they still own the red roof inn?
What a fuckin joke. They'll start collateralizing your next paycheck - yeah payday loans will be considered good collateral. Oh wait they already do that. LOL
Full retard.
Rehypothicated bundled payday loans........mmmmm good!
Dont forget the futures market for the next months salary.
Nothiing like a bit of International Panic Lee Scratch Perry
http://youtu.be/F8cXSqB5j0M
"... and directly influencing private asset prices."
Merely another step on the road to what is ultimately coming: large institutions become the ONLY buyer of private assets. Exactly what they want.
Fewer buyers = less competition = higher margins and more monopolies.
Solves this whole deflation thing.
Just like the Middle Ages.
How soon before they also buy real estate?
BTW not sure if you noticed while distracted by clipboard men and fake zombie apocalypse, but apparently there is a hell of a lot of hardware on its way toward Donetsk right now.
Human sacrifice is even better when the victim is defenseless.
Putin will never let that happen.
He is taking off his shirt and mounting the Tiger as we speak.
is he wearing spurs?
My man rides bareback and no spurs, no harness even.
Bankster cocksuckers playing Monopoly with our lives. Same as it ever was.
Bankster games dont piss me off as much as the next retard who just worships them and fall for their every trick.
Is it just me or does anyone else out there also find the term "unencumbered public debt" somewhat strange?
How anyone in their right mind would accept public debt as collateral is beyond me.
Public debt is accepted as collateral because the .gov gets to put a gun to all of our heads and compel us to pay on pain of imprisonment, financial ruin, and ultimately death if a person dares to resist. Try not paying your local property taxes, just for fun.
First you get a notice. Then you get a cop kicking you out. Resist and you will die, either in a fire or a hail of lead, fired from automatic weapons.
Fiat. It's all bullshit.
How else can you own people in this day and age. It's the civilized thing to do.
oxy "moran" ic for the siberian av temp iq.
They should get a brain! Morans!
Its important to understand what eurozone (scarce money) dynamics has done to European trade over the years.
If we look at Ireland - it was only in trade surplus during the years 1941,43& 44. (these were hard hard years)
It next was in trade surplus after the eurozone entry (1979) phase in 1985 (domestic economy depression) and went exponential soon after.
its trade surplus peaked at nearly 44billion in Y2010.
The amount of energy wasted in this "trade" which subtracts from individual purchasing power is gigantic.
http://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=TSA01
The provision for depreciation in the Irish economy is 23 billion ~ a year.
This is 3~ times our yearly food consumption.
What is depreciating is the benefits of this manic trade.
Houses , cars roads........................
"Using these data it is also possible to calculate the average age of the private car stock in each year. The trend in
the average age of private cars over the period 1990 to 2013 is shown in
Figure 15. It can be seen that the average
age declined and reached a low of 5.6 years in 2000 and has since risen to 8.6 years in 2013. This ageing of the
fleet is to be expected due to the low turnover in the car stock since 2008, with fewer new cars being bought and
consequently older cars being kept on the road for longer"
Taken from SEAI - energy in the transport sector.
shocking
After six years, its still not different this time....Yet Fuk the Ponzi
draghi looks like a ferngully bat.