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Stocks Spike On Reuters' "ECB Does QE" Leak Du Jour
It never gets old... Stocks have spiked - leaving all other asset classes in the dust - as Reuters unleashes their latest rumor:
- ECB STIMULUS MAY LACK DESIRED SCALE, QE AN OPTION ACCORDING TO SOURCES: REUTERS
Reuters adds that the ECB plan to buy private sector assets may fall short and pressure is likely to build for bolder action early next year.
The market reacts...
As Reuters reports,
The European Central Bank's plan to buy private sector assets may fall short of its goal and pressure is likely to build for bolder action early next year, with government bond purchases an option, ECB sources said.
The euro zone's central bank started buying covered bonds last week and plans to buy asset-backed securities (ABS), or bundled loans, later this year -- both with a view to fostering lending to businesses and thereby supporting the bloc's economy.
ECB President Mario Draghi has said he wants the purchase plans, together with the provision of new cheap loans to banks, to increase the ECB's balance sheet towards its levels of early 2012 -- up to 1 trillion euros higher than today.
But the illiquid nature of the ABS market and the scarcity of quality paper available to buy means the ECB may struggle to achieve the stimulus effect it wants with the current programme.
The ECB's offer to banks in December of a second round of long-term loans, or TLTROs, may help it make progress towards the balance sheet target, but the paltry take-up of the first offer -- just 82.6 billion euros -- does not bode well.
"Some people know that this (the current purchase plan) will not work. It's too small and the problem is much, much bigger," said one source familiar with the matter.
The second source added: "We're perfectly aware these two markets are not that simple and certainly on their own will not be sufficient to expand our balance sheet as we intend."
Asked to comment for this story, an ECB spokesman said: "The targeted long term refinancing operations (TLTRO) and the purchases of ABS and covered bonds have to be seen as a package. The overall impact of these three measures on the balance sheet size of the Eurosystem will be sizeable."
* * *
So to sum up -
Reuters first leaks the possibility of Corporate bond QE....
we do the math showing it is idiotic...
and now Reuters confirms its source was enitrely wrong; we were right,
and ECB has to do what everyone though it would do anyway.
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But the ECB "can't do QE"....
More govt manipulation of the already manipulated markets. Nothing new here. Move along
I thought there was no Plan B?
sounds like it's time for some more banksters to go airborne off a 33 story building.
Maybe this is just MOAR Plan A.
It sure is taking them forever to print those darn EuroBonds.
the fed funded ecb...
again that interesting theory that always fails to explain what for "the FED funded the ECB". that was a one trillion swap, and it was reversed
I could as well, looking at the current balance sheets of the two - how politically incorrect of me - argue that the ECB funded a faster FED QE
the whole thing about that swap was that dollars were "severely missing in circulation", remember? it was a... dollarzone issue. but the dollarzone is global, and it's main "players" are megabanks, so go on with your interesting theory, but please do give a shout when you have more flesh on this bone
Originally, I had believed that QE2 was about countering fallout from municipal defaults, but later evidence proved otherwise. QE2 was (IMO) all about providing eurodollar liquidity to European megabanks in anticipation of major, unplanned disruption from a Greek default.
In that sense it was the Fed funding the ECB covertly (without a direct currency swap that perhaps the ECB was unwilling or unable to draw upon). It was perhaps not planned this way originally but the outcome was clear enough.
It now seems like a distant memory, but the on-again off-again discussion of a Greek bailout dragged on for about 6 months (I'll set May 5 and Nov 10 as the watershed dates) and it was at the end of that period that QE2 was rolled out. ( Nov 3 to be exact: http://www.federalreserve.gov/newsevents/press/monetary/20101103a.htm ).
Recall the frustrating game of bailout ping pong during 2010. The Germans were in on a bailout, then they weren’t, then they were, then they weren’t. The IMF were involved, then they weren’t, then they were. It went on and on.
The whole time, the Fed must have been thinking about a potential run on the eurodollar system from a Greek default, triggering USD denominated CDSs. Such a run would suck USDs out of the domestic system to support a run on eurodollars that would definitely impact the USD / EUR (strengthen the dollar). It would certainly stress the ECBs eurodollar reserves and force it to draw upon its swap line with the Fed, something that CBs prefer to avoid as a crisis is already well underway when that happens.
Being primarily a European problem, I’m sure the Fed would have preferred to sit back and let the EU/ECB/IMF deal with it, hence the lengthy delay in acting. Certainly the initial talk out of Europe in early-mid 2010 sounded promising but it repeatedly turned out to just be talk. Eventually, the Fed got nervous and decided to act to provide stability.
Maybe it did achieve this with QE2 and saved the day, or maybe the situation would have resolved itself without QE2's liquidity to the eurodollar market. Either way, Greece didn’t end up defaulting (yet) and the rest is history.
I'm quite sure that QE2 was 100% a eurodollar issue (behind the scenes), though it was never telegraphed this way in the media. The following two graphs provide strong evidence for this:
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/imag...
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/imag...
What the Fed was swapping onto its books during that period were USD denominated assets from banks operating in the US, but with exposure to Europe. These banks began stockpiling USD reserves in anticipation of a messy default and used the Fed's QE2 program to rapidly build liquidity, offloading assets to the Fed in exchange for what were effectively eurodollar reserves in waiting.
Had Greece defaulted, we would have seen those reserves drain out into the eurodollar market, but the default never came. Said banks then found themselves sitting on excess reserves when Greece cooled down, leaving them free to gamble away on new ventures (or park it for IOER which is now running at $US 50 billion / year).
Did the Fed save the day (prevent a Greek default) or does it have egg on its face for panicking? We'll never know without insider accounts from the eurodollar exposed megabanks, the Fed and the ECB.
hedgless, EuroBonds would mean, at the end, an Euro-Army and an Euro-Fleet, with of course a common fiscal budget
thanks, but no, thanks
meanwhile, "there is no Plan B" is correct. It has to do with the lettering convention. Remember Plan Z? In case Greece exits the eurozone? the banknotes printed by Greece bear the letter Y. A simple case of "Caesar's Substitution Code", meaning:
Plan W is about Germany's exit, Plan T is about France's exit, Plan R is about Italy's exit, etc. etc.
Plan H is reserved for the case of the UK entering the eurozone - heaven forbid! - in which case it would become the Plan for the UK exiting again
Since N is not taken, it would probably be the plan for all participants to exit at the same time
you see how easy it was for Draghi to explain that there is no Plan B?
whatever you do, don't ever ask him how Plan N looks like. I remember the public debate on that case, in the 80's, and people were aghast in the realization that Plan N would not be the death of the EUR, at least not necessarily. Once started, a big currency does not need a fixed zone. Just have a good look at the EuroDollar, if you don't believe it, or many other currencies that continued to be used even after the issuing states went under. particularly if there still is debt to be serviced denominated in it
but who am I kidding, there is perhaps one in a million that is really interested in monetary history
and, more to the point, don't just buy stocks when the Euros do QE, but buy US stocks, because US stocks - which have already completely detached from the rest of the world, all other assets and reality - are the true beta play on monetary madness, wherever in the world it may be.
Maybe QE in Korea or somewhere like that will be enough to get the S&P back to all time highs?
atta boy, mario. if the junkies can't get their fix from the USA at least they can cop from europe. it's one happy family anyway, right? wink, wink.
We must all keep in mind this simple law....
Something, Somewhere, must be destroyed to support stocks or the dollar.
obama : yes we can -> he can't
ecb : we do not QE - >they do.
finance = politics, take opposite of said to get truth.
Rumors and innuendo are so much more fun then that pesky reality stuff.....
.......and it's GONE!
Someone please make it stop.
stop what? the cries for moar QE? addiction is a though monkey, you know?
Markets going up on just leaked rumours and jawboning.
Pretty easy to do in the empty casino, plus when they 'break the exchanges' so that no selling is permitted, only buying higher.
Russia roullette with an automatic pistol. The end result is guaranteed.
What direction can they possibly trend in when Megabank can borrow at ~0% and feed through to Corporations at historically low rates for said Corporations to fund their own stock buybacks and let Management collect their stock-price-triggered "performance" bonuses?
The fuss over QE is a bit of a storm in a teacup (it's not going away). ZIRP is the bigger story (with IOER and the RRF adding a twist).
Now just lying straight out. Are we discovering there is no outlet to the tunnel??
The crisis in 2001 started over a 10 billion shortfall.
So when they talk about a paltry 82 billion.... euro's... not dollars...
you can multiply both by 10
what about the "whatever it takes OMT", which would be illegal......lol. as if the bankers give a fuck about breaking a few rules.
LMAO.
5 years of rumors, bullshit, market distortion & generally malignant, cancerous central planning interference...
Hey Reuters why don't you look at your source and see if just maybe someone bought a boatload of calls before your tipster leaked "all over you"?
Reuters staff....
when you know algos are pavlov dogs....easy to make money if you control the news...
<-- More QE?
<-- More bankster "suicides"?
you think only with 3 QE they will understand it does not work ?
This mkt is so rigged by reporters.. The news is old and is reported as hot.. This reporter should be investigated
This reporter, as well as every bloomberg market reporter should be in jail - end of story.
A good example of how the computerized algos are being used. Instant "recognition" of specific words triggered the buy signal. Once the average true range was reached, the algos triggered the sell signal. And so it goes on.
Operation Blackbriar.
"Some people know that this (the current purchase plan) will not work. It's too small and the problem is much, much bigger," said one source familiar with the matter.
obviously my only prediction ... Draghi has gotten 2+ years out of "whatever it takes" jawboning ... time drawing near for him to put up or shut upso fuuny now we Have QE- european style
Between this Reuters announcement and QE3 POMO wrapping up at 11:am there was -6 minutes of central planning uncertainty.
Whew! That was close...
Bank A calls Reuters, demands they publish rumour X, Bank A's algo takes the market where it wanted and exits the position for a profit. Rinse and repeat.
Bank A and Reuters never are prosecuted.
More likely to be hedge fund A
Big Implications: Germany Clears Russia in MH-17 False Flag;
http://winteractionables.com/?p=15920
A cold winter is coming in Europe, and Germany no longer wants to be hung out to dry energy-wise on these false-flag frauds. Nor do they want their economy trashed by US led sanctions. Accordingly they have just cleared Russia of responsibility for the MH17 crash.
This may also presage blowback against the out-of-control ECB. Germany is going to try and move closer to Russia and China geo-politically and disengage from U.S. hegemony.
sources... yeah whatever. This market is literally rigged.
And anyway, "QE" as the market knows it is NOT an option for the EU. It will never fly in germany. period.
Information and misinformation. I always laugh when i see some bozo money manager (or more likely "client relationship" manager) from the middle of nowhere come on cnbc and try to profess their knowledge of how the ECB will do QE. Always makes me laugh.
Any 'journalist' who bases a story on 'anonymous sources' should be flogged in public.
Is it just me or really the "market's" enthusiasm for EU version of QE is tepid?
duplicate - ignore
We already always did ignore you.
Just a daily chart of the US stock market would be clear enough evidence of market manipulation and criminal prosecution - never in the history of stock markets (prior to QEs) did markets simply move up vertically in a straight line, one, two, three times in an hour, repeatedly, day after day.
Hey at least these clowns have to make up whopper lies every minute now just to keep the wheels on this shitshow.
"ECB STIMULUS MAY LACK DESIRED SCALE, QE AN OPTION ACCORDING TO SOURCES: REUTERS"
You gotta love, "sources" being credible enough to give the market a boner. Not even "Central bank officials" or "Experts" or even "newsletter writers", just fucking "sources" is all it takes.
Can't wait for "Stocks collapse 50% on rumors from sources" headline.
'Source'......some guy 'Reuters' heard mumbling to himself in the adjacent bathroom stall this morning.
Is a banker jumping off a building shouting on the way "We are all going downnnnn......" a credible source ?
And oil magically popped back up above 80 after breaking that double bottom. It's almost as if someone knew that was dictating the market and took effort to change the direction.... hmm....http://alchemyfinancials.blogspot.com/2014/10/under-weather.html
How many times over the last few years have we heard, "if important market breaches X, it will set off a huge wave of negative consequences" only to see it bounce just after breaching or just at that exact level?
Except for PMs. Every technical indicator they break is advertised well in advance and rather than slide over it, they pole vault over it.
"Some people know that this (the current purchase plan) will not work. It's too small and the problem is much, much bigger,"
Bigger won't work either.
Who owns Reuters-Thomson? What is their goal?
merkel nervous breakdown in 3.....
ECB can't do POMO - Germany won't allow it and the ECB doesn't have the legal process to do this - it's not the Fed.
These pushes up are just central banks and aligned financial institutions working together in a coordinated manner - pretty much like they have for the last six years.