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Draghi Launches New Year With More QE Jawboning, Sending Euro To New 4 Year Low, Yields Lower, US Futures Higher
The new year has officially started because it wasn't even a day in and Mario Draghi was once again out and about, jawboning the Euro to a lower level than where it was when he said back in 2012 he would do "whatever it takes" to push it higher. The reason, as Reuters reports, why the Euro sank to a nearly 5 year low against the USD, was "clear indications that the European Central Bank will soon embark on outright money-printing." Actually, it was on just more hollow rhetoric by Draghi, who told German Handelsblatt that "the risk that we don’t fulfill our mandate of price stability is higher than it was six months ago." He also added that "it’s difficult to say” how much the institution will have to spend on government-bond purchases.
Confirming yet again, that when it comes to QE the ECB is all about talk and precisely zero action, Draghi continued: "We are in technical preparations to alter the size, speed and composition of our measures at the beginning of 2015, should this become necessary, to react to a too-long period of low inflation. There’s unanimity in the ECB council on that."
On the topic of deflation he said that “the risk cannot be entirely excluded, but it is limited,” still “we have to act against such risk. A look into history shows that falling prices can endanger the prosperity and stability of our community just as much as high inflation."
“Interest rates have been very, very low for a long time - and that will continue for another while."
Draghi then tried to debunk recent swirling rumors that he would quit the ECB and become Italy's next president when he said that “I don’t want to be a politician,” when asked about resignation of Italian President Napolitano; says his ECB mandate lasts until 2019. In other words, he lied. Just as a politician would.
And speaking of lying, Draghi concluded with just that when asked about the likelihood of a break-up of the euro zone. "A break-up of the euro zone? That will not happen. That's why there is no plan B," he said. Which, as Zero Hedge readers now know, is what Draghi told Zero Hedge back in April 2014, and as they further know, is a bold-faced lie as explained in "When The Head Of The European Central Bank Lies To Zero Hedge On The Record: Presenting Europe's "Plan Z." Recall, via the FT:
Unbeknown to almost the entire Greek political establishment, a small group of EU and International Monetary Fund officials had been working clandestinely for months preparing for a collapse of Greece’s banks. Their secret blueprint, known as “Plan Z”, was a detailed script of how to reconstruct Greece’s economic and financial infrastructure if it were to leave the euro. The plan was drawn up by about two dozen officials in small teams at the European Commission in Brussels, the European Central Bank in Frankfurt and the IMF in Washington. Officials who worked on the previously undisclosed plan insisted it was not a road map to force Greece out of the euro – quite the opposite. “Grexit”, they feared, would wreak havoc in European financial markets, causing bank runs in other teetering eurozone economies and raising questions of which country would be forced out next. But by early 2012, many of those same officials believed it was irresponsible not to prepare for a Greek exit. “We always said: it’s our aim to keep them inside,” said one participant. “Is the probability zero that they leave? No. If you are on the board of a company and you only have a 10 per cent probability for such an event, you prepare yourself.”
Then again, technically Draghi isn't lying: it isn't Plan B - it is Plan Z.
Of course, for an entire continent in dire terminal straits, we have grown to expect nothing less from its central bank than a constant barrage of lies desperate to preserve confidence (who can forget that for the ECB it is not deflation, which is going to happen after all, it is "negative inflation"... please). However, while Draghi did drive the EURUSD lower once more and in the process sent USDJPY surging to 120.5 which promptly took E-minis up by 0.4%, European stocks have been unable to rally on Draghi's latest jawboning and addining insult to injury, Europe reported a set of PMI data that was even worse than expected, confirming Europe's triple-dip recession, even with the "benefit" of hookers and blow, has arrived. The details from Goldman:
The final Euro area Manufacturing PMI came in at 50.6 in December, 0.2pt lower than the Flash estimate. Today's release constitutes a 0.5pt sequential improvement in the area-wide Manufacturing PMI in December, though this serves only to reverse the index's November decline. The monthly rise in the area-wide index is largely attributable to a 1.7pt increase in the Manufacturing PMI for Germany to 51.2 (in line with its Flash estimate). The Manufacturing PMI for France came in 0.4pts lower than its Flash estimate (with a final reading of 47.5). The Manufacturing PMI for Italy fell by 0.6pts on the month (from 49.0 in November to 48.4 in December, against consensus expectations of a small increase to 49.5) and the Manufacturing PMI for Spain fell by 0.9pts on the month (from 54.7 in November to 53.8 in December, against consensus expectations of a small increase to 54.9).
And while the ECB's hands may in fact be tied due to the recent political Snafu in Greece (as Zero Hedge and Morgan Stanley explained previously), the bond market won't hear any of it, and this morning pulled peripheral Eurozone yields to fresh record lows:
- Italian 10Y yield -6bps to 1.826%, least since Bloomberg began collecting the data in 1993.
- Spanish 10Y yield -5bps to 1.565%
- Belgian 10Y yield touches 0.819%, also record low
- French 10Y yield reaches 0.812%
- Portugal 10Y drops under 2.50% for the first time ever
In other news, Asian stks rise, after fluctuating at least 10 times between gain and loss, on low trading volume as region’s two largest mkts shut for holidays. MSCI Asia-Pacific ex-Japan Index gains as 5/10 index groups advance, led by financials; 4 groups drop, led by consumer discretionary. MSCI A-P Index -0.1%. New Zealand, Philippines, Taiwan, Thailand also closed for holidays.
As a result, and in summary, European shares trade mixed, having risen from intraday lows, with the personal & household and autos sectors underperforming and bank, oil & gas outperforming. Euro weakens to 2010 low, ECB President Mario Draghi says can’t exclude risk of deflation in interview with Handelsblatt. Euro-area, U.K. manufacturing PMI data below estimates. The German and Swiss markets are the worst-performing larger bourses, the Spanish the best. Portuguese 10yr bond yields fall; Irish yields decline. Commodities gain with natural gas outperforming. U.S. Markit U.S. manufacturing PMI, ISM manufacturing, construction spending due later.
Market Wrap via Bloomberg
- S&P 500 futures up 0.4% to 2061.2
- Stoxx 600 down 0.1% to 342.1
- US 10Yr yield up 3bps to 2.2%
- German 10Yr yield little changed to 0.55%
- MSCI Asia Pacific little changed to 137.9
- Gold spot little changed to $1182.6/oz
Europe
- 3 out of 19 Stoxx 600 sectors rise; bank, oil & gas outperform, personal & household, autos underperform
- 49.8% of Stoxx 600 members gain, 48.3% decline
- Eurostoxx 50 -0.1%, FTSE 100 -0%, CAC 40 -0.1%, DAX -0.6%, IBEX +0.9%, FTSEMIB +0.8%
Asia
- Asian stocks little changed, MSCI Asia Pacific at 137.9
- Nikkei 225 closed, Hang Seng up 1.1%, Kospi up 0.6%, Shanghai Composite closed, ASX up 0.5%, Sensex up 1.4%
FX/Bonds
- Euro down 0.4% to $1.2055
- Dollar Index up 0.47% to 90.7
- Italian 10Yr yield down 8bps to 1.81%
- Spanish 10Yr yield down 6bps to 1.55%
- French 10Yr yield up 1bps to 0.83%
Commodities
- S&P GSCI Index up 0.7% to 420.9
- Brent Futures up 0.6% to $57.7/bbl, WTI Futures up 0.8% to $53.7/bbl
- LME 3m Copper down 0.5% to $6268.8/MT
Bulletin headline Summary
- Treasuries fall to begin the new year, led by 2Y and 3Y notes; USTs returned 6.02% in 2014, best performance since 2011, led by double-digit gains for 10Y and 30Y sectors, according to BofAML; 10Y yield began 2014 at 2.989%, 30Y at 3.922%.
- ECB’s Mario Draghi said he can’t exclude the risk of deflation in the euro area, in a sign that the likelihood of large-scale quantitative easing is increasing; EUR weakened to 2010 low while Spanish and Italian bonds gained
- U.K. manufacturing unexpectedly slowed to a three-month low in December as weak growth in overseas markets such as the euro area undermined demand
- French investors are piling into Japanese stocks again, a sign to Nomura Holdings Inc. that the market is poised to fall.
- Bonds of Kaisa Group Holdings Ltd., a developer based in the southern Chinese city of Shenzhen, plunged to record lows after the resignation of its chairman triggered a default on one of its loans
- China is investigating an assistant foreign minister suspected of disciplinary violations as President Xi Jinping continues an anti-corruption campaign that has netted thousands of officials over the past two years
- Pimco’s Total Return Fund returned 4.7% in 2014, trailing a majority of peers for the second straight year after missing a rally in longer-term bonds and betting incorrectly that inflation would rise
- Russian oil production rose to a post-Soviet record last month, showing how pumping of the nation’s biggest source of revenue has so far been unaffected by U.S. and European sanctions or crude’s price collapse
- China demanded a review of crowd-safety procedures as dozens of people remain in Shanghai’s hospitals after a deadly stampede on New Year’s Eve killed 36 and caused the cancellation of celebrations across the city
- Search teams looking for the crashed AirAsia Bhd. jetliner’s black box will deploy side-scan sonar and pinger locaters as inclement weather off Indonesia’s coast hinders efforts to recover bodies and the plane’s fuselage
- Kim Jong Un’s younger sister married the son of one of North Korea’s most powerful officials last year, Yonhap News reported, citing two people in China it didn’t identify
- Sovereign yields mostly higher. Asian and European stocks mixed, U.S. equity-index futures gain. Brent crude, gold and copper fall
US Event Calendar
- 9:45am: Markit US Manufacturing PMI, Dec. final, est. 54 (prior 53.7)
- 10:00am: Construction Spending, Nov., est. 0.4% (prior 1.1%)
- 10:00am: ISM Manufacturing, Dec., est. 57.5 (prior 58.7)
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US Futures Higher
Wow....didn't see that coming.
Draghi Launches New Year With More QE Jawboning
Yeah....that's pretty normal.
Fulfilling their MANDATE of price stability manipulation
~~~
Our society will continue as normal.
00:30:42 Work will go on. You will pay your bills.
00:30:49 There will be no hoarding.
00:30:52 There will be no sudden profiteering.
00:30:54 I'm freezing all wages, all prices.
President Tom Beck (Morgan Freeman) as a 500 billion ton comet is barreling towards earth at 135,000km/hr.
BWAHAHAHAHAHAHAHAHAHAHA!!!
yes, a mandate of price stability. what is your point against that? are prices supposed to go up and down like mad just to have financial interests to profit?
sorry, I prefer stable prices free from excessive financial markets manipulation. the kind or "let's buy out wheat", coupled with "screw the poor, I don't care if we see food riots everywhere"
and no, this has nothing to do with what the ECB is having: price stability in the eurozone
"yes, a mandate of price stability. what is your point against that?"
Hey ~ if it floats your boat, I'm not against the notion of euphemisms. Knock yourself out.
The reality of the matter is that that is the farthest thing from the truth of what central banks, owned by private family shareholders do, &/or are all about.
"owned by private family shareholders" - false narrative not appliccable to all CBs. example: the Bank of England was nationalized, after the war. I'm taking this example because the Rothschild family had, in this case, to give their shares to the UK government. if you want the FED to be nationalized, well, then ask for that. in this case, we are talking about the ECB, with is a completely different proposition
Don't bother trying to sell me on the nuances of the ECB structure, vs. the Fed, vs. the BOE (unless you care to explain to me how an entity named 'BELGIUM' was buying all those Treasuries). They all operate from the same virtual playbook. The objectives are the same.
The damn ECB shouldn't exist in the first place. All it ever was was the de facto 'poster child' prototype for [hopefully] a move to a single world currency. It's failed miserably [on that & every other front]. The populations of the countries that are now slaves to that system wish to God they could go back to the way things were before European Union or ECB ever existed.
I don't want central banks... PERIOD.
Ghordius, go fuck yourself and die
Thanks.
you are welcome, and have a wonderful new year
does it mean you believe too this " (the EUR) All it ever was was the de facto 'poster child' prototype for [hopefully] a move to a single world currency." from Ahoi Polloi?
there are currently two schemes for a single world currency: the Mighty Dollar and SDRs. and they are fighting with each other. meanwhile, the EUR... is a regional currency
every country that tried to have ties with the EUR beyond certain levels... let's say it... failed. but no, Ahoi Polloi still believes in the EUR as scheme for a single world currency
I didn't say it was a 'scheme' for a single world country. Instead ~ I referred to it as a 'prototype'. What I mean by 'prototype' is an initiative that tests the idea for people from various countries & cultures to all have faith in a unified system. IOW ~ I'm not saying that the Euro would evolve into THE single world currency, Instead ~ I'm saying that the finite model was used as an experiment to see if the idea worked in the first place. What aspects might succeed, what might fail, and how dis people embrace it in the short, medium, & long term.
The USD never needed to follow that model (otherwise, we'd have seen an AMERO, or other such thing, by now)
SDR? Ha! Give me a break. Try going out onto the street and ask passerbys what an SDR is. You don't buy milk & eggs at the store (or a bag of Cheetos with your EBT based on SDR's). SDR is just more central bank concocted nonsense in an effort to leverage more system wide control of price manipulation and fee generation.
This is about 'currency', and as far as currencies are concerned, (until a better system makes the scene), it requires faith & recognition. If the globalists want to create a worldwide system, the idea needs to be 'tested' in a smaller regional area. The European zone was a candidate for that due to its regionality & economic activity.
Please stop wasting my time with silly detours from the spirit of my initial argument. You have only succeeded in turning a sarcastic anecdote into an exercise in Chinese water torture.
[Nuanced discussion on Chinese water torture coming in 5...4...3...2... is my best guess as to what follows] ~ rolls eyes
Euro as a prototype for a world currency..
Nice theory. Which facts lead you to believe that ?
The euro was above all about containing Germany imho. Maybe that requires a world currency ?
No facts. Just a theory.
But two things appear clear to me:
1. TPTB have made it very clear that they would like a single world currency system [with THEM at the top, of course]
2. It would only seem obvious that a smaller scale trial ballon would have to be put into operation before the above were ever to be accomplished.
How hard is it to figure out?
1. some TPTB. while some TPTB are fighting that. withness the US Congress at loggerheads with the rest of the IMF bunch regarding IMF shares
2. well, then conduct this experiment of yours... at home
look, it's simple. you are posing a request: "I don't want central banks... PERIOD"
well, lead by example, instead of asking foreigners to do what you want
socialist from socialist country ? and socialism is better? better than what? better than fascism? suppose you have a point, more hope over there? concede you have it better, for sure with health scare...
" I'm taking this example because the Rothschild family had, in this case, to give their shares to the UK government."
Any proof of this statement?
that the Rothshild family had a huge chunk of the shares of the Bank of England is regarded as an established historical fact, leading to the fame of the Rothschild family
that the Bank of England was nationalized, after WWII, which means the British Government forcefully bought them up at their price, is also an established historical fact
research yourself, the very way you are asking the question leads me to think you would not be happy with any link I could provide, at this point
I think you might find the whole story on the website of the Bank of England, or on wikipedia, but again, what sources suffice your requirements? most of what I write about is things I learned outside of the internets, because most of my self-studies predate the internet. hell, at my age I'm actually proud of somehow coping with this terribly fast blog thing
Historical fact. Ha. So many "historical facts" have been exposed to be bald-faced lies. Now, the idea that any entity forced the Rothschild cabal into doing anything is the greatest laugh of the year. Granted the year is new, so you have time to outdo yourself.
i do not expect from a man who got his sign on euro banknotes to bend enough his ego to please the mass....
if you see what i mean.
Ha ha ha ha ha " And then they thought they were free " ha ha ha ha halarious. Way to early to be a fuck'en retard.
Very normal, and he'll probably actually do fuck all again. Who cares about 50% unemployment in Spanish and Italian young people, eh?
what is the other option? printing? full blast QE? is that what you are suggesting? just curious
ECB will be used as a tool to drive Europe into the desirable federalization with the characteristics of an empire, rather than of a democratic federation. Scenario 3 will be probably the most suitable for the "emperor" Draghi to proceed towards this direction, as he has already the control inside eurozone through a decision taken more than two years ago:
imo a false narrative: either federalization with characteristic of empire or democratic federation. further, we are only talking about... Draghi talking
it's a sign of our times that every word of a major central banker is treated as if it was a monetary metal
I see it as a fact that the current status quo of both EU and eurozone is that of sovereign members engaging in cooperation, through shared organizations
empire or federation? we have a de facto confederation of sovereigns, which is nothing else then an alliance. of peers
free to join: welcome, Lithuania, to the eurozone. free to leave: yes, UK, nobody is holding you back, if you don't want
"Mario Draghi was once again out and about, jawboning the Euro to a lower level than where it was when he said back in 2012 he would do "whatever it takes" to push it higher."
that's not what I remember. the "pushing it higher" part. the rationale was a bit different, as well as the narrative on several sides
And what is the life of the jawboning? Can he fertilize the green shoots till the close?
"Bulletin: The ECB's Mario Draghi is said to have eaten eggs this morning, US futures up 7% on the news...."
Normalization is a big part of International Treaties. Or so I am told. Laws, patent Rights, Property Rights, Corporate Rights, Immigration Rights, Spying, Privacy...
- Teen arrested for drawing with chalk on wall at Hong Kong protest site by Vicky Wong
I think we have seen these with people arrested for having a garden in the front yard, selling lemonade on the sidewalk, having a picture or Drawing of a gun, Stealing a kiss from a girl in K-12, Walmart over turning local countries with WTO Treaty to build a store & parking lot beside a city...
This is part of a Psy-Op, Europe, Asia, USA... we all have QE & LIRP or ZIRP and looking forward to TPP Treaty Signed under President Obama. Probably it details what kind of investments for foreigners and what kind of businesses or Toll Roads, bridges, Dams, Utilities that Chinese & Europeans can buy in the USA.
+1
http://www.amazon.com/Hocus-Pocus-Kurt-Vonnegut/dp/0425130215/ref=sr_1_1...
Thanks. I like off the wall satire. I've read some of his and enjoyed.
https://www.youtube.com/watch?v=YtRjdWWFW5o
Mea Culpa - Byrne/Eno
"Then again, technically Draghi isn't lying: it isn't Plan B - it is Plan Z."
we are talking about a guy that eurozoners expect to lie, aren't we? in the very way that Juncker said: "when needed, you have to lie" or something similar, and afterwards, if memory isn't betraying me, was elected again by his electorate
further, isn't a cliche that europeans don't even to to the bathroom without a plan? of course we always have several contingency plans, and of course we won't admit that
cultural differences. Americans have this thing about lying with isn't that easy to understand for europeans
if an armed goon enters your home and asks if you are hiding political dissidents or unwanted ethnic persons scheduled for elimination, what do you do? stick to the truth?
erm.
We have a thing about grammar, too.
ie, I.m not sure what you meant there.
OK, read it again a few. You're liable to lie. Thanks for the warning.
yes, if you are hiding in my basement I will lie to the goon searching for you for ethnic or political cleansing. it's a promise, and no, I'm not lying about this
I don't think I have ever lied on ZH, btw. search my comments, see if you find a lie
meanwhile, see this comment section and note if I give a damn about up or down votes. not everybody wants facts, often they prefer cherished "truths"
I'm on the Outs with Plato.
In the New Republic Plato described the Noble Lie... Pretty much the same thing as Junker and Draghi. But not Noble at all on the Level you are talking about... You are talking Schindler's List or Hell Keller level of Lying.
The Russians don't go to the bathroom without a plan. There is no such a thing as a European. By which I mean, not any more so than there are real families with 1.7 children.
Those rates have got even crazier:-
Appears someone trying to keep WTI from the 51 handle
Different view on the Russian 'crash'.
They have lots of $ pouring in from oil and gas (often forgotten that gas price is stable so reduced ruble means quids in) and up to now appear to have been buying gold with it. The Serbs are now saying that they have been spending them buying back parts of their industries, especially Gazprom, that were on the western stock exchanges at bombed out prices.
Stunning move again by Moscow if true.
http://en.cyplive.com/ru/news/inserbia-putin-odurachil-finansovyh-akul-z...
Note to Draghi (forgive my language( - Shut the fuck up.
DavidC
that's a no go, I'm afraid. financial markets require and request constant commenting. the ECB had even to reschedule their meeting cycle so that commentaries about their frequency would stop
fact is that there is a legion of analysts working for megabanks and other institutions that are "hooked" to the way the FED does things and are constantly bewildered if the ECB does not do things at least in the same format
Ghordius,
I was being ironic (as you probably gathered!) - yes, I take your point.
DavidC
Here is one for Draghi: Get to Work!!
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Uh Oh... Draghi may ask for More Broken Windows or a War with Russia...
- 12% fewer cars torched in France on 2015 New Year eve (PHOTOS, VIDEO)
- The number of vehicles torched across France on this New Year eve has fallen to 940 – a “significant” 12 percent decrease compared to 1,067 cars set aflame the year before, according to the country’s Interior Ministry.