ECB's Draghi Repeats The Party Line, Forces Another Brief EUR Squeeze, Sends Futures Soaring

Tyler Durden's picture

When you can't act, you talk. Sure enough, here we go again:

  • DRAGHI SAYS ECB WILL DO WHATEVER NEEDED TO PRESERVE THE EURO
  • DRAGHI SAYS THE EURO IS IRREVERSIBLE
  • DRAGHI SAYS YIELD DISRUPTING POLICY TRANSMISSION ARE IN ECB REMIT
  • DRAGHI SAYS SHARING SOVEREIGNTY ON EU LEVEL TO COME
  • DRAGHI SAYS LAST EU SUMMIT WAS MOMENT OF RECOGNITION

And of course the weak hands cover until they realize Draghi just said absolutely nothing, as at this point everything is  in Germany's hands. And not only has Germany not said anything, and won't until September when the constitutional court will approve or deny the ESM, but in fact they have been saying overnight that Spanish bonds are not eligible for EFSF purchases. In the meantime, Europe has devolved from a continent of coordinated action to coordinated jawboning.

Take home: poor Draghi can't even afford Hilsenrath and has to force EURUSD squeezes himself. Because both he and Bernanke know that all they can do is talk the markets up. Any actual event is now grounds for selling the news.

In the meantime, here is the market reaction in a world in which nothing matters any more except what hollow words comes out of broke central planners' mouths:

  • S&P futures spik, now up 6.6pts (or 0.5%) after being down 6pts just before Draghi pledged ECB will do whatever needed to preserve euro.
  • Dow futures up 56 or 0.4%, Nasdaq up 10 or 0.4%
  • Italian stocks up 2%, Spain up 1.3%, DAX uup 0.4%, CAC up 1.1%
  • Euro spikes to 1.2180, NY oil trims drop to 15c or 0.2% (was down 90c or 1%), NY gold unchanged at $1,612/oz (had been down $7.80 or 0.5% at $1,604)
  • 10-yr Treasury yield rises to 1.42%

A quick Reuiters summary of what was said:

European Central Bank President Mario Draghi pledged on Thursday to do whatever was necessary to protect the euro zone from collapse, including fighting unreasonably high government borrowing costs.

 

"Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough," he told an investment conference in London.

 

"To the extent that the size of the sovereign premia (borrowing costs) hamper the functioning of the monetary policy transmission channels, they come within our mandate."

 

The euro rose and German bond futures turned negative after the comments.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
strongband's picture

Anyone seen my shirt? seem to have lost it again.

LULZBank's picture

Your shirt is on, its your pants that are missing again!

Carl Spackler's picture

Would Draghi resign from his position and denounce Goldman Sachs to save the Euro? (You know, ANYTHING)

I thought not.

battle axe's picture

Meanwhile, Draghi thinking to himself:

 

We are fucked.

We are fucked.

We are fucked.

EscapeKey's picture

"When it becomes serious, you have to lie," Juncker

Arisu's picture

"I don't think Spain will need any kind of external support."
— Jean-Claude Juncker, via Reuters, 17 April 2012.

"We decide on something, then put in the room and wait a while to see what happens. If there is no bluster or uprising, because most people cannot grasp what has been decided, then we go on - step by step until there is no return."
— Jean-Claude Juncker in „Die Brüsseler Republik“, Der SPIEGEL, issue from 27 December 1999, p.136.

LULZBank's picture

In a whorehouse, you dont worry about getting fucked.

MillionDollarBoner_'s picture

Off Topic but...

WTF just happened to Gold price in USD?!?

EscapeKey's picture

That's not OT if you think about it.

HelluvaEngineer's picture

Umm, no offense but it's exactly what this news states - Euro up, dollar down, therefore gold up.

LULZBank's picture

Europeans realised that Benny boy has been printing on the low low.

Colonies... they will never learn!

Poor Grogman's picture

Someone unplugged the computer that controls  the automated naked short selling algo.

They actually thought they were unplugging the water cooler machine...

Just as soon as they boot it up again everything will be back to normal,nothing to see here, move along...

Aguadulce's picture

Sorry Mario, but the princess is in another castle....

slaughterer's picture

"Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough,"

Draghi just gave the agreed-upon signal for LTRO3.

"believe me, it will be enough"

fonzannoon's picture

Yep sit back Bernanke and put your feet up. It's all good until election time.

Ned Zeppelin's picture

Might as well force the Euros to go first on the Big Print, if only to see what happens for when it is our time.

Coming soon: Big Print in Euroland plus, in exchange, all of Europe will absolutely and permanently surrender their banking sovereignty to Germany, and Germany will have finally won control of the Continent.  Greece will default, but keep the Euro and continue as a minimally funded, austerity plagued stepchild (as will Spain and eventually Italy). 

Believe or not, the right bet will be to be long the Euro - for the time being. 

That will be the deal. Interestingly enough, it won't solve the debt problem.

slaughterer's picture

This is all because Biderman went 100% short this week. 

slaughterer's picture

Angie too busy sleeping off her Cristal hangover at the Bayreuth festival to say "NEIN" immediately. 

Itch's picture

How do you like them for onions? (EUR/CHF still not budging though, which probably means its real value is now somewhere around 0.6000...i keep bids around 12002 and scalping 1.2010, easy money until it's not)

Goldtoothchimp09's picture

Jawbone this, jawbone that...

jawbone attached to the assbone, assbone attached to the mouthbone

Splootch's picture

So you see as they need desperatly eur to go down otherwise if eur go back to 1.25 the sp500 will have to go to 100 000

 

tomAsss's picture

he say "we will do anything to preserve euro "...meen we will print Euro untill we have ink

and euro just rise to 1.230 ..LOL

market is superirational !!!

dexter bland's picture

He prefaced that with - "WITHIN OUR MANDATE". That mandate has always stopped them from doing anything useful as their mandate is only to fight inflation.

That's why the Euro crisis has never resulted in money printing, and still won't. Tough talk however, is free.

 

Catullus's picture

A 15 year old currency bloc is irreversible.

Shit Central Bankers say... 

Boilermaker's picture

Amongst countries and cultures that have been at all out war, twice, in the last 90 years resulting in over 50M civilian deaths.

It's all gonna work out. Lots of love there.

Spastica Rex's picture

"Irreversible," they keep using that word. I do not think it means what they think it means.

http://www.youtube.com/watch?v=1-b7RmmMJeo

Boilermaker's picture

Lather, rinse, & repeat.

cebri88's picture

Get to work Mr.Chairman

EZT's picture

Great, just great!

 

LULZBank's picture

Draghi says the rudder is broken and the navigation equipment is lost but we will steer the ship to safety.

Neethgie's picture

the markets are absolutely retarded at the moment, draghi has said NOTHING, yet i suppose some coked up frat boy and his algo are thinking draghi said x = buy eur/usd. what on earth could draghi do except print? The last two spikes in eur/usd have been caused by people saying absolutely nothing at all, amazing.

CH1's picture

Probably the ECB, BIS and other friends were buying in tandem with the speech. Getting out now.

It's all theater for a somnambulant public.

hugovanderbubble's picture

i dont trust this movement....

HelluvaEngineer's picture

Really?  It seems perfectly reasonable.

Hype Alert's picture

Those silly machines are at it again.

BeetleBailey's picture

Short EUR/USD @ 1.2150.........this pissant ain't gonna shake me out.

Sad when comments like his cause this shit to happen. Not on solid data - only on words.

Hopium...2012's answer to "growth".

Print money.....who would have thought this...this....was how people "make money"

Lunacy....

MrTouchdown's picture

10YR US Treasuries dipped just below 1.4 right before his announcement. He's just gatekeeping for the Bernanke.

tok1's picture

the reality is he is right... US debt is much larger than Spains.. If the ECB buys Spanish bonds (since they are Spains central banks not just Germany's and suppose to be independant)  Treasuries and bunds will get hurt.

The fact he has favoured Germany over Spain for 6 months is a disgrace.. 

Look out US if they do buy Spain bonds ever at 20% of the rate the fed buys. Tres will be introuble and US debt will be exposed.

THe US issued 100 bill this week Spain's just trying to issue 5-7 bill a month ...

LTRO was a two time proposal the FED is loaning unlimited at 0% (with no change until 2014 ) ahh right

so an unlimited two year loan ...sounds familiar except.. US is any amont any time...

 

Good luck with the higher rates..

 

sqyntz's picture

Merkel must be away on holiday... no end to the mischief Draghi gets into

Cast Iron Skillet's picture

He's gonna get a lickin' when she gets back.

LULZBank's picture

He already got flashed by Merkel in the last summit.

  • DRAGHI SAYS LAST EU SUMMIT WAS MOMENT OF RECOGNITION
  • tomAsss's picture

    Draghi "Change in euro-zone membership wouldn’t affect value of euro investments "

    what does this mean ?

    is Grexit on the move ?

    goldinpenguin's picture

    That is definitely a loaded statement deserving of a follow up question or two.Just reassuring blather I believe.If things are semi chaotic now just wait till there is a messy Euroland divorce with no prenup.

    Joe A's picture

    And free Spiderman towels for everyone!

    Cdad's picture

    17 ES points straight up on this.  The criminal syndicate is looking to sell this morning, and would like better prices.  Never mind about zero market credibility...just run it up the flag pole.  

    Good grief.  It will take generations to find someone dumb enough to buy into these markets.  Way to go Wall Street!  Nice work Banana Republic Bernanke!

    LOL!  The BlowHorn [CNBC] just called this Draghi comment "some serious news."  Because, of course, we all know that if some central banker somewhere wants something, then it is so.  Just sureal.

     

    HelluvaEngineer's picture

    This is gonna be one heck of a wicked candle on the daily chart, that's for sure.

    Cdad's picture

    Com'on brother Engineer...think positive.  This is going to be a great selling opportunity. 

    DavidC's picture

    Pathetic, absolutely pathetic.

    DavidC

    debtor of last resort's picture

    "DRAGHI SAYS SHARING SOVEREIGNTY ON EU LEVEL TO COME"

    May you be hung under the bridge to austerity at a Spidey-towel

    azzhatter's picture

    I found this comment to be interesting- "sharing"- Fuck you Mario Draghi