Goldman Interprets Draghi

Tyler Durden's picture


Wondering what Draghi really meant this morning when he spoke at an informal Investment Conference? Apparently nothing just as we said first thing this morning: IMF SAYS DRAGHI'S REMARKS ARE A WELCOME REITERATION OF ECB'S WELL-KNOWN COMMITMENT TO DO WHAT IS NECESSARY. So now the talking down of expectations, or in this case today's iteration of "baffle with bullshit" begins. Yet surely there is some additional agenda. For the best interpretation of what the ECB head said, we go to his former employer, Goldman Sachs, which is always ready to tell its clients to do the opposite of what its own prop desk is doing.

From Goldman's Dirk Schumacher

Strong signal for ECB intervention from Draghi, though timing and instrument yet to be determined


Speaking at a conference today, ECB President Draghi pledged: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough." This statement from Draghi comes after an interview published in Le Monde last Friday (July 20) in which he said that “the euro is irrevocable”.


We have been of the view for a long time that the ECB is ultimately the only institution that can credibly backstop Italy and Spain should these countries no longer be able to refinance themselves in private markets. The existing bail-out funds are not large enough to cover both countries and any other form of debt mutualisation (Euro bonds, for example) that would provide relief for either Spain or Italy are not feasible any time soon.


Mr Draghi’s comments, in our view, signal very clearly the ECB’s determination to use the ECB’s balance sheet in one form or another to support the Euro. While we think that the ECB wants first to see a similar commitment from governments - and the use of the existing tools as signalled by his comments - before it springs into action, we would not rule out that some action will be taken at short notice in order to dent the sharp rise in Spanish and Italian yields.


As we wrote in last week’s European Economics Analyst, the ECB still has a broad range of non-standard measures it can use. A reactivation of the SMP would be one possibility to change, at least temporarily, market sentiment. But another 3-year LTRO would be another possible short-term reaction to the latest market moves. Both measures can be implemented rapidly and the chances of this happening have increased after Mr Draghi’s comments today. The reference of Mr Draghi to the malfunctioning monetary policy transmission mechanism could be seen as a preference for a re-activation of the SMP. However, it is noteworthy that a damaged transmission mechanism has been the justification for all non-standard measures the ECB has taken.


In any case, such measures would probably provide only short-term relief and a firmer commitment would be needed to have a lasting effect on peripheral bond markets. Some form of refinancing of the EFSF/ESM through the ECB would be a lasting solution, although there is some legal uncertainty about whether this is feasible.

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Thu, 07/26/2012 - 10:42 | 2653129 veyron
veyron's picture

Why do we still listen to goldman after their "generational buy opportunity"?


Thu, 07/26/2012 - 10:46 | 2653146 FieldingMellish
FieldingMellish's picture

Contrarian play.


Oh yeah.. and... FUGS!

Thu, 07/26/2012 - 10:49 | 2653156 Pladizow
Pladizow's picture

"The last duty of a central banker is to tell the public the truth" - Alan Binder Federal Reserve Board Vice Chairman, Nightly Business Report 1994

Thu, 07/26/2012 - 10:58 | 2653188 FieldingMellish
FieldingMellish's picture

Correct. And their first duty is to tell their stockholders the truth so that they can misdirect and front run what is about to be said.

Thu, 07/26/2012 - 11:03 | 2653218 vmromk
vmromk's picture

FUCK Goldman, FUCK Draghi, FUCK Bernanke, FUCK Geithner, FUCK Dimon, FUCK Blankfein, FUCK MONTI and FUCK any other criminals I did not mention.

Your orange jumpsuits are being tailored my fine criminal gentlemen.

Thu, 07/26/2012 - 11:02 | 2653214 krispkritter
krispkritter's picture

Remain calm, all is well...

Thu, 07/26/2012 - 10:48 | 2653155 engineertheeconomy
engineertheeconomy's picture

House of cards can only hold a certain amount of weight before one of the bottom cards gives way

Thu, 07/26/2012 - 11:07 | 2653234 RiverRoad
RiverRoad's picture

"For the best interpretation of what the ECB head said, we go to his former employer, Goldman Sachs, which is always ready to tell it's clients to do the opposite of what it's own prop desk is doing."


Isn't it fabulous that ZH can make this statement with impunity?!

Thu, 07/26/2012 - 10:42 | 2653130 Neethgie
Neethgie's picture

in goldman language, we got our puppet to spike the eur usd, we are now comfortable that most of the easy stops have been hit, please commence back down in an orderly fashion because we now have our shorts back on

Thu, 07/26/2012 - 10:42 | 2653131 King_of_simpletons
King_of_simpletons's picture

What does interpreting mean these days ?

Thu, 07/26/2012 - 10:44 | 2653135 YesWeKahn
YesWeKahn's picture

After trillions of LTRO, nothing has been solved, what else he can do? He is no more smarter than the idiot Bernanke.

Thu, 07/26/2012 - 10:44 | 2653139 Neethgie
Neethgie's picture

The funny thing is our markets are so dependant on what central banks say, banks probably have more psychologists and body language experts examining draghi bernank and co, than the cia did when lookin for bin laden

Thu, 07/26/2012 - 11:02 | 2653211 adr
adr's picture

You mean when the CIA hired them to give the guy they dressed up like Bin Laden expressions and movements to copy.

Thu, 07/26/2012 - 10:47 | 2653150 fonzannoon
fonzannoon's picture

Shit interprets poop

Thu, 07/26/2012 - 10:48 | 2653151 buzzsaw99
buzzsaw99's picture

that mealy mouthed mofo said nothing

Thu, 07/26/2012 - 10:53 | 2653170 Jlmadyson
Jlmadyson's picture

We are so screwed.

Thu, 07/26/2012 - 10:54 | 2653172 azzhatter
azzhatter's picture

Nothing, he said nothing but the usual drivel and gangster speak of central bank scum around the world. Somebody just shove a dick in his mouth

Thu, 07/26/2012 - 10:54 | 2653174 spanish inquisition
spanish inquisition's picture

It's possible he sent a clear message.....

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

Compare to

Michael Corleone "If anything in this life is certain, if history has taught us anything, it is that you can kill anyone"

Thu, 07/26/2012 - 11:00 | 2653201 alien-IQ
alien-IQ's picture

"Leave the gun. Take the cannoli"

Thu, 07/26/2012 - 10:55 | 2653179 alien-IQ
alien-IQ's picture

When the only news that moves the market is based on more government intervention, we really need to stop calling this a "free market" and call it by it's proper names...Fascism. Ponzi. Fraud.

Thu, 07/26/2012 - 10:57 | 2653186 Jlmadyson
Jlmadyson's picture

Pretty much.

Thu, 07/26/2012 - 11:42 | 2653372 island
island's picture



Clearly most elected and appointed officials are either completely ignorant when it come to finance and economics, or they are complicit in the widening gap between the have-littles and have-a-lots.  They can call it whatever they want, they can couch it as necessary, etc. - but in the end all they are accomplishing is making the richer richer and the poorer poorer.  It is absolutely disgusting and unconscionable.  Their days of reckoning (on earth or elsewhere) can't come soon enough.

Thu, 07/26/2012 - 10:55 | 2653180 milanitaly
milanitaly's picture

Listen the german sound of silence. Wonderful.

Thu, 07/26/2012 - 11:00 | 2653196 adr
adr's picture

You would think these guys couldn't actually speak anymore. You can barely sit down after having diarrea all day.

The shit that has been coming out of these guys for years should have left bloody streaks for miles.

The farce is growing to such epic proportions that it is even going beyond comical. Home sales miss and forclosures go through the roof, and homebuilders skyrocket? You got me there. I have no clue anymore.

I'm going to enter America's Got Talent next year as a comic, and just put a stock chart on an easel and point. If I don't win the million dollars there is no justice in the world.

Thu, 07/26/2012 - 11:00 | 2653202 youngman
youngman's picture

The Germans make the best printing presses in the world..the same ones the USA uses to print our we know why....

Thu, 07/26/2012 - 11:00 | 2653203 lizzy36
lizzy36's picture

"Baffle with bullshit" has been working since the invention of push-up bras and spanx.

Problem is most people prefer the "Bullshit" to the truth. 

We all desire a photoshopped reality.

Thu, 07/26/2012 - 11:04 | 2653227 adr
adr's picture

Central bankers must really like Thailand then.

Hiding the suasage is their favorite game.

Thu, 07/26/2012 - 11:00 | 2653205 kadriana123
kadriana123's picture

Rally is already fading. 

Thu, 07/26/2012 - 11:03 | 2653206 nathan1234
nathan1234's picture

Goldman needs to be closed down. Their partners and bosses behind bars.

They are behind so many frauds.

They are also responsible for Greek's condition today have helped cover up their inadequate finances to enter the EMU.

The fact that they are still around goes to show that the politicians and crooked bureacrats are hand in glove.




Thu, 07/26/2012 - 11:05 | 2653208 SheepDog-One
SheepDog-One's picture

RELAX!! My daaad has this ULTIMATE set of tools mon....I can FIX it!!  I Can Fix It - YouTube

Thu, 07/26/2012 - 11:04 | 2653221 kito
kito's picture

Goldman Interprets Draghi.....


i didnt know squid understood snake language???????.........

Thu, 07/26/2012 - 11:06 | 2653232 alien-IQ
alien-IQ's picture

Neither has a spine. Perhaps they have a common language also.

Thu, 07/26/2012 - 11:04 | 2653222 alien-IQ
alien-IQ's picture

"Members of German parliament now criticizing Draghi remarks"

source : talking Forex.

Thu, 07/26/2012 - 11:04 | 2653224 Caggge
Caggge's picture

If there is one thing I have learned it is that the TBTF institutions that need to fail are the central banks.

Thu, 07/26/2012 - 11:07 | 2653235 adr
adr's picture

Yo mama's such a whore, she sucked 86 bankers dicks and still asked for more.

Thu, 07/26/2012 - 11:09 | 2653244 eclectic syncretist
eclectic syncretist's picture

Gold and silver are easy money from here with all the worthless rhetoric coming out of central bankers mouths about diluting the value of fiat "bills of credit". 

Thu, 07/26/2012 - 11:13 | 2653257 Whoa Dammit
Whoa Dammit's picture

Putting new spinner rims on the ghetto car fixes it right up. /s

Thu, 07/26/2012 - 11:13 | 2653260 MillionDollarBoner_
MillionDollarBoner_'s picture

"Goldman Interprets Draghi"?

What are you smokin', Maaan!?!

Draghi interprets Goldman! He does what ever they say but puts his own spin on it.


Thu, 07/26/2012 - 11:15 | 2653264 stormsailor
stormsailor's picture

so draghi's comments are causing absolute short covering and such "giddy" optimism that everyone is out buying stocks.  32 /es points since yesterday's close. 


then i read an article here abouut how "the charts are showing an 82% chance of breaking down".  


everyone talking about qe, etc.  


what makes anyone here think they would even announce or disclose additional quantitive easing.  they use your "chart analysis" to trap you into a bear trap, and have been since march of 09. 

how many times do you have to stick your dick in the deep fryer before you learn not to?


robo gets a lot of heat on this site, but he is right, not because of the reasons he expounds, but because the federal reserve and proxies have an "infinite" amount that they can pump in, and absolutely no one on this planet can stop them,  and probably no one would want to.


just observations of a long time trader with chart analysis experience.

Thu, 07/26/2012 - 11:31 | 2653334 alien-IQ
alien-IQ's picture

They cannot pump the market with an "infinite" amount of anything without causing very real and lasting damage to the overall global economy.

If you want to (like Bozotrader) trade based on the belief that the fed and it's proxies have such unconquerable powers, then go right ahead. But to try to convince others of it is simply insulting to anyone with the ability to do simple math.

Sell crazy somewhere else. We're all stocked up.

Thu, 07/26/2012 - 13:48 | 2653835 stormsailor
stormsailor's picture

i would think crazy is the inability to grasp reality, however you must have a different definition.  as to my trading,  i get in and out rather quickly trading /es and manage to turn a bit-of-coin.


as to the   "They cannot pump the market with an "infinite" amount of anything without causing very real and lasting damage to the overall global economy"  i am sure that keeps them up all night "pacing".  for 4 years now we have looked at real data, but the "inside" crowd has managed to avoid every pitfall, keep infinite spinning plates balanced and i'm quite sure they have more tricks in their sack in the rare event something unexpected were to occur.


so go ahead and load the boat up short, so you can be sheared, 



Thu, 07/26/2012 - 15:19 | 2654094 alien-IQ
alien-IQ's picture

I trade the same way. In and out quickly and never holding overnight.

Regarding the rest of your comment...I'll just leave you with this thought from a pretty smart guy:

"There are only two things that are infinite: The universe and human stupidity...and I'm not sure about the universe"

Albert Einstein

Thu, 07/26/2012 - 15:24 | 2654117 stormsailor
stormsailor's picture

"God leads people to believe they understand things that they actually are far from understanding"- ALBERT EINSTEIN

Thu, 07/26/2012 - 11:59 | 2653448 Nobody For President
Nobody For President's picture

Damn, not only is the transmission broken, the clutch is going fast.

Thu, 07/26/2012 - 12:13 | 2653502 yogibear
yogibear's picture

Draghi is a Goldman Sachs soldier. He takes orders from the top.

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