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Guest Post: Be Careful What You Wish For, Such As ECB Printing Money
From John Kinnucan of BroadBand Capital Management
Be Careful What You Wish For, Such As ECB Printing Money
Last month, global equity markets fairly demanded that the ECB hurry up and print, through buying euro zone debt. Effete euro elites publicly demurred at first, insisting that unlike crass Anglo-Saxons, they didn’t let financial markets push them around. Shortly thereafter, to markets’ thrill, LTRO was launched, i.e. backdoor money printing, since any sentient investor realizes that the debt being bought by the ECB is effectively like a loan to a family member: One should only expect repayment if the recipient has a chance encounter with a winning lottery ticket.
Market euphoria over this intensely desired outcome was briefly interrupted a week later, when investors had a look at the shockingly bloated ECB balance sheet, causing a Euro chart breakdown, with a concomitant breakout for the dollar. This now unremitting dollar strength will doubtless temper company outlooks due to be delivered in the next few weeks. Ironically, it is the most crowded trade of late, the Dow Dividend Darlings, whose earnings are likely to be singularly impacted by this newfound dollar strength, as at current rates the dollar is looking to be ~10% higher in H1/12 vs. H1/11.
This deleterious currency effect will be hitting just as the accelerating global slowdown is set to finally impact US companies’ earnings. While bulls are fond of downplaying any effect from Europe, the fact is that 40% of S&P revenues arrive from abroad. Even if Europe is a relatively small part of the total, the knock-on effects from weakness elsewhere will be substantial.
Exhibit A here may very well be the stock responsible for the Dow’s outperformance last year: IBM. Equity markets gave a pass to the “shocking” ORCL miss a few weeks ago, but with stocks now considerably higher, and investors much giddier (see latest AAII/Investors’ Intelligence sentiment polls), market reaction might not be quite so forgiving of a similar performance by another major tech bellwether, not to mention numerous other companies who will no doubt be similarly impacted.
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The BIG LIE starts with the word,"sterilization".
Then you know it is a farce.
First message in from SETI translator computer: Alien Civilization broadcast on 4 second repeat, broadband, all frequencies
"Aguire Ziber, Audimet"
Translated, roughly, "Buy Silver, Gold."
Message repeats.
Four barely coherent paragraphs... what else you got?
COME ON!!!!!!
LET'S JUST DO IT!!
It will feel so good, I PROMISE!! Just this one time! After that, we'll stop. promise... pinky swear....
the Americans did it, and look how the prospher!
LET'S DO IT YOU LITTLE TWARP!!!
DON'T MAKE ME BREAK YOUR LEGS FUCKFACE!!!!
And that, ladies & gentlemen, is SD's entire repertoire regarding women.
The Date Rapists Guide to Monetary Policy
? are you a lesbian?
I'm okay with that... Got some pictures? Or a home made movie?
LOL.....the ECB money printing reminds me of a gigantic continental scale venipuncture procedure where the patient happens to be Germany. :P
Buying SBUX puts today.
The Euro is falling against the $ rather then Gold.
What this means is that yee guys in North America get to burn more of the worlds oils ration - but North America burns twice as much oil as Europe.
Therefore Global growth must fall - but Americans win.
Its a sick world out there - unless you can keep scoring with the pretty girl even when you are getting older & fatter.
Waiting for a little more reality to set in, Volume will come in and is will be sell side. I think QE 3 is already being priced in and when we actually get it it wont do anything.
"Give me a control of a nations money supply and I care not who makes its laws" - Rothschild
Starting to smell like downgrades are forthcoming ...
EU money managers come to Noo Yawk and buy stock. What else will they buy? Munis?
Even if overseas earnings are down (less F/X) there are dollar profits (in more valuable dollars).
Strong dollar is end of carry trade, what easing takes place stays in the US.
US is tallest mast on sinking ship.
I used to prefer to look at our great nation as the hooker with the least threatening STD, but now I am having my doubts.
I am wondering if it isn't more like a horny 300 pound cell mate with full blown AIDS.
Worldwide printing will go on until the system is reset by gold. Gold valued so high it will blow peoples minds. The value is already there it only have to be set free from the monetary paradigm. And it will, it´s just a matter of time.
Gold, go get you some :) "Aristotle"
BINGO! First real ZH article for a while that sees through Big Banks Extrapolation Wizards (BBEZ)....
dupe
Pathetic drivel.
And speaking of printing-ink...
World's largest maker of printing inks is HQ'd east of Tokyo, DIC/SunChemical conglomerate.
Don't know their raw material sources, but if local, that would suggest caution bec of radioactive particulates. TEPCO/Japanese gov do not test for som,e of the more dangerous items, like Plutonium, Strontium, Americium, etc...,ostly just Cesium isotopes.
Don't lick the newsprint or magazine, etc.
I just cancelled my Playboy and Penthouse subscriptions....damn....bad ink
My worry is that temporary Dollar strength, and the resulting commodity weakness, will give the Fed the green light for more money-printing here and more inflation in the not-too-distant future. The Fed criminals are just chomping at the bit to apply more QE, and to attempt to inflate our way to prosperity! We all know it doesn't work! It just impoverishes everyone -- at least the ones who live on Main St -- through inflation!
"The Fed criminals are just chomping at the bit to apply more QE, and to attempt to inflate our way to prosperity! ".......
Attempt......no..its more like they have to....its their only "Politicaly real" option....they are not going to cut expenses or pensions or welfare.....period...
With inflation you can blame the price increases it on someone else..like the big bad corporations....its a win for the Politicians
I just come back to see the ads. On the left we have Obama and family on a Christmas card, I see Cramer is advertising on the right flank, and the EDD (its sooo easy to file) is at the top.
But what percentage of S&P revenues are actually repatriated from abroad?
EURO-SIS
CNBC twitter/buzz word of 2012
fuck the MSM
The economy is rolling downhill taking savers with it as the Fed prints money, increases inflation to take away the savings and delivers that money to the investment banks; where I am in Coastal California, you can actually see it happening. Even this robbery of the savers is not enough to stop the erosion in the economy. As Nate says today (using chart proof) on Nathan’s Economic Edge regarding the BLS on unemployment:
[S]tart with the chart from John Williams at Shadow Stats. Sure, his unemployment rate calculation is closer to 23% versus the phony 8.5%, but what I want to point out again is that his data is trending upwards, whereas the BLS’s data is trending downward. Gee, that separation of trend has never happened before… why is that?
Note the downward revision to last month’s miracle… that’s a 17% revision lower, as if it weren’t trumped up enough already.
Below is the entire pile of snow from the BS, oops, I mean BLS, where you will be completely baffled and amazed at the number of notes regarding the amount of changes transpiring in how they calculate and revise their “data:”
When we look at the Alternate Table, we find that U-6, data that most closely resembling data from the past, actually rose .2% when not seasonally adjusted, but fell only when seasonal adjustments were made.
The completely phony Birth/Death model was not as large of an influence as normal, actually subtracting 11,000 jobs versus the 6,000 add that occurred last year…
So how is the BLS getting the rate to trend lower?
Simple… they fail to count people as looking for work. Then they report that their numbers are basically unchanged – read the report above – when in fact the numbers are shifting in the same direction time and again in increments they ignore but add up to huge numbers over time.
This can be seen in Participation Rate and Not in Labor Force charts….
And despite “improving” numbers, the Mean Duration of Unemployment is still rising, how can that be? Below is the Mean Duration of Unemployment with the trumped up Unemployment Rate on the same chart. Hmmm, why is it that at no prior time in history has there been this disconnect where these two have diverged from one another so much?
Hallelujah, it must be time to name a new Saint as another miracle just occurred... Now go back up and look at that Shadow Stats chart again and note that his divergence is over the same time frame and has also never happened in the past.
Hmmm. Let’s just say it’s snowing indoors and it’s getting deep.
I, Nathan Martin, no longer consent to the lies.
http://economicedge.blogspot.com/
I never knew that JR was your nom-de-hedge, Nate. I have been a visitor of your site for years now, and your Marginal Productivity of Debt chart was sent far and wide in my emails.
Cool
Don’t I wish, Crime of the Century; but in all fairness to Nate I have to say I’m not Nathan Martin, just a great fan of his intellect and analyses. I can see what threw you - that last line without quote marks – next time I’ll not rely on a small colon at the top to reference a report, but will use quotes or indentation throughout.
I hope Nate sees your compliment. His Marginal Productivity of Debt chart virtually changed the landscape of financial reporting. I'd like some day to see Nathan's Economic Edge in the list of Zero Hedge Reads; ZH is always on Nate's.
Interesting.
The "Great Equalization" has begun. Ain't counterfeit USD's the underly for the counterfeit EUR's?
What the bid to ask on Tungsten, anyone?
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