Mario Draghi Live Webcast

Tyler Durden's picture

At 2:30 pm CET, 8:30 am EST, Mario Draghi will take the podium and either whip out the Bazooka, which may lead to the resignation of Jens Weidmann from the ECB governing council and further unpredictable consequences (the ECB already broke European money markets when it lowered the deposit rate to 0.00%), or a water pistol, in the process destroying any remaining credibility he may have once and for all. More importantly, what today will show is who currently has the upper hand: Goldman, via its assorted money printing muppets, or Germany, for whom Weimar is always one CTRL-P away. Find out as soon as the ECB building fire alarm goes off and when Mario Draghi presents the latest and greatest details of his plans to reporters.

Conference highlights:

  • DRAGHI SAYS INFLATION WILL REMAIN ABOVE 2% IN 2012, TO DROP BELOW 2% IN 2013
  • DRAGHI SAYS INFLATION EXPECTATIONS ARE FIRMLY ANCHORED. 
  • ECB HAS DECIDED ON MODALITY FOR BOND PURCHASES IN SECONDARY MARKET
  • DRAGHI SAYS PURCHASES WILL ADDRESS DISTORTIONS IN BOND MARKETS
  • DRAGHI SAYS ECB WILL HAVE A FULLY EFFECTIVE BACKSTOP
  • DRAGHI SAYS ECB WILL ACT STRICTLY WITHIN ITS MANDATE, ECB ACTS INDEPENDENTLY, EURO IS IRREVERSIBLE
  • DRAGHI SAYS GOVERNMENTS MUST BE READY TO ACTIVATE EFSF, ESM
  • DRAGHI SAYS NEED STRICT CONDITIONALITY
  • DRAGHI SAYS ECB TOOK DECISION ON COLLATERAL

As for the economy, it's a goner:

  • ECB 2013 GDP FORECAST -0.4% TO 1.4%
  • ECB PREV. 2013 GDP FORECAST 0.0% TO 2%
  • ECB 2012 GDP FORECAST -0.6% TO -0.2%
  • ECB CUTS 2012 GDP FORECAST TO -0.4% FROM -0.1%
  • ECB 2012 INFLATION FORECAST 2.4% TO 2.6%

The SMP 2.0 is called OMT: Outright Monetary Transactions: the same as SMP 1.0 but only buying bonds under 3 years.

  • DRAGHI SAYS TRANSACTIONS HAVE STRICT CONDITIONALITY ATTACHED
  • DRAGHI SAYS IMF INVOLVEMENT WILL BE SOUGHT
  • DRAGHI SAYS ECB TO CONDUCT TRANSACTIONS IF WARRANTED
  • DRAGHI: ECB MAY TERMINATE ACTIONS IN EVENT OF NON COMPLIANCE - just in case Berlucsoni is reelected
  • DRAGHI SAYS THERE ARE NO EX-ANTE QUANTITATIVE LIMITS

ECB says bonds will be pari passu: unclear if this means retroactive as well, which would make the ECB balance sheet insolvent on Greek bond losses.

  • DRAGHI SAYS TRANSACTIONS WILL BE FULLY STERILIZED

Since SMP 2.0 is now here, SMP 1.0 is history:

  • DRAGHI SAYS SMP IS TERMINATED
  • DRAGHI SAYS LIQUIDITY OF SMP WILL CONTINUE TO BE ABSORBED
  • DRAGHI SAYS ECB WILL HOLD SMP SECURITIES TO MATURITY - in other words, no sales. Ever.

Naturally, Germany said "9".

  • DRAGHI SAYS THERE WAS ONE DISSENTING VIEW

Weidmann resignation next?

Webcast link