As Europe's Core population collapses (and economic activity with it), the Euro and ECB seem to be serving a select few at the expense of the majority. The imbalances and distortions will only grow as the attempts to mask who the Euro and ECB truly serve continue. What little vitality exists is being transfused to prop up the few.
The issue here is – the “markets” have been levitated via the “wings of doves.” Suddenly – those “doves” have all but vanished. And if that’s true? What’s vanished with it may just be the BTFD genius along with it. And that will turn into a very big problem indeed if correct.
On Thursday, the ECB will hold its fourth tender under the TLTRO-II (Targeted Long-Term Refinancing Operations) programme. A large take-up is expected. A poll published by Reuters had a median forecast of EUR 125bn net borrowing, with estimates as high as EUR 300bn. From a rates perspective, what matters is whether these funds will trigger flows into the bond or swap markets as banks set up carry trades.
"Index investing means buying a box of garbage stocks sprinkled with a few hope and glamour stocks whose price gains are solely a result of underperforming fund managers grasping for quarterly bonuses and retail investors juicing up their portfolios in a doomed attempt to catch up on their retirement targets."
"It’s quite shocking to me... It’s very harmful to the shareholders... It is manipulation and it’s used frequently. Yet, the exchanges don’t step in because the exchanges are owned by the banks... the self policing system doesn’t work because no one wants to police themselves because they’re all making too much money."
Yesterday's brief hiccup in what has been an otherwise relentless rally in global risk assets is all but forgotten this morning, as European and Asian stocks, and US equity futures, all rise in quiet trading ahead of tomorrow's FOMC meeting, with the Dow set to make a 16th consecutive post-election all time high.
It is critical for the markets to “hang on” to current support at the previous breakout highs. A failure to do so will put the markets back into the previous trading range that has existed going back to 2014.