Tomorrow's ECB meeting "looks set to be sleepy" according to Saxo Bank's Mads Koefed as Draghi is largely cornered into confirmation he will do "whatever it takes" and some additional details on the corporate bond purchase plan. Most of the sell-side's research suggests the same, as Bloomberg notes, ECB will probably leave the door open for further cuts if needed; but any downside risk for the euro is seen limited, as Draghi stays on hold by reinforcing its dovish stance after the mix of easing measures announced in March with some defense of the efficiency of his policies after recent criticism by Germany.
- After big New York wins, Trump and Clinton cast themselves as inevitable (Reuters)
- Eastern States Take Turn in Presidential Primary Spotlight (WSJ)
- China's Stocks Tumble Most in Seven Weeks to Break Trading Calm (BBG)
- Oil falls on end to Kuwaiti strike, supply outlook (Reuters)
- Oil price's decline weighs on global stock markets (Reuters)
The biggest catalyst for overnight markets, first reported on this site, was the announcement by Kuwait that its oil workers had ended their strike which disrupted oil production in the 4th largest OPEC producer for 3 days cutting it by as much as 1.7 mmb/d, and had served to offset the negative news from the Doha debacle. Kuwait Petroleum also added that it would boost output to 3m b/d within 3 days, which in turn has pressured the price of oil overnight, and the May WTI contract was back to just over $40 at last check, sliding 2%. Not helping things was a very dejected Venezuela oil minister Eulogio Del Pino who said at a conference in Moscow that he sees oil prices returning to lows in 3-4 weeks if oil producers can't make a deal. For now the algos - and central banks - disagree.
The only achievements of the American neoconservatives are to destroy in war crimes millions of peoples in eight countries and to send the remnant populations fleeing into Europe as refugees, thus undermining the American puppet governments there, and to set back the chances of world peace and American leadership by creating a powerful strategic alliance between Russia and China. This boils down to extraordinary failure. It is time to hold the neoconservatives accountable, not elect another puppet for them to manipulate.
The economy’s capital structure remains imbalanced as a result of the enormous amount of monetary pumping since 2008 (total TMS-2 growth since then: approx. 128%). There is a limit to this though, even if it cannot be quantified. What can be stated though is that the greater the boom, the greater the eventual bust usually is. There are now more and more indications that a decisive inflection point may be quite near.
Amid the growing ghetto-isation of Muslim Europe, and with 66% of Germans against Merkel, German police have arrested five suspects on terrorism charges in raids on a right-wing group charged with attacking asylum shelters in the east of the country in the midst of Europe’s refugee crisis. German officials have proclaimed the raids show that "the state is moving resolutely and in a timely fashion against right-wing terrorist structures and criminals." We suspect sadly that more attacks, and more arrests are to come as George Soros calls for Europe to accept 500,000 more refugees per year.
In an effort to slow Syrian, Afghan, and Iraqi migrants traveling to Europe, many countries are now implementing border controls, a decision that could prove to have significant negative consequences for Europe's economy. As Bloomberg notes, the open border economy supports more than 400 million people, with 24 million business trips, and 57 million cross-border freight transfers happening every single year. Research by the Bertelsmann Foundation asserts that a permanent return to border controls could cost $530 billion of GDP growth from the European economy over the next decade.
Fear of starvation is fundamentally different from other fears of shortages. Even good people panic.
Following yesterday's OPEC "production freeze" meeting in Doha which ended in total failure, where in a seemingly last minute change of heart Saudi Arabia and specifically its deputy crown prince bin Salman revised the terms of the agreement demanding Iran participate in the freeze after all knowing well it won't, oil crashed and with it so did the strategy of jawboning for the past 2 months had been exposed for what it was: a desperate attempt to keep oil prices stable and "crush shorts" while global demand slowly picked up. And whether it is central banks, or chronic BTFDers, just 12 hours after oil opened for trading with a loud crash, the commodity has nearly wiped out all losses, and both brent and WTI were down barely 2%, leading to both European stocks and US equity futures virtually unchanged on the session.
Europe looks like a dying civilization. European political leaders know that every decision they make may provoke reactions among the Muslims living in Europe. Muslim votes matter. Riots occur easily. In France, Belgium, other European countries, Islamists are present in the army and police forces. In the meantime, Islamist organizations recruit and Islamic lobbies gain ground. European governments are now hostages. The European media are also hostages. Political movements expressing anger and concerns are rising. All are demonized by political power holders and the media. They have almost no chance of gaining more influence. Populations are gnawed by fear, frustration and impotence.
With everyone from ivory tower academics to sin-street hookers proclaiming the need for and benefits of a "war on cash" to save the world from criminals and tax-evaders (oh yeah and to stop NIRP-driven savers from hording cash and crushing central planners' dreams), it is perhaps shocking that Bundesbank board member Carl-Ludwig Thiele warned at an event this week that the attempt to abolish and criminalize cash is out of line with freedom. He said that citizens should continue to decide how and in what form they want to use their money.
To challenge the US dollar hegemony and increase its power in the global realm of finance, China has a potent gold strategy. Whilst the State Council is preparing itself for the inevitable decay of the current international monetary system, it has firmly embraced gold in its economy. With a staggering pace the government has developed the Chinese domestic gold market, stimulated private gold accumulation and increased its official gold reserves in order to ensure financial stability and support the internationalisation of the renminbi.
Why do they hate Donald Trump? Why has the Establishment pulled out all the stops in an effort to smear him, stop him, and crush him underfoot?
It must be tempting for the believers to again revel in the brute power of the “perpetual money machine.” Yet the costs associated with the latest round of monetary inflation are steep. Not many months ago it appeared that China was determined to rein in excess, while the U.S. was ready to lead the world toward policy normalization. Today it’s become rather obvious that China is out of control and global policymakers are trapped at near zero or negative rates and perpetual QE monetary inflation. What was always sold as temporary extraordinary measures is increasingly recognized as desperate “whatever it takes” indefinitely.