In recent days, we have observed a distinct trading pattern: a ramp early in the US morning, usually triggered by some aggressive momentum ignition, such as today's unexplained pump then dump in the EURUSD with stocks rising after the European open, rising throughout the US open, then peaking around the time the US closed at which point it is all downhill for the illiquid market. So far today, the pattern has held, and after trading flat for most of the overnight session, with Europe initially in the red perhaps on disappointment about the Italy bank bailout fund, a bout of early Europe-open associated buying pushed US futures up, following the first rebound in the USDJPY after 7 days of declines which also helped the Nikkei close 1.1% higher.
"Money-financed fiscal programs (MFFPs), known colloquially as helicopter drops, are very unlikely to be needed in the United States in the foreseeable future. They also present a number of practical challenges of implementation, including integrating them into operational monetary frameworks and assuring appropriate governance and coordination between the legislature and the central bank. However, under certain extreme circumstances—sharply deficient aggregate demand, exhausted monetary policy, and unwillingness of the legislature to use debt-financed fiscal policies—such programs may be the best available alternative."
ECB Scrambles To Calm A Furious Germany: "Helicopter Money Was The Straw That Broke The Camel's Back"Submitted by Tyler Durden on 04/11/2016 11:27 -0400
Just hours after Spiegel penned its infamous "Germany is taking aim at the ECB" article, Schauble went on the record to deny that the Geran finmin would consider taking legal action if the European Central Bank resorts to "helicopter money" but the damage was already done. As Reuters follows up today, "almost a month after stoking a divisive debate about how far it should go in pumping money into the flagging euro zone economy, the European Central Bank is trying to soothe relations with Germany after unusually strong criticism from Berlin."
While the market is still enjoying the post-NFP weekly data lull, economic data starts to pick up again in the coming days, alongside the start of the reporting season. Below are this week's key events.
- Italian Bank Stocks are Surging on the Back of Rescue Reports (WSJ)
- European Stocks Rise Led by Italian Banks; Emerging Markets Gain (BBG)
- Oil price dips on prospects for producers' meeting (Reuters)
- U.S. shale oil firms feel credit squeeze as banks grow cautious (Reuters)
- U.S. banks' dismal first quarter may spell trouble for 2016 (Reuters)
- Miserable Year for Banks: Stocks Suffer as Rates Stay Low (WSJ)
it has been a rather quiet session, which saw Japan modestly lower dragged again by a lower USDJPY which hit fresh 17 month lows around 170.6 before staging another modest rebound and halting a six-day run of gains; China bounced after a slightly disappointing CPI print gave hope there is more space for the PBOC to ease; European equities rose, led by Italian banks which surged ahead of a meeting to discuss the rescue of various insolvent Italian banks, while mining stocks jumped buoyed by rising metal prices with signs of a pick-up in Chinese industrial demand.
They will resort to an alternate system. This is historically what has always occurred when people have been squeezed to this degree and it will repeat itself this time around..
RANSQUAWK WEEK AHEAD VIDEO 11th April 2016 - Highlights this week include BoE and BoC rate decisions, a host of CPI readings and the beginning of US earning seasonSubmitted by RANSquawk Video on 04/10/2016 21:42 -0400
- Attention this week will likely turn to rate decisions from the BoE and BoC, alongside CPI readings from China, Germany, the UK and US.
- Elsewhere, US participants will be gearing up for the start of earnings season, with Alcoa due on Monday.
The US Dollar Index is sitting at 94.62, just above a critical support zone at 93-94. Meanwhile, the Trade-Weighted Dollar Index has pulled back ~3.4% from its high on Jan20’16. It is hard to tell that long USD is a consensus trade because investors have lost their conviction.
"We continue to think Greece has the potential to return to the headlines, and we do not rule out the prospect of “Grexit” returning... We note the more fragile European political environment (Dutch referendum, UK’s EU referendum, likely snap elections in Spain, key elections in France and Germany in 2017) compared to previous episodes, and the possibility that the increased noise around Greece could potentially influence the UK referendum on EU membership. Furthermore, the ongoing migration crisis in which Greece plays a central role is exacerbating tensions at both domestic and European levels."
The alienation between Germany and the ECB has reached a new level. Back in deutsche mark times, Europeans often joked that the Germans "may not believe in God, but they believe in the Bundesbank," as Germany's central bank is called. Today, though, when it comes to relations between the ECB and the German population, people are more likely to speak of "parallel universes."... Should it come to helicopter money, Berlin would have to consider taking the ECB to court to clarify the limits of its mandate. In other words: the German government and Draghi's ECB would be adversaries in a public court case.
During a leisurely stroll around Germany, one may encounter many strange sights but nothing would stranger than the following ad (courtesy of Peter Barkow) which promises negative 1% interest rates for consumer loans up to 24 months.
If the IMF is engineering a financial crisis in Europe in order to gain more power and influence, why wouldn’t the Fed be doing the same for the IMF in America? Just as the international bankers use stimulus and rate policy as tools, so, to, do they use chaos.
Just like the Cold War I, the Cold War II has its ideological underpinning, except, now it is not about communism versus capitalism, it is about multipolarity versus unipolarity. It just happened Russia was not willing to be a part of unipolar world. It just happened to be against Russian national character to be serving a “higher master”. How did it dare to disobey? Well, the nuclear weapons came handy for standing up to protect its national pride and its national interest in face of America bluntly stepping into Russia’s spheres of interest.