One of the bigger news this morning is the so far unconfirmed report that Bundesbank President Axel Weber, who has been in the running to replace Jean Claude Trichet, has decided against an ECB future, and instead wants to make money at Deutsche Bank. The sudden about turn in the process has left many wondering why so late in the process, and just what about the ECB is it that makes Weber leery of affixing his fate to the central bank without a unified bond printing facility. From BusinessWeek: "Deutsche Bundesbank President Axel Weber will step down and wants to join Deutsche Bank AG, Deutsche Presse-Agentur reported today, without saying where it obtained the information."
Earlier today, the ECB decided to keep rates at 1.00%, as expected. There were no major or even minor moves in the EUR pairs following the announcement indicating that rumors of a rate hike by the ECB are still very preliminary. Yet the one issue everyone wants to hear more information on is when the latest "rescue" ponzi scheme, the EFSF, will become active, which will allow Europe to wash its hands of all direct monetization allegations, and blame it all on a CDO. Of course, when the CDO itself implodes it will be Europe, and mostly Germany left to pick up the pieces, which is why Merkel is so far the only party which has refused to endorse the outright monetization power of the EFSF. For an update of the ECB's views on the EFSF watch the press conference starting any minute now.
EURUSD Surges By 200 Pips (To China's Delight) On Trichet Comments That Inflation Cracks Starting To AppearSubmitted by Tyler Durden on 01/13/2011 09:58 -0400
Those looking for vol in stocks really should shut down their E-Trade account and get some forex terminal. As we have been stating for well over 6 months now, with the Fed artificially ramping stocks, and making stock vol extinct, daytraders continue to be forced to find other avenues to day trade volatility. And the FX is just that market. The EURUSD has just done its daily 200 pip song and dance, putting yet another several hundred Japanese housewives using 50x leverage underwater by 10 times their capital amount. But at least China is happy. Oh and yes, with $4 trillion in FX turnover per day in 2010, this kind of mindblowing volatility is sure to end well.
Jean Claude Trichet has finally learned the Bernank's lesson #1 on Central Bankering: when all else fails, buy it all. The FT reports that according to traders the ECB was on Thursday buying Portuguese and Irish bonds in €100m tranches – four times bigger than previously, which in turn sharply brought down the cost of borrowing for Lisbon and Dublin and sparked a euro rally. Just like in the US, this means that virtually no assets reflect their true value, as the ECB is now monetizing debt, without even having formally announced it is doing so, either in a sterilized or unsterilized fashion. This means that next week's update of the ECB SNP programme will demonstrate a surge in bond buying. This is especially the case when factoring in that Trichet is currently out in the market waving every Portuguese Bond in. It is a sad day that the only way the ECB, just like the Fed, can create an upward move in an asset class only by forcing a short squeeze.
Just kidding. More importantly, it now appears that the $1,400 barrier in spot gold will be breached shortly.
JP Morgan On JC Trichet's Third Attempt At Pulling Off Paulson's Bazooka: Advance Thoughts On More ECB Bond PurchasesSubmitted by Tyler Durden on 12/02/2010 00:47 -0400
Today the market surged after it was announced that JC Trichet has finally thrown in the towel and will launch some version of "buy the everything" program made so popular by his bald transatlantic late-afternoon genocide buddy over the last two years. Subsequently the market surged more on a rumor that America would send a mega dose of viagra to make Trichet's "bazooka" even bigger by boosting America's, er, IMF contributions to what will soon be a multi-trillion bail out. Lastly the market surged some more when that last rumor was proven to be false. Which is why tomorrow at 7:45 am Eastern (with conference to follow 45 minutes later) the hapless Pinata formerly known as Jean-Claude Trichet, whose every action is now predicated by the markets, better have something good to announce or else the market will go up so more... just as it will if there is no news. So for all those who wish to know why buying stocks is a guaranteed way to make money now that nothing at all matters, here are JP Morgan's advance thoughts previewing the ECB action, as well as Greg Fuzesi's observations on additional bond purchases.
If only our own Fed were somehow held accountable to the people of this country - even symbolically…
The sudden plunge in the EURUSD can only be attributed to Waddell and Reed rushing to sell a few nickels worth of the FX pair, as the JCT ECB press conference has ended, and contrary to what some are saying, had nothing notable in it. In fact it was the usual liefest, in which the Europe Fed big man had the gall of saying the US wants a strong dollar: who appoints these pathological liars? Here is Goldman's Erik Nielsen with a rounddown of the bulletin of bullshit.
More fireworks out of Europe, following in the footsteps of the disclosure about Deutsche Bank's dramatic underfunding and need to raise capital, is JC Trichet's stunning announcement that Eurozone members that break the region's rules on public finances should be excluded temporarily from Europe’s political decision-making, according to the FT. Obviously, where there is smoke there is fire, and the ECB president has sufficient reasons to make this demand. It can only mean that major European political turbulence is imminent, precisely as we had been expecting. That it coincides with the end of vacation season is also right in line with our expectations. In essence, JCT's proposal will make a the explusion of member countries symbolic - they won't be fully thrown out, but for all intents and purposes, will be (while still lacking their own monetary independence: the worst of all worlds). That this will not inspire any confidence in Europe is beyond any doubt. Somehow we don't expect a massive surge in the EUR any time soon (and predict a very stressful week for Phillip Hildebrand who will soon be battling with USDCHF parity and a EURCHF in the mid 1.20s).
Let Europe's monetization continue indefinitely! Surely this will do miracles for the EUR once Goldman is done buying all its clients are selling to it today. Other soundbites from his conference earlier below: pick the odd lie(s) out:
- Decision on 3 Month operations was unanimous
- EUR is a very credible currency and has an exception track record [no comment here]
- Q1 growth was "not buoyant, Q2 to be more so"
- Bond programme is designed to ensure effective monetary transmission mechanism
- Says non-standard measures are temporary in nature
- Welcomes recent decision to set up stability facility
- Welcomes steps by governments to do extra fiscal consolidation
Straight from the pages of "How to utilize a good crisis"; a manual written by Rahm Emanuel
Trichet And Dominique To Brief German Parliament On "End Of World" Should They Not Ratify Greek BailoutSubmitted by Tyler Durden on 04/28/2010 10:28 -0400
Guess what happens when banks need something? They promptly brief you how the world will end should one not do their bidding. The IMF and the ECB are apparently no exception to the rule. From prophet Goldman Sachs: "Trichet and Strauss-Kahn in Berlin today to brief parliament. ECB president Trichet and the head of the IMF Strauss-Kahn will be in Berlin today to brief parliamentary leaders about the financial help package for Greece. The idea behind the briefing is to explain to MPs the consequences of a Greek default (i.e what are the second and third round effects) and why it is in the German interest to help."
Sarkozy, Berlusconi And Trichet Deal Suckered Merkel Into Greek Bailout On Terms So Secret Austria Has No Clue What Is Expected Of ItSubmitted by Tyler Durden on 04/13/2010 14:58 -0400
Days into the latest round of European bailouts we finally start to get a glimpse of the scrambling within the EU's top ranks over the past week to avoid the imminent Greek collapse this Monday. According to Handelsblatt, France and Italy had worked out a deal with Trichet first and subsequently advised Merkel that they would go ahead on their own. Merkel who had held out for a 6% interest rate on European subsidy loans was consequently forced to participate in the "syndicate" as Germany has the most to lose from a Greek situation spiralling out of control due to its banking system exposure, yet whose population is the one most vocal against a full blown bailout. The next questions: what are the actual details of the subsidy debt's role in the capital structure, as well as the actual cash disbursement mechanism remain unanswered. Here are some thoughts.
IMF says Italy is right on track. Okay, but which track would that be? More facts thrown at you that probably hurt if you believe the soundbites in the media..
Full Text Of Trichet Speech Following Today's Monthly Monetary Policy Meeting Of ECB's Governing CouncilSubmitted by Tyler Durden on 04/08/2010 09:05 -0400
Regarding our collateral framework, the Governing Council has decided to keep the minimum credit threshold for marketable and non-marketable assets in the Eurosystem collateral framework at investment-grade level (i.e. BBB-/Baa3) beyond the end of 2010, except in the case of asset-backed securities (ABSs). In addition, the Governing Council has decided to apply, as of 1 January 2011, a schedule of graduated valuation haircuts to the assets rated in the BBB+ to BBB- range (or equivalent). This graduated haircut schedule will replace the uniform haircut add-on of 5% that is currently applied to these assets. The detailed haircut schedule will be based on a number of parameters which are specified in the press release to be published after todays press conference.