ECB "In Touch With Market Participants" Over Market Crash; White House "Concerned"

In a double whammy of panic about the fate of the artificial "wealth effect" created thanks to $20 trillion in central bank liquidity, officials at both the White House and Europe's largest hedge fund expressed concerns about the market rout that saw the Dow suffer its biggest point drop in history.

According to Bloomberg, ECB staff "have been in contact with market participants over the current selloff in stocks to gauge if there is any risk to financial stability."

As Bloomberg adds, the latest communications are part of the ECB’s regular interactions with financial institutions and the central bank isn’t yet overly concerned by the global equity rout. The underlying assumption is that "it’s simply a correction because valuations may have become overstretched."

Of course, if the VIX explosion continues, the ECB will be far more worried.

As a result, staff are "watching for signs the downturn might enter a self-reinforcing spiral or spread from equities to bonds."

One worry is that the selloff was triggered by strong U.S. economic data that led to expectations of faster interest-rate increases, a symptom that financial markets are still  relying on monetary support, one of the people said.

Meanwhile, across the Atlatnic, White House Spokeswoman Mercedes Schlapp said on Fox that "obviously we’re concerned about setbacks that happened in the stock market" however, she was quick to hedge that "with that being said, we’re looking at the long term strong economic fundamentals."

Seeking to distance the White House from Trump's relentless boasting about every uptick and sudden silence now that stocks have crashed, she instead decided to sound like your typical, worthless sellside analyst, and said that people should focus on "improving fundamentals" instead: "What we’re seeing is a strengthened economic growth, increased wages; we’re focused on the fact that there’s been the lowest unemployment that we’ve seen in a long time, and there’s confidence in our businesses. Consumer confidence is at an all-time high."

As we said last night, the best outcome from all of this is that Trump will probably not tweet about the S&P for a long, long time.

Comments

Laowei Gweilo eclectic syncretist Tue, 02/06/2018 - 09:55 Permalink

They're okay if it goes down decently because of interest rates and money supply.

What they don't like is when they lose control and something like volatility/volume crackhead algos nearly flash crash the market lol.

If anyone is gonna crash the market, it's THEM ^_^ governments hate losing control even more than they hate losing fake wealth.

In reply to by eclectic syncretist

Phat Stax lolygager Tue, 02/06/2018 - 10:13 Permalink

Before he was elected he said the market was in a "big, fat bubble," and that he didn't have much invested in the stock market (<2% of his assets).  Now that he's president, it's the awesome-est thing ever.  Right.

In reply to by lolygager

Stan522 Tue, 02/06/2018 - 09:50 Permalink

Is this the same ECB that the obama administration through the Federal Reserve gift trillions of dollars during the 2008 collapse....?

PitBullsRule Tue, 02/06/2018 - 09:51 Permalink

Deplorables in an up market, "Trump, Trump, He's our man, if he can't do it, NO ONE can!! WEEEEE!"

Deplorables in a down market, "They're out to get Trump!"

Avichi Tue, 02/06/2018 - 09:57 Permalink

BTFD- PPT IN FULL FORCE

Classic FEAR Psychosis- Watch for President #TRUMP  drive another dragger into the FED manipulation and send FEAR- Today they NASA IS SENDING ANOTHER SECRET MILITARY SPACE MISSION. WARIII -T-100..99...98 "EMERGENCY WILL BE DECLARED" -MARTIAL LAWDemocRATS and the CABAL(FED CABAL/ROTHCHILDS/CLINTON FOUNDATION/BERKSHIRE HATHAWAY/BILL/MALINDA FOUNDATION/HOLLYWOOD CABA/WALL-STREET CABAL/SILICON VALLEY CABAL) are going TO GO UNDERGROUND,OBAMA,CLINTON AND HER CRIME FAMILY ALONG WITH SOROS AND THE GANG ARE GOING UNDERGROUND. WE WILL HUNT YOU DOWN.

MILITARY INTELLIGENCE IN FULL CONTROL

 

THIS IS A WAR BETWEEN GOOD Vs. EVIL - PLANE AND SIMPLE

THESE BASTARDS HAVE TO BE PURGED AND ELIMINATED

 

GO #MAGA #TRUMP

Avichi Tue, 02/06/2018 - 10:28 Permalink

When did "Mario Monty" really cared about AMERICA? - Fuck You Mario--- Work with your socialist EU Buddies.

OBAMA and "Fairy God Mother" are GONE! There is new Sheriff in TOWN and a NEW FED CHAIR. If you see SOROS, let him know we are watching him too.

 

USA is open for BUSINESS- UNDER NEW MANAGEMENT. Take you money and leave , if you do not like it.

SweetDoug Tue, 02/06/2018 - 11:19 Permalink

'

'

'

Said to my Mud'da this morning,

 

"I bet we're gonna find out the FED and CBs are stepping in to buy up the losses, and increase liquidity.

OJO

V-V

 

Paul Morphy Tue, 02/06/2018 - 11:35 Permalink

Was this always the way? Was it always the way that when markets coughed, Central Banks would be "in contact with market participants"? I know they're up to their necks in the game and they probably have to get involved because of that. But were they always doing this in previous crisis?

 

I don't know if it was always the case that the central banks would have to be as involved as they appear to be since 2008 especially.

This nanny statist approach stinks. Let the chips fall where they may.

 

Blankfuck Tue, 02/06/2018 - 11:49 Permalink

666 the mark was evident a few days ago in the Dow at the close-beware! 

10 long years of fraud by bankers!

 

Amerika, built on fraud, Amerika built on ponzi, Amerika built on false lies

Amerika, built on fraud, Amerika built on ponzi, Amerika built on false lies

Amerika, built on fraud, Amerika built on ponzi, Amerika built on false lies

Amerika, built on fraud, Amerika built on ponzi, Amerika built on false lies

Amerika, built on fraud, Amerika built on ponzi, Amerika built on false lies

Amerika, built on fraud, Amerika built on ponzi, Amerika built on false lies

Amerika, built on fraud, Amerika built on ponzi, Amerika built on false lies

Amerika, built on fraud, Amerika built on ponzi, Amerika built on false lies

Amerika, built on fraud, Amerika built on ponzi, Amerika built on false lies

Knave Dave Sat, 02/10/2018 - 12:00 Permalink

"staff are 'watching for signs the downturn might enter a self-reinforcing spiral or spread from equities to bonds.'"

Figures. They're watching for the wrong thing. It all started with a rise in the interest rates of bonds, which caused a sell-off on bonds, which within hours spread from bonds to equities." So, the self-reinforcing spread has happened. Now equities are reflecting back to bonds in a way that is positive for bonds, however, as the two are finally interacting under their traditional dynamic where one falls when the others rise. As interest in bonds goes up, some money appears to be moving from stocks into higher-interest bonds. In this manner, stocks and bonds find a new equilibrium. 

The longer-term dynamic is that bond rates will go up more due to the Fed's tightening and the government's overspending. That will drive stocks down again as people buy bonds. The odd part of this equation is that bond funds go down because they are heavily invested in low-interest bonds that become unappealing. If you're going to buy your own bonds and hold them and live off the interest, then the rise in long-term rates is good news. If you're bought into a bond fund loaded with low-interest bonds, you're stuck because the fund makes its money buying and selling bonds and the old bonds are worth less and less each day as the government issues new bonds at higher interest rates. 

 

It's an odd world, but as I see it, bonds are only a true safe haven if you are buying and holding the actual bond (as in have the papers in your own safe), not buying into a fund. You're just parking your money in government bonds for the duration and enjoying guaranteed interest. (Doesn't do you any good, though, until yields rise a lot above where they are now.) If you're invested in bond funds, you'll just get to enjoy the mass exodus.