Euro Dumps Then Jumps On Conflicting Reports Of Merkel Government Collapse

Yesterday we reported that the tenuous Merkel coalition government is in a crisis following a revolt of the junior coalition partner, the CSU, over Merkel's immigration policies.

Specifically, as we said Merkel was facing a rebellion from her hardline Interior Minister Horst Seehofer, who demands that German border police be given the right to turn back migrants without identity papers or who are already registered elsewhere in the European Union.

This morning, the rebellion appeared to come to fruition when a report on a local radio said that Merkel's Interior Minister Seehofer announced the end of the CSU's allliance with Merkel's CDU, effectively collapsing Merkel's government. From Reuters.

  • GERMAN BROADCASTER HESSISCHER RUNDFUNK SAYS ON TWITTER INTERIOR MINISTER SEEHOFER ANNOUNCES END OF CSU PARTY'S ALLIANCE WITH MERKEL'S CHRISTIAN DEMOCRATS IN INTERNAL MESSAGE

The result was an immediate plunge in the Euro:

However, this was promptly reverse following subsequent reports by an unnamed CSU lawmaker who denied the report:

  • SENIOR CSU LAWMAKER SAYS REPORTS OF CSU PLAN TO DISSOLVE ALLIANCE WITH MERKEL'S CDU IS "RUBBISH"
  • SENIOR CSU LAWMAKER SAYS WE WANT TO PRESERVE PARLIAMENTARY ALLIANCE WITH MERKEL'S CDU

The Euro then promptly spiked:

With Reuters and Bloomberg making the following clarification:

  • SPOKESMAN FOR HESSISCHER FUNDFUNK TO REUTERS THE TWITTER ACCOUNT THAT TWEETED REPORT CSU FRACTION TO BE DISSOLVED IS NOT OURS
  • SEIBERT: REPORT CSU QUIT MERKEL ALLIANCE FROM SATIRICAL MEDIA

It wasn't just the Euro: Bunds rallied 32c higher with 13k contracts trading in a one-minute window on the initial report; the rally was trimmed however after German government spokesman denied the initial report.

So for now, Merkel's government appears to be still in place, although it remains to be seen just how the CSU and CDU reach a compromise over the increasingly disruptive topic of immigration. If anything, the sharp EUR reaction showed just how great Merkel's influence on Europe's overall stability is. Of course, if Draghi really needs to crush the Euro, he now knows which European politician he needs to get rid of next.

Comments

Haus-Targaryen Arnold Fri, 06/15/2018 - 06:51 Permalink

I would so love to the the CSU let Merkel hang out to dry.  

You'd have the Linke, the CSU and the AfD sitting back watching the Grüne, the CDU and the SPD wallow in it. 

The biggest risk I see here is a trojan horse of the CSU run by Seehofer.  If they do split, the CSU will veer to the right and expand into all of Germany.  It would cannibalise the AfD and at the end of the day the CSU, run by Seehofer is a corrupt organization and Seehofer is a piece of shit. 

 

In reply to by Arnold

bitzager Arnold Fri, 06/15/2018 - 08:10 Permalink

Talking about trade wars? Well, Dollar is "overvalued" by 20-30%

to the EUR and GBP (European trade partners)..

EUR 1.35 and GBP 1.60 about neutral trade "valuation"...

Meaning of "VALUE", only means TRADE exchange rate..

At EUR 1.15 Donald should be pissed even more, cause it's not helping

US trading deficit at all.. So the only "Fundamentals" is just that, anything

else - 20 years never stop talk about EURUSD "Parity" by some CNBC poppets..

 

In reply to by Arnold

Sandmann bitzager Fri, 06/15/2018 - 09:26 Permalink

D-Mark is undervalued at DM1,95 = €1,00 which is just how Germany intended it in 1998 after they saw what a disaster 1990 had been with DM1,00 = DDM 1,00 as the exchange rate between GDR and BRD.

They set out to undervalue D-mark and Schroeder used Hartz IV and Agenda 2010 to deflate domestic German wages and consumption to make Germany hyper-competitive against France and Italy.

So Germany used the weak Lira to boost its exports by letting Italy join the Euro at an overvalued exchange rate and Germany at an undervalued one

In reply to by bitzager

Haus-Targaryen Sandmann Fri, 06/15/2018 - 07:16 Permalink

Seehofer had the ability in 2015 to stop the invasion.  He chose his political career over the welfare of the nation and state he purports to represent.  

Hey could have ordered Bavarian police to secure the border and let no one cross.  He would have been fired by the party upon order from Merkel, but it would have severely delayed many coming and would have sent a signal immediately to those thinking of coming "forget about it".

I blame him personally more than I blame any other person in all of Germany, including Merkel for what happened.  He HAD the ability to stop it and stop her, and instead he said "fuck it." 

 

In reply to by Sandmann

Sandmann Haus-Targaryen Fri, 06/15/2018 - 09:18 Permalink

He could not have ordered Bavarian Police to break EU Law. It is forbidden under Schengen to inspect passports as a border control. Since Bavaria has no external EU Border and is only bordered by EU and Switzerland which is covered by EU Agreements there is no legal basis for Bavaria to check ID of persons crossing border except in random checks on sporadic basis within 300 metres of border but cannot check systematically without breaching EU Law.

 

That is why Dublin was so important because it secured the EXTERNAL border of the EU to permit Schengen. Merkel ditched Dublin unilaterally and so opened the External Border but continued to leave Schengen Free Movement. She ordered Bundespolizei (Border Guards) not to intervene and they are FEDERAL Police not Bavarian

In reply to by Haus-Targaryen

raging-chihuahua The Count Fri, 06/15/2018 - 10:33 Permalink

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In reply to by The Count

EuroPox Fri, 06/15/2018 - 06:45 Permalink

Soros said that everything that could go wrong, had gone wrong - but I bet even he did not reckon on this!  It really is too good to  be true... the EU is on the brink... one really good push and it will collapse, overwhelmed by chaos.  Excellent!

nmewn Fri, 06/15/2018 - 06:50 Permalink

I bet right about now if Frau Merkel actually had four Luftwaffe fighters that could get off the ground she would have them in the air patrolling the border as a show of her "table leaning strength"! ;-)

Grandad Grumps Fri, 06/15/2018 - 07:16 Permalink

The EU is the newest German Reich. An empire created without tanks and bullets.

And this is when Americans find out that Europe is more important to the world order than we are.

wonger Fri, 06/15/2018 - 07:25 Permalink

Euro dumps then pumps to take out weak longs above 11560 is the headline i would write, but then i dont write i just trade fx, so i will shut up 

Alexander De Large Fri, 06/15/2018 - 07:37 Permalink

Fools will never learn.

It doesn't matter who wins.  They'll promise you the Moon.

But the bottom line is this: You are going to suck Jew cock, and you are going to like it.

You are going to take in swarms of refugees, worry about getting run over and blown up, bomb the living shit out of sovereign Arab nations, have prices exponentially outpace wages, be forced to eat cereal with water because dumb wealthy jerkoff politicians decide to get into trade wars, get arrested for rape and attempted murder for brushing against a female student in a college dorm, just all manner of wacky Judaic shit.

So cheer all you want, but your great grandchildren will be wearing a kippah on the temple porch waiting in line to buy some doves.

Krink26 Fri, 06/15/2018 - 08:33 Permalink

I cannot wait to see that pig in a very large, mushy, crumpled mound. Every person she lectured about their "shared european values" should get a swing at her with an aluminum bat.

Jo A-S Sun, 06/17/2018 - 05:00 Permalink

This man, Horst Seehofer, wants to turn immigrants back at German borders.......  What about the countries ON German borders?  These immigrants are there because Merkel said that they were welcome in Germany!  So, Germany would be causing more anguish on its neighbours!