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Tag Archives: ECB

Cool Video: Thoughts on ECB

A few hours after the ECB announced a new package of monetary accommodation, I joined a discussion on CNBC Asia with Nancy Hungerford and Sir Jegarajah.  Here is a clip of part of our discussion.   I make two points.  The first is about the euro's price action.  What impressed me about it was that the euro posted an outside up day, trading on both sides of the previous day's range and closing above its high.  When Sri and I were talking early in the Asian morning, there still had not...

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Bonds and the Dollar Remain Heavy Ahead of the Weekend

Overview:  The markets are digesting ECB's actions and an easing in US-Chinese rhetoric.  Next week features the FOMC meeting and three other major central banks (Japan, Switzerland, and Norway).  The US equity rally that saw the S&P 500 edge closer to the record high set in late July spilled over to lift Asian markets.  Chinese and Korean markets were closed for a mid-autumn holiday.  The Nikkei rose 1% to bring the week's gain to 3.7% on top of last week's 2.4% rally.  It is at...

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The Obligatory Europe QE Review

If Mario Draghi wanted to wow them, this wasn’t it. Maybe he couldn’t, handcuffed already by what seems to have been significant dissent in the ranks. And not just the Germans this time. Widespread dissatisfaction with what is now an idea whose time may have finally arrived. There really isn’t anything to this QE business. But we already knew that. American officials knew it in June 2003 when the FOMC got together to savage the Bank of Japan for their lack of results. It was decided then that...

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Your Unofficial Europe QE Preview

The thing about R* is mostly that it doesn’t really make much sense when you stop and think about it; which you aren’t meant to do. It is a reaction to unanticipated reality, a world that has turned out very differently than it “should” have. Central bankers are our best and brightest, allegedly, they certainly feel that way about themselves, yet the evidence is clearly lacking. When Ben Bernanke wrote for the Washington Post in November 2010 announcing somehow the need for a second QE...

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A Bigger Boat

For every action there is a reaction. Not only is that Sir Isaac Newton’s third law, it’s also a statement about human nature. Unlike physics where causes and effects are near simultaneous, there is a time component to how we interact. In official capacities, even more so. Bureaucratic inertia means a lot more than just resistance to change, it also means, at times and in certain capacities, all sorts of biases. When the bureaucracy predicts one set of circumstance, it is as likely if not...

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Is The Negativity Overdone?

Give stimulus a chance, that’s the theme being set up for this week. After relentless buying across global bond markets distorting curves, upsetting politicians and the public alike, central bankers have responded en masse. There were more rate cuts around the world in August than there had been at any point since 2009. And there’s more to come. As Bloomberg reported late last week: Over the next 12 months, interest-rate swap markets have priced in around 58 more rate cuts, assuming central...

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Gaming the ECB and Putting the Cart Before Horse in the Brexit Drama

The step away from the edge of the abyss may have stirred the animal spirits, but it remains precarious at best.    The formal withdrawal of the extradition bill in Hong Kong is too late and too little at this juncture.  The ambitions of the protests have evolved well beyond that.  Italy has a new government, but a prolonged honeymoon is unlikely for this unlikely union.  Face-to-face talks between the US and China are better than no talks but hardly indicates an end to the tariff war. ...

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Talking and Fighting in the Week Ahead

Equity markets and the US dollar closed last week and August on a firm note.  Ahead of the weekend, the dollar rose to new highs for the year against the euro, Swedish krona, Norwegian krone, and the New Zealand dollar.  While the next set of US and Chinese tariffs start September 1, the market is making the most of the lull. At the same time, US and Chinese officials probe each other to see if sufficient disruption has been felt to force concessions.  Talking and fighting are not...

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No Shock, A Bigger Theatrical Budget

You have to understand, none of this is about money or even bonds. It is all intended for one thing and one thing only: expectations. This has been the fulfillment of Paul Krugman’s long-ago criticism. The way out is to shock the system, he said. It doesn’t even matter, by this theory, what you do. So long as it is outside of every market expectation, that’s the only goal. Japan, who was the target of Dr. Krugman’s reproach, and after having consulted with the former Economist (he’s now just...

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Negative Is The New Subprime

What is nothing? What comes to mind when you imagine nothing? The moment we try to imagine what nothing is, we fail, because nothing cannot be envisioned. There is nothing to envision or ponder or even think about. Nothing is no thing. Yes, the point above is tedious, but the value of nothing in the financial theater is the latest magic trick of the central bankers and the most vital factor governing all investments. If I invest my hard-earned capital in an asset the guarantees a...

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