Great work this week – nobody weaves the economic/political/central bank dynamic better than you when it comes to analyzing the macro picture. You approach your analysis from the point of view as a trader dealing with what’s in front of him rather than an unpractical analyst perspective.

If markets begin tilting toward the idea that Draghi has “managed to crack what seemed like a solid wall” of German resistance, I would expect that German debt prices (especially Schatz and BOBL prices) would begin to adjust dramatically lower – much lower and faster than the rise in yields we experienced last week. Further, as you have mentioned in prior Notes, I would expect capital to flow out of what seems like a very overvalued French Oat market – which trades like a safe haven benefiting from liquidity distortions in the FX market (SNB having to do something with their pile of Euros). You mentioned earlier in the week that “the Gold” would be something to keep on the radar and we certainly saw a technical breakout in Silver today and Platinum last week. I would expect that the precious metals complex would obviously continue to firm if the market begins to price in a world of “unlimited ECB buying power.”

My question to you: if the ECB were to introduce some sort of rate cap policy for the periphery or something similarly dramatic, is this something that disapproving Bundesbank members and or German politicians could send to the German Constitutional Court for a vote of Approval or Denial? – wouldn’t granting the ECB unlimited unsterilized bond buying power be deemed by many as a breach of the original EU Treaties?

Thanks,
Zach