Wow! Wednesday’s market reaction to words not said was extraordinary. The LTRO went very much as expected and the selloff in the EURO was in step, but the reaction of the GOLD and SILVER to unspoken words was quite unusual. Many questions were raised as to the market reaction. The GOLD sell off is rational if the premier haven was elevated simply on the belief of further easing by the FED.
Posts Tagged ‘Axel Weber’
In reviewing past works and our coverage of Europe, we are RE-RELEASING some earlier pieces to reflect the merry-go-round of European policy making. Nothing like seeing the GHOSTS of CHRISTMAS PAST.
It has been the best of times. It has been the worst of times. President Sarkozy began the year with such high hopes and aspirations as he desired to raise his stature on the world stage. He won his early skirmishes against Chancellor Angela Merkel by first defeating Germany’s desire for Axel Weber to attain the ECB Presidency and then forcing the German Chancellor’s hand for a larger pool of capital for the European Financial Stability Facility. But the taste of victory has now faded as the FRENCH BOND MARKET is suffering under the weight of its deeply troubled banks and the GERMAN/FRENCH 10-YEAR BOND SPREAD CONTINUES TO WIDEN. France is deemed to be very vulnerable for its banks own so much EURO SOVEREIGN DEBT that of course is deemed to be riskless and require no haircut or capital to support it.
Notes From Underground: Was Obama at the G-20? Is Soros daft? Was the G-20 Communique was Drafted By the OWS Scribe?November 6, 2011
In President Obama’s G-20 press conference the mood was somewhat upbeat as he boasted that the economic powerhouses had made progress on the issues of economic growth. The President also was confident that Europe can meet it challenges as leaving Cannes, he felt that a “solid foundation has been built.” It seems that Obama failed to capture the real mood of the FAILED G-20 meeting as the Financial Times had two very morose articles about the G-20 and a solution on the European debt crisis.
It is time for the ECB president to leave the scene as he is losing the credibility that he has labored so hard to construct. Mr. Trichet delivered the widely expected phrase “STRONG VIGILANCE” in his post-ECB monetary policy press conference. The EURO made its high for the day on the utterance of the words “STRONG VIGILANCE” but sold off quickly as Trichet emphasized that the ECB does not signal a guarantee on future interest rates. The guardian of EURO monetary policy desired to keep the markets off-balance.
OK, some of it is reality. Axel Weber announced today that he will be teaching at the mecca of monetarism as he heads to the hallowed halls of the University of Chicago. If only Bernanke would head to the Bundesbank, the financial world would have a respite from the bubble blowers that have resided at the helm of the FED. The ECB‘s loss will be the U of C’s gain. As usual, Herr Weber is not going quietly as he was opining how the ECB would raise rates by 75 basis points before the year has ended. The French and Sarkozy are breathing easier as the hard-money German has been sent across the pond to resharpen his “TALONS.”
NOTES FROM UNDERGROUND has been banging on the table for Axel Weber to become the president of the ECB but my desires were dashed as Herr Weber resigned his presidency of the BUNDESBANK last week and announced that he wished not to be considered for the ECB job. Axel broke our hearts as he would have been the strong voice for the BAVARIAN BURGHERS. Alas, Axel did not enjoy being thrown under the bus by Chancellor Merkel to placate the French who were opposed to the ECB being run by a “hard money man.”
As I was inundated with the news out of the Middle East it was simple to recall the song by Gil Scott-Heron. The talking heads were mesmerized by their apparent influence in helping to spark the “PLAZA FIRE.” This is a nice kumbaya moment to believe that the Twitter generation can overcome autocratic rulers by messaging. However, I think it creates a great deal of danger for those with their bodies in the squares. I am a believer in the need to remove the sclerotic autocrats from power but Egypt was not one of those moments. The military that has run the political machinery in Egypt is still intact and pulling all the strings. It is certainly a feel-good moment for those involved but until real change occurs it is nothing more than rearranging the chairs.
As expected, the Bank of England held the overnight lending rate at 0.5 percent. The POUND held its ground and actually rallied against the other major currencies. The U.K. yield curve steepened a touch but basically rested as it has been very active of late–it widened out with the MPC acquiescing to the recent rise in CPI numbers. The markets will have to wait until February 23 to find out the breakdown of the nine-member panel voting record. In the U.S., the JOBLESS CLAIMS number was much better than expected as the number dropped to a two-and-a-half-year low. The credit markets were numb to this data point as it has been so volatile due to weather-related effects.