Posts Tagged ‘central banks’

Notes From Underground: The King of Hearts Searches for Sanity

September 15, 2019

The inmates are running the asylum as policy makers are busy putting out old prairie fires. The European Central Bank’s move on Thursday was a final curtain call for President Draghi as he sought to cement his legacy as the man that would do whatever it takes to “preserve the Euro” and would have no taboos in his efforts. But it seems like the opposition to both the rate cut and new QE was far greater than the magician of Frankfurt let on at his final obfuscation. It is amazing how the dissidents find their voice the day after. Oh well, so it goes in the world of consensus-driven outcomes.

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Notes From Underground: When a Slower Fool, Always Look on the Bright Side of Life

June 30, 2019

First things first: There were no surprises out of the G-20, at least for those who read Notes From Underground and listened to the discussion that took place in the Whitewave Trading room. The most significant outcome was that President Trump held off from installing additional tariffs while President Xi confirmed that China would be buying more U.S. production, especially in the agricultural sector. In Thursday’s podcast with the Whitewave participants I advised that with the current weather problems in the U.S. heartland the Chinese would have to be vigilant about the cost of global grain prices rising as supply was hampered by poor planting conditions.

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Notes From Underground: Prairie Fires On the Global Landscape

April 14, 2019

Let me put introduce areas of great concern that markets acknowledge but do not price for as they are too difficult to weigh. The Chinese/U.S. trade negotiations are simple relative to the potential impact from Turkey, Venezuela, Europe, and, of course the final decision on Brexit.

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Notes From Underground: Mario Draghi Brings New Forth a New Standard of Bureaucratic B.S.

October 23, 2016

The Mario Draghi brought forth a new and improved standard of “truth obfuscation” at Thursday’s ECB press conference. When Draghi answered a question about the ECB basing its policy on politics he answered: “We are not in a political game.” In his “perception” there is NO POLITICAL WAR BETWEEN THE ECB AND ITS MEMBER NATIONS. This is of course unadulterated nonsense as everything the ECB does is political. During the ECB’s initial state of decision-making, then-President Wim Duisenberg said, “WE HEAR BUT WE DO NOT LISTEN.” The ECB claimed it pays attention to political discussion but its policy is set by objective criteria. Duisenberg brought proof to the nonsense of objectivity as the ECB kept its interest rates ridiculously low to aid the Germans in their cost of financing German unification and making the implementation of the HARTZ IV labor restructuring easier to easier to absorb for the German government. Duisenberg’s policy of negative real yields put severe pressure on the EURO as it dropped in value from its initial price of 117.5 to 82.5 which created credit problems for all of Europe but the Germans. As usual, it raises the question,  WHOSE EURO IS IT?

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Notes From Underground: The Loudest Sound In the Universe Is a Habit Breaking

October 6, 2016

The markets have been in a lock-step since easy central banks have been pushing bond yields lower and equity prices higher. (Currencies are a mixed bag depending on safe haven status, high yields or commodity-tied.) The correlation is still in play as now previously profitable trades are hearing the clarion call of higher yields leading to lower precious metals, lower bond futures, some softening in commodity prices (oil excluded), a rally in the U.S. dollar and stable equity prices. Those shifting out of some long-held bonds are searching for returns in high quality stocks with a reasonable dividend. Earlier this week, global equity markets were sold as a ridiculous rumor ran through the markets that the ECB was contemplating tapering its QE program, a la the Bernanke Fed. Today, ECB Board member Vitor Constancio ( and vice president from Portugal) denied that the ECB had any inclination to curb its QE program. This led to an immediate rally in equity markets and brought the bond yields lower. Of course a Portuguese central banker on the ECB would be opposed to any tapering of QE as Portuguese 10-year note yields are at 3.51%, a significant premium to the other European sovereign debt markets (except Greece).

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Notes From Underground: Merkel’s Boner, Take Two

September 26, 2016

It seems that 108 years is enough time to pass to relive history. For those who are not sports fans, Merkle’s Boner is a famous mistake made by New York player Fred Merkel, who didn’t touch second base and was called out erasing the “fact” that the New York Giants had beaten the Chicago Cubs. The major GAFFE led to the Cubs beating the Giants and the CUBS moving to the World Series where they defeated the Detroit Tigers for their last World Series championship only 108 years ago.

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Notes From Underground: CNBC Santelli Exchange–Central Bankers’ Timing

April 17, 2016

Yra & Rick, April 15, 2016

Click on the image to watch me and Rick discuss central bank policy timing.

Notes From Underground: He Goes Running For the Shelter of His Mother’s Little Helper

February 28, 2016

(Larry Summers had to run to his medicine cabinet to take Prozac (not Diazepam as in the Rolling Stones song) after he read the G-20 communique. The finance ministers and central bank heads meeting in Shanghai failed to come to terms with any of the issues concerning the global economy. There was no PLAZA ACCORD and no  deep discussions about the need for massive fiscal stimulus. The tone of the Communique was TEPID at best and views the present state of the global economy as slow but steady. There was certainly NO URGENCY about a rise in the prospects of a global recession. The finance ministers downplayed the recent volatility and slide in global equity markets, suggesting by those domiciled in ivory towers and model-based rat holes that the MARKETS ARE MISTAKEN AND THE MODELS ARE CORRECT. The arguments among the participants was such that there were some issues that seem in direct contradiction of any policy response.

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Notes From Underground: Santelli Exchange — Central Banks Triggering More Problems?

February 16, 2016

CNBC's Santelli Exchange, Feb. 12, 2016

Click on the image to watch me and Rick discuss flawed central bank policy.

Notes From Underground: When I Have Something to Say Sir, I’M GOING TO SAY IT NOW (Phil Ochs)

February 3, 2016

The markets are in turmoil and it gets the mind to thinking: What could possibly have caused today’s reversal in the stock market and the long end of the BOND MARKET? The market seemed like it was on the edge of a complete risk capitulation. The dollar was dropping, bonds all over the world were in rally mode and the precious metals were finally finding some technical strength as the GOLD (in pure dollar terms) had finally rallied through its 200-day moving average. Even the SILVER was able to synchronize with the GOLD and break out of three months of resistance. (The silver 200-day is at 15.13, still a bit above its closing price.) The global stock markets were cascading lower as the Nikkei and German DAX took out their lows made the night of the BOJ’s surprise move to a three-tiered negative interest rate policy.

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