The markets are playing with ECB President Mario Draghi. Just a few short weeks ago the suave performer of the ECB press conference only had to be concerned about being doused with paper confetti from an anarchist demonstrator decrying the dictatorial powers of the central bank. Post-ECB meeting, the BUNDS, OATS and BTPs made all-time highs in the futures and yields on German and French 10-year notes touched extreme lows. As the ECB paraded the success of QE the EURO currency was also trading at multi-year lows, 1.06 euros to the U.S. dollar.
Posts Tagged ‘liquidity’
Notes From Underground: The Alfred E. Neuman Equity Markets, “What, Me Worry?”
July 20, 2014
Alfred E. Neuman, the beloved character of Mad Magazine, was famous for his deadpan look while espousing the philosophy, “What, Me Worry?”
While the world has certainly entered the madness zone, the world’s equity markets remain in bull mode, floating on a sea of central-bank provided liquidity. Russian support and arming of “rebel” groups results in the downing of a commercial airliner … no problem. An Israeli invasion of Gaza to thwart the nihilistic behavior of Hamas, and the markets shrug and offer up a bland response of, “whatever.”
Notes From Underground: Will Europe’s Declining CPI Deflate Draghi’s Ego?
November 4, 2013ECB President Mario Draghi has been able to convince the world that the Euro’s problems have been contained and it is safe to re-enter the financial pool of credit assets throughout Europe. The July 2012 speech that proclaimed the ECB had no taboos and would “do whatever it takes” to preserve the euro has been a masterpiece of doing nothing while generating the desired outcome. The master plumber of all things credit (JA) alerted me to the ECB’s balance sheet (as seen on the Bloomberg terminal). After Mario Draghi pledged to offer the Outright Monetary Transactions (OMT) to any European country that contracted with the ESM or EFSF for help, the sovereign debt markets in Europe have quieted and yield spreads returned to a sense of normalcy. Many people believed that the euro currency would suffer from Draghi’s promise of massive liquidity to meet funding needs. The EURO shorts were wrong and the proof lies in the three charts I am providing.
Notes From Underground: It’s Raining Liquidity All Over the World
September 9, 2012Friday’s unemployment report solidified the TRIFECTA of LIQUIDITY for the week. ECB President Draghi seeded the “liquidity clouds” at Thursday’s press conference by announcing the installation of the OTM (outright monetary transaction), which will allow the ECB/ESM to purchase unlimited amounts of sovereign debt of up to three-year duration–of course with conditions for those asking for help. Draghi is hoping to buy the whole EU project enough time so that a FISCAL UNION CAN BE FORMED WITH THE ABILITY FOR THE EU TO ISSUE A TRUE EUROBOND.