Posts Tagged ‘Mario Draghi’

Notes From Underground: For The Sin Of …

October 7, 2019

Let me wish all those celebrating the Jewish New Year a Healthy and Happy New Year (and I wish the same for those who don’t celebrate the Jewish calendar). Tuesday night begins the Day of Atonement in which the individual is obligated to acknowledge any shortcomings, ask GOD for forgiveness and announce the desire to rise to a higher level in the coming year. There is a list of 44 sins confessed publicly, which covers the entire litany of transgressions the individual/community has most probably engaged in. (I’ve linked a list here.)

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Notes From Underground: Walking Through the Valley of the Shadow of Death

September 22, 2019

There is no question that the world’s central banks are all living under the shadow of doubt as investors and financial markets are questioning the efficacy of the zero lower bound. The sense of always doing more in an effort to attain a self-conjured 2% level of inflation has led to the continued downward slide in interest rates.

On this note, last week we saw the Powell Fed lower the target range for the fed funds rate by 25 basis points — and its interest on excess reserves rate by 30 basis points — as congestion in the financial plumbing sent overnight rates soaring. (For those who are interested in the nuances, I am linking to one of many splendid pieces from Bloomberg reporters Liz McCormick and Alexandra Harris detailing out the repo market mess.)

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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: The ECB and the Swan Song of Mario Draghi

September 10, 2019

We are coming to the end of Mario Draghi and the “Whatever It Takes” era. Remember, the head of the European Central Bank said he would do whatever it takes to preserve the EURO. This fealty to the currency has resulted in a -40 basis point deposit rate, a massive expansion of the ECB’s balance sheet via sovereign and corporate bond purchases.

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Notes From Underground: “Where Did I Find This Guy Jerome?”

September 8, 2019

Of all the U.S. president’s tweets (and believe he has a lot), Friday’s tweet about Federal Reserve Chairman was one of the best. Unfortunately, there probably should’ve been a comma between “guy” and “Jerome” since one could ask the question about any member of Trump’s economic team. President Trump could be asking the Fed chairman about Secretary Steven Mnuchin, or Commerce Secretary Wilbur Ross, and certainly of Larry Kudlow or Peter Navarro. NOTES FROM UNDERGROUND has been asking that for many months. In my opinion, the only Trump pick that inspires confidence is Robert Lighthizer.

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Notes From Underground: Woody Hayes’ Advice to Mario Draghi

September 4, 2019

Football season in the U.S. is just beginning. That said, it would be appropriate for President Mario Draghi to refrain from any type of new QE program or cut in interest rates at next week’s meeting. There have been several comments from ECB members during the past week advising against more QE or additional interest rate cuts.

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Notes From Underground: Bringing Europe to the Fore, Yet Again

August 20, 2019

Whenever I have an appearance on CNBC with Rick Santelli, Europe proves itself as critical to U.S. monetary policy. The past five years have led to dialogue that questions the efficacy of ECB policy and the slight of hand moves by President Mario Draghi. As BUND yields drag all sovereign debt yields even lower, the central bank is struggling to find policies that will keep LOWER FOR LONGER going. It seems that the last play in the book is to provoke Jerome Powell to abandon any NORMALIZATION of interest rate policy regardless of the economic data reported by the U.S.

(Click on the image to watch me and Rick discuss Europe and monetary policy.)

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Notes From Underground: The August of Our Discontent

August 7, 2019

When August rolls in the markets thin as Europe heads to the beaches and New Yorkers head to the Hamptons before Labor Day. This means every tweet President Trump is amplified by the LACK of market liquidity. On Wednesday, the president was back in full confrontation with Federal Reserve Chairman Jerome Powell because three central banks CUT interest rates last night: India,Thailand, and, most importantly, the Reserve Bank of New Zealand, which surprised most market analysts by cutting 50 basis points instead of 25.

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Notes From Underground: Unemployment Data? Frankly, I Don’t Give a Damn

August 1, 2019

Usually, when the first Friday of the month comes around my concern turns to nonfarm payrolls and average hourly earnings. But after the Powell press conference on Wednesday and Trump’s tariff tweets Thursday, my analysis is Gone With the Wind. As I discussed in the last few blog posts, Trump’s tweets on tariffs have cornered the Powell Fed as concerns arise over just how much global growth is going to be negatively impacted.

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Notes From Underground: Does Fear of Increased Tariffs Trump U.S. Data?

July 28, 2019

This is not a rhetorical question but a very direct concern about the leverage that President Trump has in dealings with Federal Reserve Chairman Jerome Powell.

After listening to European Central Bank President Mario Draghi’s press conference Thursday and then learning about the White House meeting about the possibility of currency intervention, I am wondering whether the president is using TARIFFS as leverage to satiate his desire for lower U.S. interest rates.

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