Posts Tagged ‘Mario Draghi’

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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Notes From Underground: It’s a Drag For Draghi Getting Old

July 24, 2019

On Thursday morning we will hear from the ECB about its desires to raise inflation to its self-imposed 2% target. But on Wednesday we received more tepid economic data from the EU. Then couple that with the ascent of Boris Johnson to the position of British Prime Minister. The rise of Boris Johnson is a problem for Draghi as the possibility of a HARD BREXIT increases dramatically. The market and its DAVOS media sycophants have sold the narrative of a hard Brexit as being devastating for the U.K. economy, the British GILTS, the British pound and the Footsie 100. President Draghi has to be careful that a severe rally in the EUR/GBP cross doesn’t damage the European exporters, especially Germany, who runs a 50 billion-plus surplus with Britain.

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Notes From Underground: Torn Between Two Lovers, Feelin’ Like A Fool

July 21, 2019

This Mary MacGregor ballad released in 1976 notes how a woman is torn between two men she loves and it is “breakin’ all the rules.” This is the situation Federal Reserve Chairman Jerome Powell and the FOMC finds itself: The love of its dual mandate and its torrid affair with the beloved Phillips Curve. Now it appears that the FED leadership is abandoning its affair with Phillips Curve while it grows more attached to its other love, Mario Draghi and the European Central Bank.

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Notes From Underground: ECB, Political Pawn?

July 4, 2019

Warning: There’s a great deal of colorful language in this very important discussion regarding the nomination of Christine Lagarde to the post of European Central Bank president. This is another political move by the EU elite to avoid placing a German at the helm of the ECB. Jens Weidmann may be a tough choice but Lagarde is preposterous, as Jean Claude Trichet might say. If you thought Mario Draghi was a politician and a dove by design, Lagarde will make Draghi look like a HAWK. In my opinion, IMF Director Lagarde has been and remains the ultimate politician. The role she played in the Greek bailout was pure politics and the price paid by the Greek citizenry has been steep. All in an effort to bailout many European financial institutions. Ask Yanis Varafoukis what he thinks of the Lagarde nomination.

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Notes From Underground: Draghi and Trump Are Putting Powell In a Difficult Position

June 18, 2019

On Tuesday asset classes around the world got a sharp boost when ECB President Draghi delivered the ultimate dovish speech from the annual conclave in Sintra, Portugal. The ECB has set up this annual meeting in an effort to mirror the Kansas City Fed gathering in Jackson Hole, Wyoming. What did Draghi discuss? The failure of Euorpean inflation to reach the self-imposed target of 2% set by the central bank.

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Notes From Underground: Just When It Couldn’t Get More Volatile

June 5, 2019

The above reference is from the wonderful cult movie, Putney’s Swope. The CEO of a major advertising firm has a heart attack during a board meeting and the sycophants don’t realize it as they continue peppering him with questions. When he’s unable to respond they ask, “How Many Syllables, Mario?”

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Notes From Underground: Draghi Is Waiting On a Sunny Day

April 10, 2019

President Mario Draghi’s press conference proceeded as expected as the European Central Bank laid out its plans for dealing with a slowing global economy suffering from the slings and arrows of president Trump’s trade war threats against the Chinese and now the Europeans. The ECB plans on keeping its interest rate policy intact through 2019 and probably longer as it confronts the recent headwinds to growth. The media asked several times about the possibility of tiering of rates in an effort to remove the adverse impact from the NEGATIVE DEPOSIT RATE FOR RESERVES PARKED AT THE ECB.

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Notes From Underground: Wednesday, 6:45 CST … Our Day Begins

April 9, 2019

There are so many issues plaguing Europe right now, and surprisingly, Brexit is not the most significant. On Wednesday morning — yes, Wednesday — the ECB announces its rate decision and it is expected that rates will remain unchanged,  with the main refinancing rate at zero. The only possible news will be that the ECB actually engages in a tiered financing. This would mean that some banks would get relief from the -0.40% rate that the ECB charges banks to deposit cash at the central bank. There have been rumors that the ECB was planning on raising interest rates in the hope that boost for some European domestic rates would help lift the equity valuations of some profit-stressed financial institutions.

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Notes From Underground: It’s a Drag Listening to Draghi Get Old

March 7, 2019

ECB President Mario Draghi’s press conference was, once again, another act of flim-flam as he PIVOTED away from any tightening for the next [FILL IN THE YEAR]. There was NO SURPRISE as the TLTRO was well telegraphed various news outlets in recent weeks. What’s amazing is that the currency markets were surprised by Draghi’s press conference as the U.S. DOLLAR staged a sizable rally, reaching its highest level in more than three months. The YEN was stronger as the weak stock markets provided a sense of Japanese repatriation of invested capital, while GOLD performed dismally.

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Notes From Underground: Mario Draghi’s Circus

January 24, 2019

The ECB did exactly as expected, which was less than its deposit rate (if that’s even possible). President Draghi answered questions for an hour and said absolutely nothing except that risks were now weighted to the downside. The structural theme of his composed narrative was the concept of persistence and assessment. Draghi laid the need for continued ECB monetary ease on many factors inhibiting growth:

  1. German auto production slowing;
  2. U.S.trade actions are creating greater uncertainty due to tariff threats;
  3. China slowdown; and
  4. Brexit

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