Posts Tagged ‘Mervyn King’

Notes From Underground: Three Negatives Can’t Make A Positive

July 9, 2012
Today in Europe the short-term BILL RATES in Germany, Netherlands and France all had NEGATIVE YIELDS. Think about the meaning of this: The hunger for quality sovereign paper has even driven the FRENCH SHORT RATES negative. (ABSURD as Jean-Claude Trichet might opine.) Again, QUANTITATIVE EASING and the FEAR of non-quality collateral has rendered the BOND MARKETS of the DEVELOPED ECONOMIES MEANINGLESS.
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Notes From Underground: Central Bank Poker–After the AUSSIES CHECKED, the BOE BET; the ECB CALLED

July 5, 2012
No great surprises from the mandarins of global finance. First, the BOE announced the widely anticipated 50 BILLION QUID increase in the QE program but Mervyn King and company did not cut the overnight lending rate. Following on the heels of the BOE, the ECB, under the guidance of Mario Draghi, cut the overnight rate by 25 basis points to 0.75% and also lowered the ECB deposit rate to zero from 0.25%. Again, no surprises, although the DEPOSIT RATE CUT WAS NOT WIDELY EXPECTED. Why did Draghi move to make the deposit rate ZERO?
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Notes From Underground: July 5TH PROVIDES THE FIREWORKS

July 5, 2012

Yesterday, the United States celebrated the victory of political freedom from the FISCAL TYRANNY of 18th century England. One day soon maybe we will be free from the financial REPRESSION of the FED … so sayeth the U.S. BOND MARKET.

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Notes From Underground: Draghi Takes Center Stage; Will Mervyn King Pump Up The Volume?

February 8, 2012

Tomorrow the BOE and ECB will release their interest rate intentions. The Bank of England is expected to keep the funding rate at 0.50% while moving to increase the ASSET PURCHASING FACILITY (QE BY ANY OTHER NAME) by another 50 BILLION POUNDS to a level of 325 BILLION STERLING. The recent speeches from the Monetary Policy Committee have had a DOVISH bias, prompting the consensus view for an increase in the QE program.

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Notes From Underground: They Loaded 275 Billion Pounds and What Did They Get?

October 6, 2011

(Another day older and deeper in debt.)

No surprises from the ECB as they held rates at 1.5% as Trichet ended his reign at the helm of European banking by paying homage to the FONZ: Never admit that you were wrong. The ECB did announce that it was extending its policy of providing liquidity to EUROZONE banks at extremely low rates for a period of 12 and 13 months in an effort to prevent any immediate bank run. Also, the ECB announced that it would buy up to 40 billion euro of covered bonds, but that should not be a big deal for covered bonds are the best collateral so many banks will probably not be running for funding posting the highest rated debt.

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Notes From Underground: Better Data Leads to More of the Same

October 3, 2011

Global equity markets were battered for another day as investor fears continued to outweigh any desire to add risk to portfolios. All U.S. data releases were better than expected and even auto sales proved to be a million more units above consensus on an annualized basis. The equity markets did try to rally but the attempt was short-lived and by market’s end the selloff was greater than 2.5%. Commodities were soft and the DOLLAR continued to rally on its haven status. The BOND market saw the impact of the “TWIST” as it is now October and the SOMA (SYSTEM OPEN MARKET ACCOUNT) began its work on affecting TREASURY DURATION.

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Notes From Underground: King Checks, Trichet raises but signals he is not necessarily a serial raiser

April 7, 2011

As expected, the Bank of England held rates at 50 basis points and the ECB moved to raise rates to 1.25 percent. BOE Governor KING does not hold news conferences post-announcement so we will have to wait to find out if the MONETARY POLICY COMMITTEE (MPC) voted 5-3-1 again. Also, with inflation in the U.K. above the targeted level, Mr.King will be writing another to the ECHEQUER to explain why the BOE kept rates at the present level and held back from raising as prescribed by its mandate.

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Notes From Underground: A new foreign exchange: Axel Weber to U of C and Bernanke to Cologne

March 8, 2011

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.”

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Notes From Underground: Inflation sets on the BRITISH empire

February 15, 2011

The inflation data released by the U.K. showed that CPI has increased to 4 percent. The largest price increase was in INK costs as Mervyn King had to pen another letter to the Chancellor of the Exchequer explaining the price increases maintained during the BOE’s inflation-mandated levels. King has placed himself in a difficult position as he has held rates steady in the face of rising inflation. Governor King’s stance is the same as Bernanke’s. The rise in prices are due to elements that the CENTRAL BANK cannot effect and the inflationary impact is acting as a drag on the consumer. Why ?

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Notes From Underground: Will the BOE see its Shadow and spring into raising rates?

February 9, 2011

Today, Ben Bernanke went before the new sheriffs in Washington and he maintained the importance of the FED‘s dual mandate. He let Paul Ryan and his comrades unequivocably know that the dual mandate will be fulfilled. Yes, Chairman Bernanke appeared to sign on to the desire of the Republicans’ “mandate” for fiscal rectitude but that is always to be expected from a FED chairman.

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