Posts Tagged ‘OMT’

Notes From Underground: We are IN the Marcusian ONE DIMENSIONAL World

June 20, 2016

It takes a BOURGEOIS APOLOGIST to point out the limitations of our thought processes. The current financial world is seen through the prism of BREXIT. Every nuance from the pollsters result in magnified market reactions. Last week’s political assassination of a sitting member of Parliament brought the political establishment to halt campaigning and caused a national contemplation as to where England was headed. The look into the British psyche, according to the “new” polls, has brought the voters to find favor in the status quo–exactly what Geoffrey Gundlach had predicted several weeks ago (SEE NOTES POST, IF I WAS A RICH MAN). Yra’s first law: Money is fascist and always seeks the highest return in a hoped for stable regime. Political assassination leans the ship of state toward the LEEWARD side, but there are three days left and many new polls to provide volatility to the markets. But I caution there are other events in the world that are of more than of a passing interest.


Notes From Underground: The Market Looks to Germany and Japan

February 9, 2014

Yes, the U.S. unemployment data grabbed the headlines on Friday as the non farm payroll headline number was lower than consensus again. More importantly, the revision to the very weak December payrolls of 74,000 jobs was only revised upwards by 1,000. Average hourly earnings and hours worked were also weak and after the initial drop in the stock indices, equity markets spent the entire day rallying. It seems weak data powers the equity markets’ understanding of the Fed’s forward guidance. Tapering is not tightening and the Fed will keep rates low for a very long time and let the 6.5% unemployment threshold be a mere “candle in the wind.” The Canadian data was better than expected but did substantiate Thursday’s strength in the IVEY PMI. The strong global equity markets were also supported by diminished fears from the emerging markets as investors have lost the sense of urgency to flee all EMs.


Notes From Underground: Dear Senate Republicans & Banking Committee, STFU

November 13, 2013

Ladies and Gentlemen of the Senate: Just put forward the candidacy of Janet Yellen by acclimation because it is a done deal. It cannot be stopped and so any posturing for the voters back home and any potential donors is a waste of time and energy. Also, don’t provide the idiot talking heads with any “red meat” to keep their empty heads talking. This afternoon’s release of Yellen’s testimony proves that Vice Chairwoman Yellen is a very intuitive politician. HERE IS THE MOST ASTUTE POLITICAL PIECE OF THE STATEMENT (in my opinion):


Notes From Underground: Will Europe’s Declining CPI Deflate Draghi’s Ego?

November 4, 2013

ECB 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: Carney and Dragihi Exhibit Extension Envy

July 4, 2013

In what seemed to be expected actions by central banks, the BOE and the ECB, the market was presented to a new twist on an old theme: Governor Mark Carney and President Mario Draghi both invoked the language of the Fed Chairman Bernanke and provided “extended period of time” into their policy statements. The ECB has shied away from any concept of locking itself into a future commitment strategy and upon Draghi reading the prepared statement at the press conference, the EURO immediately fell to 1.2920 from 1.3020. Ninety minutes earlier, the British pound was the object of derision as the BOE announced that the U.K. Exchequer had requested that the Monetary Policy Committee adopt some “… form of forward guidance including the possible use of intermediate thresholds. This analysis would have an important bearing on the Committee’s policy discussions in August.”


Notes From Underground: There Will Be No Independen​ce From the ECB or BOE

July 3, 2013

Ah, July 4 and the living is easy but the trading is difficult. The algo trading models make data releases perilous but the influence of geopolitical events results in more variables in motion, thus the yellow flag is waved and caution is advised. Brazil, Turkey and certainly Egypt are in crisis mode. The military has seemingly taken control of the Egyptian government and as I write it is uncertain as to what the response will be from the supporters of President Morsi. The markets will at first blush will support the imposition of military rule for Notes From Underground‘s first law is MONEY IS FASCIST, meaning it craves POLITICAL STABILITY as a prerequisite. (more…)

Notes From Underground: This Market Is a Tribute to Rudyard Kipling’s “IF”

June 25, 2013
“If you can keep your head when all about you
    Are losing theirs and blaming it on you”
The opening stanza of Kipling’s poem about British stoutness is not to say others are blaming but rather an admonition from Notes From Underground about keeping your wits about you and trying to make quality decisions in trying times. In a financial world that is steeped in excess leverage, nanoseconds and algorithmic trading programs ,being a fundamental/technical trader seeking relative value becomes a daunting task. I am not one who favors catching “falling pianos” and have been more content to let trades come to make rather than force the action. As the markets unwind leveraged trades that causes massive selling across all asset classes.

Notes From Underground: Double Play Combo; Hilsenrath to Harding to Bernanke

June 18, 2013

The media voices that have plagued the markets for the last few days will have to take their seats as the FOMC delivers its rate decision and then a half hour later Chairman Bernanke will read a prepared statement which the algos will have two seconds earlier and a Q&A will ensue. My first question is why will Hilsenrath and Harding be called on by Bernanke to ask their questions when they purportedly already know the full extent of FED policy. I look for Ben Bernanke to be very measured in his words for he has seen the damage a misplaced adjective or verb can have on the market. Will the FED “taper”? I don’t know but look for the chairman to entertain a few questions about removing part of the present QE project.


Notes From Underground: The Final Note on the German Constitutional Court

June 12, 2013

Some issues become tedious to discuss but importance is not diminished by the tedium. While the issue of OMT is extremely important for global financial markets, its significance is understated in the U.S.-centric financial press. The European press had two important pieces on the issue of the ECB and possible violation of German law. First, the Telegraph had a piece by Ambrose Evans-Pritchard, “Germany’s Brother Gladiators Battle Over Euro Destiny in Constitutional Court.” The title of the article reveals the importance of the issue as it will draw lines in Germany behind the two key issues represented by ECB Vice Chairman Jorg Asmussen and ECB Executive Board Member and Bundesbank President Jens Weidmann. The Weidmann argument is that the OMT PROGRAM “blurs the line between fiscal and monetary policy.” It is not the mandate of the ECB to bail out insolvent states. The argument for the Asmussen group is that the OMT program saved the breakup of the EU and safeguarded the monetary union. But that of course raises the question of what institution provides the financial backstop for safeguarding the EU?


Notes From Underground: Judgement Day is Tomorrow as Supplicants Approach the Bench

June 10, 2013

The German Constitutional Court is scheduled to hear the arguments in the issue of the constitutionality of the ECB providing unconditional funding for the bailouts of European sovereigns plagued with financial problems. The main issue really becomes this: Can the ECB consign German citizens to be the paymasters for the entire European project without their DIRECT CONSENT–or what the highly regarded Otmar Issing rightly called “taxation without representation” in an FT op-ed piece several months ago? Germany’s Constitutional Court sits in Karlsruhe and decides major issues of law impinging on the legality of the BASIC LAW. Previously, the court has held that the sovereignty of the people resides in the Bundestag but has warned that the transfer of German wealth and property to an outside foreign body has its limits without direct consent of the people. Where does the demands of the European Union conflict with the sovereignty of the citizens in determination of German rights?