Posts Tagged ‘PIMCO’

Notes From Underground: The Market Remains a Tribute to the Balance Sheet Recession (KOO KOO K’KOO)

December 10, 2013
Janet Yellen as her first meeting as Chairwoman:

I am he as you are he as you are me and we are all together

See how they run like pigs from a gun,see how they fly

I’ m Crying


Notes From Underground: ECB’s Mario Draghi Cuts Rates and Sends Global Markets A “Twitter”

November 10, 2013

Catching up: As the world knows, the ECB cut the overnight rate 25 basis points to 0.25%. The cut was more symbolic than substantial for the “recent” threat of a deflationary spiral will require more action than a mere drop in rates. The front month EURIBOR contract gained just two and a half points showing the cut in rates was certainly anticipated–DECEMBER EURIBOR rose to 0.99790 from 0.99765. The more important part was the symbolic nature of Draghi defying Bundesbank chieftain Jens Weidmann. Now that the German elections are over Mario Draghi wants to let the world know that he is in charge of the ECB board and will not be intimidated by the giant shadow cast by the Bundesbank, which is also headquartered in Frankfurt.


Notes From Underground: Volcker Finds His Voice

June 4, 2013

Ex-FED Chairman Paul Volcker delivered a speech on May 29, which served as a “shofar” blast, warning the FED and its governors to be cautious in possibly undermining the credibility that all central bankers strive to maintain. Mr. Volcker does not doubt the intelligence of Chairman Bernanke  but what he worries about “… is a matter of good judgment, leadership and institutional backbone” (READ THAT AGAIN). “A willingness to act with conviction in the face of predictable political opposition and substantive debate is, as always a requisite part of a central bank’s DNA.” Now, knee-jerk FED supporters (insert name here) will maintain that is what Bernanke did in presenting QE1, QE2 and QE3–but he certainly had the support of a democrat-controlled HOUSE and SENATE in 2010. Also, the White House was a fervent supporter of massive monetary stimulus as he helped keep the economy from sliding into a chaotic state of asset liquidation. The FED may have suffered the barbs of some “tea party” legislators but for the most part the major powers in Washington and Wall Street provided the needed support for the FED.


Notes From Underground: Bill Gross Goes Biblical … Sort Of

April 5, 2012

In a comment directed toward the European peripherals, Pimco’s Bill Gross said that Greece was a zit, Portugal a boil, and Spain a tumor. Readers of NOTES FROM UNDERGROUND know that Spain has been on the radar for a long time. The growth numbers or lack of growth, rather, hampered by severe austerity budgets have generated ADVERSE FEEDBACK LOOPS that have rendered all economic projections null and void. When austerity bites, all growth forecasts are cast asunder. Staying with Gross’s almost biblical references, I suggest looking at Europe though the lens of the TEN PLAGUES.


Notes From Underground: DSK Spoke in Beijing and Now His Black Book Has Replaced Mao’s Redbook

December 19, 2011

Dominique Strauss-Kahn delivered a speech today in Beijing, lambasting the leadership of Europe for its “state of denial” about the severity of the credit crisis. It seems that an angry DSK is speaking his mind now that he has no official capacity and can lash out at European leaders. The former IMF managing director was well received by his Chinese hosts who showed their appreciation for all the work DSK did to elevate the status of the Chinese in the IMF.


Notes From Underground: Sarkozy Has Overplayed a Bad Hand and It Has Cost Europe

November 16, 2011

It has been the best of times. It has been the worst of times. President Sarkozy began the year with such high hopes and aspirations as he desired to raise his stature on the world stage. He won his early skirmishes against Chancellor Angela Merkel by first defeating Germany’s desire for Axel Weber to attain the ECB Presidency and then forcing the German Chancellor’s hand for a larger pool of capital for the European Financial Stability Facility. But the taste of victory has now faded as the FRENCH BOND MARKET is suffering under the weight of its deeply troubled banks and the GERMAN/FRENCH  10-YEAR BOND SPREAD CONTINUES TO WIDEN. France is deemed to be very vulnerable for its banks own so much EURO SOVEREIGN DEBT that of course is deemed to be riskless and require no haircut or capital to support it.



July 24, 2011

Last week, the Eurocrats tried to persuade the markets that it has gathered the strength to deal with the DEBT CRISIS IN earnest. But even with three days to analyze and digest the statements it is still not clear as to how the actual bailout will work. The ultimate question: Who will guarantee all the good credit being established that will allow the EFSF to do its job to insure the markets against sovereign default??


Notes From Underground: The ECB and BOE Meet Tomorrow and the Market Expects No Change

May 4, 2011

The market’s attention turns to the ECB and BOE rate decisions. Any rate change would be a surprise as the U.K.‘s data has been weak of late as the austerity budget is beginning to be a drag on the British economy. The policy makers in England are content to let rates stay on hold as it helps to weaken the POUND against the EURO. It will be more interesting to hear from the ECB through Trichet to see if the Europeans are content with the present inflation situation, especially as the EURO has made new highs for the last 18 months. The recent strength of the EURO is a problem for the debt-stressed countries and with the U.S. on hold for an “extended period” any move by the ECB would put more upward pressure on the EURO currency. Let’s see if Trichet surprises us by discussing the recent strength of the EURO. The post-meeting press conference will be waiting to hear if Trichet loses the vigilant language.


Notes From Underground: The Budget Circus is Away; Now the FED Hawks and Doves Have Their Say

April 10, 2011
Is there any level-headed individual outside the talking heads in the media who didn’t think a “compromise” would be made in the 2011 budget. The details don’t even matter for the outcome was never in doubt and the impact for the markets is less than marginal.

Notes From Underground: Orwell that ends well with Mervyn King and the Bank of England

January 26, 2011

Two central banks issued their statements on interest rate policy. First, the FED STAID the course and left QE2 as it was/is and the language of the FOMC statement was almost verbatim from the December meeting. I am greatly bothered by the second paragraph again and the emphasis on “CONSISTENT WITH ITS STATUTORY MANDATE” (emphasis mine). The FED continues to hide behind the legislative directive of price stability and maximum employment. The FED reiterated that price pressures were negligible but that unemployment is elevated. So for all those in Congress, stop complaining for the Bernanke group is merely fulfilling its legal obligations.