The ECB protest in 3 pictures
1) German citizen realizes that she paid 100.20 for a bond and that she'll only get 100 back in 5 years
2) Constancio tells her its 100.40 bid now
3) A multi-strat fund offers her a $500 million book because of her bond trading acumen
Farmer,
ReplyDeleteNice comments MM.
She is a looker so it makes the protest more enjoyable.
At the risk of being sexist with the amount of muffin top on show she should be more cognisant of other spreads :)
ReplyDeleteAnother image:
ReplyDeletehttp://ichef.bbci.co.uk/news/624/media/images/82338000/jpg/_82338748_026762812-1.jpg
Mario's reaction to receiving his impromptu table dance.
I can't be the only one who has a real sympathy for the protesters. Draghi in particular with his goddamn smirk as he steals from the savers and bails out the banks. I wish in the US we had less security and braver protesters to deliver a rotten tomato or a key lime pie to the face of Yellen as she pretends to be concerned about the working class. I don't want to see them hurt, but taken down a notch. There is no representation, no accountability, just an expectation that the people are supposed to trust and lick the boots of our CB overlords.
ReplyDeleteWill get off my soapbox now.
Draghi's jumpy facial expression was priceless we are truly led by ballsy, brave men
ReplyDelete1) "Mein Liebchen, I have told you before. NO LAP DANCES while I am at work! Prego!"
ReplyDelete2) "Yes! Pull my hair, fascist! Is it in yet?"
3) "Gott im Himmel! She's heavier than Lagarde!"
In a few centuries, people will marvel at the annual Rite of Tax Day, wherein Wealth is upwardly distributed from the Middle Class, who are
ReplyDeletepaying 40-50% overall tax rates (NY, CT, hellooooo), to the needy,
downtrodden and ever-deserving Ultra Rich, who pay anywhere between
0-15%. Why should any taxpayer work harder - just so we can send more
money to Steve Schwartzman, Warren Buffett and the Koch brothers?
Louis XIV must be smiling from his place next to the eternal fires....
Only in America...
In other news, Marc Chandler beat me to it with a really quite good
synopsis of the Summers Secular Stagnation debate. The cure, if there
is to be one, is to apply fiscal stimulus on much-needed improvements
to the US 4th world infrastructure (looking at you, Metro North), and
combine that with measures that will stimulate aggregate demand. Marc
points to unions and wages, but if it was me I'd start with the tax
code. Here's the post:
Aggregate Demand and Secular Stagnation
Don't hold your breath on anything progressive happening in the US,
though, it will take major social upheaval, and absolutely nothing will happen until we are well into pitchfork territory.
While you all talk gibberish, the Fed is once again selling USD in the FX market. EURUSD up +80 pips in 30 mins on no news. All USD pairs crashing.
ReplyDeletePeople, wake up, CURRENCY WARS are happening.
Fed dumping USD in the market...
ReplyDeletehttps://twitter.com/nanexllc/status/588392629156577280
It's certainly a good day for many of the assets gathered in LB's unpatriotic Anti-Dollar Portfolio. Look at RSX, GDX, and the European oil stocks like STO and TOT are all going parabolic at last...
ReplyDeleteFrench 5yr notes are at negative yield now
ReplyDeleteBa1 ( as in junk rated ) Portugal 2yr sovereigns just went to negative yield
Great ST call on those things LB - I am getting out of all of my energy/EM length today - its one thing to stare at a beautiful turd for 2 minutes in the morning, quite another to start displaying it on your coffee table as objet d'art!
ReplyDeleteLB likes the European energy sector a lot, as outright deflation was being priced in not long ago. He still doesn't fancy US energy stocks at all, in fact we may see renewed weakness in those names and in $wti. The charts for Brent are much more constructive, and we think we will probably see the $wti-Brent spread expanding again going forward, especially as we see more extended bouts of dollar aversion as US macro remains weak going into this summer.
ReplyDelete“What’s very concerning to me is that Mario Draghi as ECB president is not actually serving the societies, but imposing rules on them -- without ever being elected. This press conference is the little, little bit of democracy that the ECB gave us. I used this opportunity to express my criticism.”
ReplyDelete-- Josephine Witt, the activist that disrupted ECB President Mario Draghi’s press conference in Frankfurt.
@ Mr. T,
ReplyDeleteAs bad as the CB folks have been, isn't it probably more fair to criticize all the politicians screaming about "austerity"? I'm thinking about LB's angle re infrastructure. Bernanke spoke to Congress over and over about the need for some fiscal action, and they totally ignored it because BENGHAZI or some damn thing. As for the UK politicians -- I don't know what their problem is exactly. The EU folks seem to be hung up on the idea that economics should be a morality play, and hamstrung by a fundamentally flawed currency structure.
- Whammer
Josephine Witt is FEMEN = ?
ReplyDelete:)
saddest thing is that outside ECB tower would have to be millions of people to protest.
ReplyDeletepurchasing power of traditional savers and people living of their wages has collapsed.. at least an entire generation will admire a big number of Porsche and Range Rover bought by asset keepers during this crazy times.
30yr GE govies at 52 bps..no words to add
Read this: KURODA argues (off record) with ABE about JGBs:
ReplyDeletehttp://asia.nikkei.com/Politics-Economy/Economy/BOJ-s-Kuroda-warns-Abe-about-bond-rules
I would
ReplyDeleteI suppose none of those savers are experiencng the benefit of a fully funded pension. Imagine the state of affairs on corp balance sheets of massive underfunded liabilities or workers who were promised benefits that don't receive them because those 7% return objectives aren't met.
ReplyDeleteI don't endorse qe either, but I've yet to hear a viable alternative.
It also occurred to me that one thing you don't hear much about is QEs impact on labor - with capital so cheap it's easier for corps to build an automated factories to supplant factory workers than it would be under normal conditions. So the longer ZIRP remains the policy of choice, the harder it is for workers to compete with capital for jobs.
ReplyDeleteWe all know that this whole fantasy is designed to increase net worth via weath effect etc etc so why be so deceptive about it - buying bonds to reduce rates, why not go whole hog and just load your balance sheet up with spoos, at least then you're not distorting rates and credit to the same extent. Sure it would create a bubble, but the problem with bubbles is leverage and equity capital is supposed to be at risk.
One can only assume they are either blinded by intuectualism or hell bent on creating an even bigger mess than they protend to be cleaning up.
My favorite European oil company is SBRCY
ReplyDeleteI've gone off Draghi. He s like the goodie turned baddie. There is no bond shortage. There is no bond bubble as there is no leveraged long. Errr. Take a look in your back pocket matey. We INTEND to but throughout. I think the UK should sell it's shares in the ECB.. yes it's a major shareholder.
ReplyDeleteNemo mines been Tullow. But done so much over last few days i might make that switch.
Sry but= buy
ReplyDeleteSBRCY is Sberbank, not an oil company, at least it's not directly one, but I agree with Nemo. We like this one too, have done since the depths of the irrational dumping of all things Russian. The dividend, and the improving RUBUSD exchange rate all make this look a good buy, still early for the Ruski rally.
ReplyDeleteChina markets up another 2.5% or so after the break. Has me wondering if there is something different about China - what if trickle down works differently there? Maybe I have underestimated the amount of real fiscal stimulus available there, the amount of political capital available, compared to the political problems in the west. I have never made any money in China - and it's not because I have not tried, but perhaps some of the beaten down Western commodity producers have some decent optionality to China? US coal seems a bit ballsy but perhaps a BHP/VALE or even a CLF/FCX? Everyone on the street has price decks for industrial commodities going nowhere but down until half the companies are down - does not seem like a horrible bet.
ReplyDeleteHopefully the West becomes like China - even their: communism, stock market bubbles & corruption are nothing compared to ours.
ReplyDeleteTalking of cronyism and corruption, did you hear that Ben is now working for the HFT boys? Maybe he'll tell them how best to spoof the Spoos to keep the Ponzi scheme going...
it's ok if you don't get the sector right Nemo such details don't matter one bit in Russia where chasing 'value' is metaphysical at best
ReplyDeleteI am sure Nemo knows which sector is which and was making a point re its dependence on oil price and oil interests.
ReplyDeleteThank you, Polemic. Not really European, not really an oil company... But only half joking. Or trying to, anyway.
ReplyDeleteAn Old Classic that might just have some relevance today.
ReplyDeleteMr T, August 2000?
ReplyDeleteToday's "pitchforks and torches" update: http://nypost.com/2015/04/15/parents-are-paying-150000-to-tour-colleges-in-private-jets/
ReplyDelete- Whammer
http://www.businessinsider.com/us-corporate-bankruptcies-are-on-the-rise-2015-4
ReplyDelete"Will Draghi eventually roll craps and buy bonds with negative yield?"
ReplyDeleteApparently not.
ECB Hansson: ECB may extend QE to state-owned corporation debt --BBG
Pimco's Ivascyn is unfazed by sub-zero yields. "No lower limit" on yields
ReplyDeleteWe are all "unfazed".
FunnyMoney nails it yet again...
ReplyDeleteWSJ’s Hilsenrath: Fed Shies Away From June Rate Hike http://stks.co/g28R4
Lew berated Japan today. Gave them a real birch slap . Says they are punks and they are not doing enough...
ReplyDeletehttps://sg.finance.yahoo.com/news/lew-urged-japan-tools-help-213258979.html
Listen to me!!!!
ReplyDelete"China stocks will double from here. Chinese investors have $19.5 trillion in bank deposits, or 2.5x total market cap. PBoC cutting rates."
https://twitter.com/ReformedBroker/status/588711017183576064
When Hilsenrath writes that the sun is forecast to rise in the east tomorrow, will you claim credit for that one too?
ReplyDeletehttp://en.wikipedia.org/wiki/Saint-Gaudens_double_eagle#/media/File:1908_Saint-Gaudens_double_eagle_no_motto_obverse.jpg
ReplyDelete1) Fuerchtenichts, sie ist die Gesichte der Freiheit;
2) Youth and Freedom are more fun than old men and money;
3) What would you give to be poor and have a wench like me on the arm?
Anon @1:43AM
ReplyDelete"Direxion Investments announced today that it has launched the first 2x leveraged ETF tied to China A-shares. The Daily CSI 300 China A Share Bull 2x Shares (Ticker: CHAU) seeks daily investment results, before fees and expenses, of 200% of the performance of the CSI 300 Index, which consists of 300 market-capitalization-weighted China A-share stocks."
Oil move to comment ratio appears v low.
ReplyDeleteDeflationary impact fast being unwound.
To put it in juvenile fashion... gao xiao de qian is a phag
ReplyDelete@MM - Definitely! It's far easier than trying to correctly call moves in the markets (especially when I close my Spoos positions 30 handles too early :)
ReplyDeleteMM, USA stock market will never be trusted again for its data releases. Ever.The officialdom can put an appearance of having strict officials in place but having expirenced the brutal pullbacks in this QE market I dont care who you are what desk you sit on in the US..I just dont believe the research teams on the desks over there anymore. I've moved on into sport HFs..no risk means no regrets.
ReplyDeleteMay I add, that the only reason US officials seem interested at these low levels after having been noticeably absent is b/c god forbid punters may actually realise that in the US current bubble the risk of association is not returned in any way whats so ever...no one could come to that conclusion...
ReplyDeleteDax just crashed -250pts, Nasdaq -200 ticks on no news. USD also getting pummeled. Let's pray we get a -2000 point flash crash to wipe out every equity bull... here's hoping.
ReplyDeletemein gott
ReplyDeleteclassic expiration money on the table to be had.
https://www.youtube.com/watch?v=YGvtq2PwjoI
Buffalo Buffalo
there is a very precise technical reason why Dax crashed and all the folks who have been playing this market blindly on the way up will understand why this indice is Europe's widow maker. Eurex futures are not for CNBC and sell side analysis aficionados but Dax has been the vehicle of choice to play Europe. With so much leverage in play you can some April dominos
ReplyDeleteNico is a fade
ReplyDeleteI think MM caught 'the mood' exactly for Europe/Dax.
ReplyDeleteThe Fed will shift on muni bond -- will propose including them in new bank funding rule....
ReplyDeletehttp://www.wsj.com/articles/fed-is-expected-to-shift-on-muni-bonds-1429232200
Sure, let's get Chicago and Puerto Rico bondholders off the hook and dump them on the federally insured banks
So greece is gonna get kicked out.
ReplyDeleteWhen can i load up on Stoxx? 7% pull back? Agreed Nico, Dax is not for the faint of heart. Using past QE examples, the nice clean trending part doesnt come right away. Volatility is expected but keep in mind the long term picture. buy the dips
I cant figure out Spoos. Also i have no idea about HK. some say its a game changer
abee - yes been waiting for something like this to inaugurate length in fez or vgk - that trade has been so consensus tho that I doubt anyone is short europe at this point - 7-10% off the highs would be 50% retrace for the post QE rally so I guess I am with you there.
ReplyDeleteReally not sure what spoos want to do, but vol still seems very cheap for the kind of moves we could be seeing in the next few weeks/months.
LOL with all this "crash" nonsense. Look beyond a daily chart, ladies.
ReplyDeleteEurope - buy the dips.
ReplyDeleteSpoos - sell the rips.
That's All Folks™.
OpEx days/weeks usually feature the shorts being slowly eviscerated. When that doesn't happen, there is often some follow-through selling on the Monday.
When will the prolonged Grexit/Grefault/Grextension pantomime season conclude? It's hard to see an end to the negative interest rate regime in Europe until Schäuble is bound and gagged in the Reichstag somewhere. Come on, Mangler, get a grip.
If the EU have enough to survive Greece leaving the EU they certainly have enough to restructure Greek debt. If EU have enough money to buy 60bio a month in QE they have enough to bail out Greece.
ReplyDeleteThere is a lot of hypocrisy based on assumptions of debt to GDP ratios.
I go one stage further and say that this is another crisis caused by pegging to the wrong benchmarks. As we know, most benchmarks are bollocks.
Pol,
ReplyDeleteSo you would not differentiate between funding QE that is spread proportionately across the EU zone and the option of wiping the debt of a specific country? I'd rethink the logic from a politicians viewpoint and perhaps from the viewpoint of the tax payers of the zone and how it could be sold to them.
Fresh printed money doesn't touch the tax payer. But as for proportional response for other countries.. do them too!
ReplyDelete"Fresh printed money doesn't touch the tax payer"
ReplyDeleteIt does unless you have reinvented the concept of double entry book keeping.
Ok.. whatever. But separate question spinning off that though. If it s all double entry book keeping where does counterfeited money hit the double entry book keeping books?
ReplyDeletethis will be my last post here, for the sake of finishing a mission: you guys continue to completely underestimate the Greek issue and its repercussions
ReplyDeleteGreece will set a precedent in Europe. Good luck to those who buy the dips because what? 45% bounce in Dax was not enough for you?
or were you just too late and hoping to be let in at a discount. The repricing of Europe HAS been done. Good luck if you insist on crashing a party here, that everyone is leaving
just mind the tape, caution, caution, CAUTION, fade caution at your own risk.
"Only about 8% of the bailout funds Athens is now on the hook for, actually went to Greece; the other 92% was used to save major European and American banks."
ReplyDelete"While at first sight German national debt is a ‘mere’ 70% of GDP, add the promises it has made to its banks, and the number comes in at a horrific 222%. Not far behind comes the Netherlands with a similar ‘official’ national debt at 73% of GDP. But the contingent liabilities are 115%, making a pretty nasty mountain of 188%.
ReplyDeleteThe Number One and Number Two top contingent liability millstones in the EU are – by miles – Germany and the Netherlands. Now let me see … who are the two chaps working hardest to stop the Greeks and their contagious banks from going their own way? Why, none other than German finance minister Schäuble and Dutch finance minister Dijsselbloem. The third prong of Troika2 is of course the ECB’s Italian Mario Draghi. Without any contingencies at all, Italy’s national debt is 132% of GDP. Add its 45% of contingents, and this too adds up to 178% of GDP."
"When the Grexit happens, it will be on a weekend. The banks will be closed, parliament will be called into emergency session, and a packet of laws will be passed. And this needs to be on a Saturday to avoid wholesale capital flight the moment that parliament is called into session, were it a weekday. This leaves only a few possible dates. May 2nd is too soon, and the 16th is too late. That leaves May 9th."
ReplyDelete"They’ve made the April payment, but simply do not have the money for the May or June payments."
Nico - regarding the 'greek issue', I am actually intrigued by whether this market is
ReplyDelete1) thinking this is the usual fun and games and posturing to result in basically nothing (fairly confident that's Left's view), or
2) thinking so what if it happens, some small portfolios here and there might blow up, but when someone like warren buffett actually advocates an exit how on earth could it be that bad, or
3) thinking that if it happened and was indeed temporarily bad, it will panic CB's into doing a monumental hail mary where they will send the gestapo to your doorstep with a briefcase full of cash and force you to buy equities whether you like it or not (fairly confident that is Funnymoney's view) or
4) Not thinking at all, and we are stepping into a twilight zone with major faults where a couple of chipmunks in Tanzania may shake a berry tree and set off a set of events that results in a global risk off bloodbath
I wonder, I wonder...
As of February 2015:
ReplyDelete-€53 bln bilateral loans
-€142 bln EFSF loans
-€27 bln ECB loans
Based on that I'd say that the path of least political resistance would be to keep the can going as if all those get wiped out it would just be a, multiple times larger political disaster that no politician with half-a-brain would want to ever voluntarily encounter. Not to mention the boat loads of Eurocrats who should be terrified right now for their own sake, jobs and future benefits and do everything they can to keep the can going as well.
If I'm wrong anyway I just can't see anything net positive happening from the (broken record warning) --exit for either EZ or her trade partners. Certainly it's important to understand that it won't fix anything and it is going to be a choice which will have to be made again in the future as well. And next time they will be the real heavyweight components which are going to be final knockout (Spain, Italy, France, Portugal...).
Happy clappy yields and QE will limit the contagion short term but it's just a jack in the box waiting for another opportunity. In fact low yields are probably the only thing that's holding this thing together as there is no political coherency to speak of, which should have btw actually been preceding everything else, certainly the monetary union. In that context I find it very odd and hypocritical to exclude Greece from the QE party because there are boat loads of countries which are really not that different in terms of "morality" and spending habits, given the opportunity.
Personally I think Eurocrats and national politicians have the weaker hand, and will not be willing to play Russian roulette and will muster up something to kick the can. If I'm wrong then mercy on my soul as it's going to be a bloodbath, otherwise just cage rattling.
Now probably the biggest challenge is to decide whether you are over or under estimating these guys who "should" have quite a lot of reasons to be worried.
But, based on the rally in EUR, it seems that fx traders are betting they are just going to kick the can again.
ReplyDelete@washedup 8:02
ReplyDeleteRe: 3) Correct :)
DX kissed 97 this morning at 6am EDT, which is the 50 day average, any
ReplyDeletebreak below that and we are in a whole new FX ball game, ladies and
gentlemen. The obvious trigger for such FX regime change would be some
form of Grextension compromise leading to a screaming squeeze in EURUSD.
With German 10s now at 8 bps, one does really feel that the Greek
Panto has become extremely tiresome and it's time to bring the curtain
down so that punters can stop doing really rather silly things and a
measure of sanity can return to capital markets. In terms of the above discussion, it's clear where Funny Money and I come down. It's far cheaper to kick the can, Germany can do it with pocket change, than to risk a Grexit that might open the Pandora's Box of potential Porxit, Spaxit and so on...
End the madness, Wolfgang. Go back to Offenburg and retire....
"When the Grexit happens, it will be on a weekend."
ReplyDeleteNever happen. They don't "work" weekends and besides, the hookers and limo drivers are off on weekends.
Weidmann spits in Lew's face...
ReplyDelete“It would be absurd to discuss whether German competitiveness should be reduced to narrow the current-account surplus,” Bundesbank President Jens Weidmann said in Washington on Friday.
What has Lew all fired up lately? First Japan and now Germany?
lew-ser, fired from citi!
ReplyDeleteEurope has chosen bazooka draghi as the savior of their problems. Who knows if it works as perfectly as it did in the US ( according to Dalio at least ). If ECb can buy Greek bonds the problem is solved, if not we find out very soon. There is no leadership in Europe. Yes it sends a bad precedent for sometime in the future when another anarchist party gets elected, but probably not near term ( so I hear in Spain ).
ReplyDeleteThere is a tail risk when Greece goes. But it can't be a total surprise to anyone. ( though I sorta thought the same thing about Lehman ). Any smart Greek money should have a contingency plan already made.
Yes QE has made the euro trade very crowded but they also have no way out of it. They are gonna keep rates negative until it gets better or the expirment blows up. So unless it blows up, the only game is to buy risk assets.
And if Europe really blows up, sell everything. Maybe even SHCOMP, which is rallying bc China is reforming and ppl are front running index funds who will be forced to buy...though this is happening when estimates are falling and the economy is slowing. Now that's a casino.
Beautiful delegergaing, sorry.
ReplyDeleteAnd how does QE hit the public balance sheet, checkmate? Except the small amount of interest that is earned on holdngs and distributed to national central banks , which I guess can then go to the treasury. Otherwise I thought ECb just buys assets and creates deposits out of thin air. That's the other entry.
"Ok.. whatever"
ReplyDeleteThat's what I say when I don't want the discussion for whatever reason. Fair enough ,but tin that case I'll just leave you and I think Abee to work it out for yourself I'm not here to take shit from anyone any time.
I'll join Nico.
Checkmate.
ReplyDeleteCorrect. There were many reasons I didn't want the debate ..primarily it was friday night and I was going out and preferred that option to embarking on a huge debate. Have fun.
I believe the old saying applies to Greece. If you owe the bank a $1000 you've got a problem, if you owe the bank $1,000,000 they've got a problem.
ReplyDeleteI don't see the advantage of Greece exiting on it's own.
The write downs will just need to be sufficient to allow current income to support remaining debt.
Now is the current volatility all post expiration or are other stresses being priced in.
Here is a great chart roll of some resent market action
The Daily Shot; April 18, 2015: Global Macro Currents: http://eepurl.com/bkfs3v.
The . at the end of the address is a problem, try this.
ReplyDeletehttp://eepurl.com/bkfs3v
"I thought ECb just buys assets and creates deposits out of thin air."
ReplyDelete...creates deposit out of thin air.
Chinese equities go parabolic and you cut RR by 100bps...the underlying economies are in the gutter.
ReplyDeleteEdit - create deposit LIABILITIES out of thin air.
ReplyDeleteuh - oh - china RR cut - time to cook bear meat again!
ReplyDeleteNotwithstanding the imminent rally in global equities on this news , I have to say that collectively, CB's (especially PBoC and BoJ) have increasingly been coming off less like Optimus Prime, and more like chicken little would look if he tried to cure his meth hangover with an overdose of ex.
Needless to say, that is a very long range signal, but ultimately CBs losing the plot and their credibility in the process is a bigger threat to equities than earnings recession, GDP contraction, interest rate increases, and world war III combined!
This move by the PBoC just further highlights what we've previously said: the major CBs are becoming increasingly desperate.
ReplyDeleteI agree with washedup: more bid in equities. This is not going to end well at all.
So Janet, you're at a poker table. You have a large number of chips to be sure, and now you threaten to raise (rates). Be careful, or someone will call you - and I, FunnyMoney, predict that you will be found wanting.
The German yield curve is now flat at just above zero from overnight to 10-year....
ReplyDeleteDoes anyone see this as a problem?
whats the problem? it isn't negative yet - I see further upside..
ReplyDelete