• Tag Archives Mario Draghi
  • Trader: Investors Should Ignore Payrolls, Focus On Europe

    In his latest Macro View, Bloomberg reporter and macro commentator, David Finnerty, explains why investors are better off ignoring today’s payrolls report – where “any weakness will be attributed to hurricanes, while a beat on payrolls or wages would be seen as supporting a Federal Reserve interest rate increase in December” – and instead focus on Europe, and specifically the next ECB meeting which will set the stage for the next big move in global risk.
    His full note below.

    Looking for the Next Treasury Driver After Payrolls
    While all eyes will be on the U. S. non-farm payrolls data Friday, investors may want to look to Europe for the next major catalyst.
    The ECB’s policy meeting is approaching and with some form of QE adjustment announcement expected, we may see European yields rise taking American ones with them.
    The balance of risks is in favor of yields rising after the U. S. employment report. Any weakness will be attributed to hurricanes, while a beat on payrolls or wages would be seen as supporting a Federal Reserve interest rate increase in December.
    But the ECB could be a more significant driver. President Mario Draghi said in September that the bulk of the decisions on QE will be taken in October.
    The euro has weakened since the previous meeting. Any perceived tightening is likely to push yields higher initially.
    When the Fed formally announced its well-choreographed plan to slow down bond purchases at its December 2013 meeting, the U. S. 10-year yield reacted by rising from about 2.8% to more than 3% two weeks later. Eurozone yields followed.
    This time around the roles could be reversed. So pay attention to payrolls, but after that it’s over to you, President Draghi.

    This post was published at Zero Hedge on Oct 6, 2017.


  • ECB Wants to Weed Out Smaller Banks to Cut Competition

    The biggest financial problem in Europe these days is that it is ‘over-banked,’ according to Daniele Nouy, Chair of the ECB’s Supervisory Board, and thus in charge of the Single Supervisory Mechanism, which regulates the largest 130 European banks.
    In a speech bizarrely titled ‘Too Much of a Good Thing: The Need for Consolidation in the European Banking Sector,’ Nouy blamed fierce competition for squeezing profits for many of Europe’s banks while steadfastly ignoring the much larger role in the profit squeeze played by the ECB’s negative-interest-rate policy. ECB President Mario Draghi agrees.
    The profits of the largest 10 European banks rose by only 5% in the first half of 2017, compared to 19% for the US banks, which benefited from higher interest rates, stronger capital markets, better capitalization, and larger market shares, according to a new report by Ernst and Young.
    In its latest annual health check of European banks, Bain Capital found that 31 institutions, or 28% of the 111 financial institutions they assessed, are in the ‘high-risk’ quadrant. Location seemed to be a far more important factor than size.

    This post was published at Wolf Street by Don Quijones ‘ Sep 29, 2017.


  • Global Equities Mostly Up On Ideas Of Better World Economic Growth

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    (Kitco News) – World stock markets were mostly firmer overnight, on hopes that a U. S. corporate tax-reform plan will boost economic growth not only in the U. S. but around the globe. U. S. stock indexes are pointed toward slightly lower openings when the New York day session begins.
    Gold prices are slightly lower and hit a six-week low overnight. Better risk appetite in the marketplace this week, as well as a rallying U. S. dollar index, are bearish for the safe-haven metal.
    World bond market yields are on the rise this week, on ideas that better world economic growth will prompt the major central banks to become less accommodative on their monetary policies. Odds are rising (now about 75%) that the Federal Reserve will raise U. S. interest rates in December.
    In overnight news, the Euro zone economic sentiment indicator rose to 113.0 in September from 111.9 in August. The September reading was the highest in over 10 years. This report falls into the camp of the Euro zone monetary policy hawks. European Central Bank President Mario Draghi said Thursday the ECB will decide later this year specifically when to start winding down its quantitative easing of monetary policy (bond buying).

    This post was published at Wall Street Examiner by Jim Wyckoff ‘ September 28, 2017.


  • German Elections Void of Any Critical Discussion

    The German Bundestag election campaign has seen a total black-out of any discussion of the major crisis that is building in Europe. Nobody is mentioning that Euro crisis, ECB monetary policy, disintegration of the EU, refugee crisis, pension crisis, the municipalities on the brink of insolvency, or the drastic increases in taxation coming AFTER the election that will only lower disposable incomes and extend deflation.
    The politicians, and the press, are in full swing to hide the real trend at foot. The press is running stories why the Germans Love Merkel, yet she has never won even 40% of the popular vote. Even the press outside of Germany is in on the ‘selling’ of Merkel because she is the leader of Europe – good – bad – indifferent.
    Perhaps the monetary policy of the ECB has set the stage for a serious monetary crisis over the coming years that will seriously disrupt the German economy, in one way or another, depending upon the industry. Mario Draghi has experimented with negative rates which has kept the Eurozone governments on life-support – but they have not used the time to reform anything.

    This post was published at Armstrong Economics on Sep 23, 2017.


  • WTF Chart Of The Day: BoJ Now Owns 75% of Japanese ETFs

    While ECB President Mario Draghi faces his own German-bond-market constraints in his hubristic bond-buying-bonanza, cornering him to taper sooner than later; the Bank of Japan appears to have thrown every textbook out of the window and cranked their plunge-protection to ’11’, as Bloomberg reports, The Bank of Japan now holds 75% of the nation’s ETFs.
    Since December 2010 – when The Bank of Japan held no ETFs at all – the central bank has been buying ETFs (doubling its annual buying target to 6 trillion yen in July 2016) as part of unprecedented economic stimulus. While the Nikkei 225 Stock Average has risen 89% since December 2010, the BOJ’s dominance of the ETF market has raised concerns.
    In fact, in a circular vicious cycle, the Bank of Japan’s purchases have helped assets managed by ETFs surge almost 10-fold since the end of 2010 to 25 trillion yen ($230 billion).

    This post was published at Zero Hedge on Sep 11, 2017.


  • Weekend Reading: The “Real” Vampire Squid

    First, it was Hurricane ‘Harvey’ and an expected $180 billion in damages to the Texas coastline. Now, ‘Irma’ is speeding her way to the Florida coastline dragging ‘Jose’ in her wake. Those two hurricanes, depending on where they land will send damages higher by another $100 billion or more in the weeks ahead.
    The immediate funding needed for relief to Americans is what you would truly deem to be ’emergency measures.’
    But that is not what I am talking about today.
    Nope, I am talking about Central Banks.
    On Thursday, Mario Draghi, of the ECB, announced their latest monetary policy stance:


    This post was published at Zero Hedge on Sep 8, 2017.


  • Market Talk- September 8th, 2017

    Governments and central banks across the world are still concerned about the lack of inflation or significant growth and we saw evidence again in that today from the Japanese Q2 GDP release. Well below estimate of 4% this mornings release came in at 2.5%. Mario Draghi also commented on growth concerns in yesterdays ECB meeting and it is also being questioned in the Federal Reserve as well. It didn’t help the stock market which closed down -0.65% with financials and exporters leading the decline and this again encouraged the yen dash as we now watch the mid 107’s trade. 10yr JGB’s traded negative for most of the day. One bright spot was the Hang Seng but that was large cap’s reflecting the US holding yesterdays levels. Still worth keeping an eye on the Chinese yuan as yet another stronger set today (6.5032) making this a double digit gain in days. SENSEX closed small up today still helping its impressive 10.5% YTD gain.

    This post was published at Armstrong Economics on Sep 8, 2017.


  • ECB And Draghi Keep Rates At Zero, Downgrades 2018 Inflation To 1.2% (To Infinity … And Beyond!)

    This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
    The European Central Bank (ECB) President Mario Draghi is mimicking Buzz Lightyear from Pixar’s Toy Story: ‘To Infinity and Beyond!’ That is, Draghi announced today that the ECB is keeping their key rates at 0%, 0.25% and -0.40%.
    At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.

    This post was published at Wall Street Examiner on September 7, 2017.


  • ECB Preview: A Trapped Mario Draghi Makes A Decision

    After a barrage of media trial balloons (as recently as today) meant to temper the enthusiasm of Euro bulls now that the EURUSD is back to 1.20 and threatening European corporate profitability, Mario Draghi’s Sintra hawkishness is a distant memory.
    And so, with the ECB’s policy decision less than 12 hours from now, a “trapped” Mario Draghi finds himself in a quandary: with less than 4 month left until the formal expiration of the ECB’s 2.3 trillion QE program, he will likely start laying the groundwork for the central bank’s stimulus reduction – after all the ECB is rapidly running out of bonds to purchase – but without revealing too much as that will send the EUR surging, and he will also hold off on any major commitment, as an explicit backing off his recent hawkishness could collapse the EUR and send Bunds right back into NIRPatory.
    Which path will he take?
    With that in mind, courtesy of RanSquawk, here is a full preview of what to expect (or not) from the ECB president tomorrow.
    Rate Decision due at 1245BST/0645CDT and Press Conference at 1330BST/0730CDT
    All rates and the current pace of asset purchases are expected to be left unchanged Staff will update macroeconomic projections; impact of EUR likely to weigh on inflation outlook Key focus for press conference will be on recent EUR strength and possible QE exit Click here for a link to an overview of ECB rhetoric since the last meeting

    This post was published at Zero Hedge on Sep 7, 2017.


  • What Share Of Bond Markets Do Central Banks Own: Deutsche Bank Answers

    With the latest ECB statement due out in just two days, traders are curious to see how Mario Draghi will escape from the trap in which the European central bank has found itself: on one hand, seeking to temper the recent dramatic rise in the Euro, on the other running out of QE eligible private-sector debt to monetize, especially in its largest captive market, Germany. While we don’t know how Draghi will succeed (or fail) in this endeavor, overnight Deutsche Bank has released a useful analysis breaking down what share of bond markets the biggest central banks currently own.
    In the analysis, DB puts the ECB CSPP holdings in the context of global QE by comparing what part of relevant markets is owned by major central banks. Then it provides a more granular update on the latest CSPP purchases, including the geographic breakdown of the current CSPP universe. Further, it focuses on the CSPP vs. PSPP dynamics, noting the conflicting signal between Q2 and the summer months. Finally, it addresses the question whether in selected jurisdictions CSPP purchases could be used to partly replace PSPP purchases if for one reason or the other the ECB cannot exit QE any time soon and scarcity becomes a hard, binding constraint in some government bond markets.
    The answers are shown in the table below, which compares central bank QE holdings across asset classes with Deutsche Bank’s estimates of the size of the corresponding markets. Using those estimates, the German lender calculates the fraction of each relevant universe in central bank ownership.

    This post was published at Zero Hedge on Sep 5, 2017.


  • See no evil, speak no evil…

    The Jackson Hole speeches of Janet Yellen and Mario Draghi last week were notable for the omission of any comment about the burning issues of the day: …where do the Fed and the ECB respectively think America and the Eurozone are in the central bank induced credit cycle, and therefore, what are the Fed and the ECB going to do with interest rates? And why is it still appropriate for the ECB to be injecting raw money into the Eurozone banks to the tune of $60bn per month, if the great financial crisis is over?i
    Instead, they stuck firmly to their topics, the Jackson Hole theme for 2017 being Fostering a dynamic global economy. Both central bankers told us how good they have been at controlling events since the last financial crisis. Ms Yellen majored on regulation, bolstering her earlier-expressed belief that financial crises are now unlikely to happen again, because American banks are properly regulated and capitalised.

    This post was published at GoldMoney on August 31, 2017.


  • Mario Draghi’s Fatal Conceit

    On 23 August 2017, the president of the European Central Bank (ECB) gave a speech titled ‘Connecting research and policy making’ at the annual assembly of the winners of the Nobel Price for Economics in Lindau, Germany.1 What Mr Draghi talked about on this occasion – and especially what he didn’t talk about – was quite revealing.
    Any analysis of the causes of the latest financial and economic crisis is conspicuously absent from Mr Draghi’s remarks. One gets the impression that the crisis came basically unexpected, out of the blue. There is no mention of the role of central banks, the monopoly producers of unbacked paper (or: fiat) money, played for the crisis.
    No word that central banks had for many years manipulated downwards interest rates – accompanied by an excessive increase in credit and money supply – causing an unsustainable ‘boom.’ When the bust set in – triggered by the spreading of the US subprime crisis across the globe – the ugly consequences of this central bank monetary policy came to the surface.
    In the bust, many governments, banks and consumers in the euro area found themselves financially overstretched. The economies of Southern Europe especially do not only suffer from malinvestment on a grand scale, they also found themselves in a situation in which they have lost their competitiveness.

    This post was published at Ludwig von Mises Institute on August 30, 2017.


  • Futures Flat As Gasoline Soars On Harvey Devastation, Rising Euro Sends European Stocks Lower

    With billions in economic losses and unknown supply chain shocks to come following devastating and historic flooding in Texas, S&P futures are virtually unchanged (down less than 0.1% at time of writing) while European and Asian shares are modestly lower as oil was little changed. As reported yesterday, gasoline futures surged as the greater impact of the storm that shut more than 10% of U. S. fuel-making capacity was becoming more evident. The Bloomberg Dollar Spot Index fell to its lowest since January 2015 after Janet Yellen and Mario Draghi refrained from discussing monetary policies at Jackson Hole on Friday.
    The US dollar continued to slip against the euro after central bankers’ comments at Jackson Hole provided little reason for a change in this year’s trend. U. S. Treasury futures were steady ahead of a combined $60 BN worth of two- and five-year debt auctions and Friday’s payroll numbers. USDJPY hovered above 109.00 handle, with initial main support at 108.60, the low on Aug. 18. EURUSD little changed after rallying initially, but failed to break above 1.20 handle. European bond markets were waiting for impetus as a bank holiday in the U. K. weighed on trading volumes.
    Unlike the US, European stocks started the week on the back foot, with every sector retreating following Friday’s euro surge. the European Stoxx 600 index declined following a surge in the euro towards $1.20 after Draghi did not express concern about the currency’s recent rally at Jackson Hole as some analysts had expected. The Euro Stoxx 50 falls 0.7%, while the exporters-heavy DAX drops 0.7% and France’s CAC falls 0.7%; U. K. markets are closed for public holiday. Germany’s DAX Index fell 0.5 percent to the lowest in a week.

    This post was published at Zero Hedge on Aug 28, 2017.


  • Goldman “Unexpectedly” Exempt From Venezuela Bond Trading Ban

    When the White House announced on Friday that Trump had signed an executive order deepening the sanctions on Venezuela, and confirming the previously rumored trading ban in Venezuelan debt that earlier in the week had sent VENZ/PDVSA bonds tumbling, we made what we thought at the time was a sarcastic comment that in light of the recent scandal involving Goldman’s purchase of Venezuela Hunger Bonds, that Lloyd Blankfein’s hedge fund, which now controls the presidency and next year will also take over the Fed courtesy of Gary Cohn, would be exempt from the trading ban:
    So all bonds owned by Goldman are exempt from the Venezuela sanctions until Goldman can sell them?
    — zerohedge (@zerohedge) August 25, 2017

    And, as it so often happens in a world controlled by Goldman (as a reminder, in 2018 the world’s three most important central banks, the Fed, the ECB and the BOE will be run by former Goldman employees: Gary Cohn, Mario Draghi and Mark Carney), sarcasm has a way of chronically turning into truth, and as Bloomberg confirmed overnight, one of Venezuela’s largest bondholders is “breathing a sigh of relief.”
    That would be Goldman Sachs Asset Management, which infamously bought $2.8 billion of notes issued by state oil company PDVSA in May, and has since faced sharp criticism for a deal that appeared to supply fresh funds to President Nicolas Maduro. Confirming our initial “sarcastic” reaction, while observers thought the Goldman bonds would be a prime target for new penalties, they were exempt from the order. In fact, the only bonds covered by the trading ban are notes due in 2036 that appear to never have been sold outside Caracas.

    This post was published at Zero Hedge on Aug 26, 2017.


  • Draghi Fears “Return Of Protectionism”; Warns Regulators Against “Rekindling Incentives That Led To Crisis”

    As a reminder, it was in Jackson Hole three years ago that Draghi laid the groundwork for the launch of the ECB’s 2.3 trillion-euro asset-purchase program.
    They looked pensive before he spoke…
    Following Yellen’s “unhawkish” nothing-burger of a speech (which has sent the broad dollar index to 2 year lows), all eyes were on whether ECB President Mario Draghi would mention the euro’s strength, but he disappointed, instead focusing on global trade and protectionism. Draghi failed to mention policy in general, but did warn regulators (similar to Yellen) that…
    When monetary policy is accommodative, lax regulation runs the risk of stoking financial imbalances. By contrast, the stronger regulatory regime that we have now has enabled economies to endure a long period of low interest rates without any significant side-effects on financial stability, which has been crucial for stabilising demand and inflation worldwide.
    With monetary policy globally very expansionary, regulators should be wary of rekindling the incentives that led to the crisis.

    This post was published at Zero Hedge on Aug 25, 2017.


  • Global Stocks Rise Ahead Of Much Anticipated Speeches By Yellen, Draghi

    Global markets are stuck in a holding pattern with S&P futures up modestly after fluctuating overnight, as European and Asian shares rise with oil while the dollar has dipped lower ahead of the biggest central bank event of the year: the Fed’s Jackson Hole symposium where Janet Yellen and Mario Draghi will speak at 10am and 3pm ET, respectively. Meanwhile, world stocks drifted toward their best week in six on Friday, as a near three-year high in emerging markets shares and a roaring rally in industrial metals bolstered the year’s global bull run.
    US futures got a marginal boost by comments from Gary Cohn before the FT shortly after 5am ET, pushing back against suggestions he will leave the White House and confirming another push for tax reform.
    European Stocks were mixed for much of the morning session before edging higher, with gains for miners eclipsing retailer declines in the wake of Amazon’s announcement it would cut Whole Foods prices on Monday in the Stoxx Europe 600 Index.
    As discussed over the past week, the only show in town over the next couple of days is the Yellen and Draghi show at the Jackson Hole symposium (today’s agenda here). They talk at 10am and then 3pm (EST/NY time). As for Yellen it seems the swing factor is whether the Fed is placing greater weight on very loose financial conditions and financial stability concerns over any supposed short term soft inflation numbers. Deutsche Bank yesterday published a piece re-visiting Yellen’s July 2014 speech on ‘Monetary Policy and Financial Stability’ as a benchmark for assessing any changes in her views on the topic. The bank suggests that there is an interesting parallel between today and mid-2014 when Yellen delivered that speech. Then, as now, financial conditions were very loose. Yet despite easy financial conditions at the time, Yellen’s speech concluded that the nature and magnitude of financial stability considerations as of mid-2014 were insufficient to justify tighter monetary policy. The key question for markets is whether enough has changed since July 2014 for Yellen to reach a different conclusion and send a more hawkish signal about the future monetary policy path at Jackson Hole?
    ‘Will financial-stability concerns prompt the Fed to hike, even when inflation is so low? This is what the market wants to know,’ John Cairns, a strategist at Rand Merchant Bank in Johannesburg, wrote in a client note. ‘With little else to focus on, the market has morphed the symposium into a colossus. Risks are two-way: Yellen could take the hike off the table, or reaffirm it.’

    This post was published at Zero Hedge on Aug 25, 2017.


  • Markets Quieter, Awaiting Yellen, Draghi Speeches Today In Jackson Hole

    This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
    (Kitco News) – Global stock markets were mostly firmer overnight and U. S. stock indexes are also pointed toward higher openings when the New York day session begins.
    Gold prices are near steady in pre-U. S.-day-session trading. Gold bulls still have the near-term chart advantage amid an uptrend in place on the daily bar chart.
    Many markets have been quieter most of this week, ahead of the highly anticipated annual world central bankers meeting in Jackson Hole, Wyoming, that began Thursday and ends Saturday. Featured speakers at the three-day event include Federal Reserve Chair Janet Yellen, who is scheduled to speak this morning at 10:00 a.m. EDT. European Central Bank President Mario Draghi is slated to speak this afternoon at 3:00 p.m. EDT.
    Traders and investors will closely examine these Jackson Hole speeches and other central bankers’ remarks for any clues on future monetary policy moves by the world’s major central banks. There are ideas the central bankers will mention generally very low inflation worldwide, which could be extrapolated to mean keeping very accommodative monetary policies in place longer.

    This post was published at Wall Street Examiner on August 25, 2017.


  • Jackson Hole: Inflation, Phillips Curve, Income Inequality, Housing and The Taylor Rule

    Janet Yellen, ‘Super’ Mario Draghi and other Central Bankers are meeting at the 2017 Economic Policy Symposium on ‘Fostering a Dynamic Global Economy’ at Jackson Hole for the next three days.
    Topics will include the persistent low inflation in advanced economies, like the US 1.5% growth rate on Personal Consumption Expenditures Core Prices YoY despite the staggering fiscal and monetary stimulus thrown at it.

    This post was published at Wall Street Examiner by Anthony B Sanders ‘ August 24, 2017.


  • World Markets Quiet, Awaiting Jackson Hole Central Bankers Symposium

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    (Kitco News) – World stock markets were mostly firmer in quieter trading Thursday. U. S. stock indexes are also pointed toward modestly higher openings when the New York day session begins.
    Gold prices are weaker, amid bearish ‘outside markets’ today-firmer stock markets and U. S. dollar index, and weaker crude oil prices.
    Stock, currency and financial markets have been quieter this week, ahead of the highly anticipated annual world central bankers meeting in Jackson Hole, Wyoming, that begins today. Featured speakers at the three-day event include Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi. Traders and investors will closely examine the Jackson Hole speeches for any clues on future monetary policy moves by the world’s major central banks. There are ideas the central bankers will mention very low inflation, which could be extrapolated to mean keeping very accommodative monetary policies in place longer. Draghi’s remarks are likely to impact the Euro currency, especially after the ECB has recently expressed a bit of concern about the appreciation of the Euro. In recent years the Jackson Hole central bankers confab has significantly moved the markets.

    This post was published at Wall Street Examiner on August 24, 2017.


  • Global Equity Markets Mostly Lower In Quiet Summertime Trading

    This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
    (Kitco News) – World stock markets were mostly weaker Wednesday. U. S. stock indexes are also pointed toward lower openings when the New York day session begins. World stock markets are having a tough month of August, heading into the historically even tougher months of September and October.
    Gold prices are slightly higher in pre-U. S.-session trading. Gold prices are in a near-term uptrend, but struggle when prices approach the key resistance level of $1,300.00.
    In overnight news, the Euro zone Markit composite purchasing managers index came in at 55.8 in August from 55.7 in July. The August number beat market expectations. A reading above 50.0 suggests growth in the sector.
    The marketplace is awaiting the annual central bankers meeting held in Jackson Hole, Wyoming, Thursday through Saturday. Featured speakers from around the world include Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi. Traders and investors will closely examine the Jackson Hole speeches for clues on future monetary policy moves by the world’s major central banks. In recent years the Jackson Hole central bankers confab has significantly moved the markets.

    This post was published at Wall Street Examiner on August 23, 2017.