• Tag Archives Mario Draghi
  • BREAKING AWAY FROM THE WEST: Gold Investment In Germany & The U.K. Surged

    While gold demand in the West continues to languish, something has recently motivated renewed interest in the yellow precious metal in Germany and the United Kingdom. Now, when I say ‘renewed interest’, I am referring to a surge in gold investment by Germans and British that we haven’t seen for quite some time.
    This big increase in gold investment in Germany and the U. K. over the past year and a half is not from the diehard physical bar and coin investors, rather it is from a source that is even more interesting… it’s coming from investors in the retail Gold ETF Market. You see, this is a much different segment of the population who move into the Gold ETF Market versus the 1% that buy physical bar and coins. When there is a surge of Gold ETF buying, it means the institutional or regular mainstream investor is worried about the overall market.
    And why shouldn’t Europeans be worried as the ECB – European Central Bank’s President, Mario Draghi, stated in June that they would continue its bond buying program (QE – Quantitative Easing) until 2019, even though they believe that the ‘regions growth’ looks broadly balanced. This is like a doctor telling his patient, ‘we are going to continue with broad-based Chemo-Therapy’, even though your cancer has gone into remission.

    This post was published at SRSrocco Report on August 12, 2017.


  • An Insane Bond Market In 4 Charts: “Italian Junk Bonds Yield Less Than US Treasurys”

    In our “WTF Chart of the day” from last Friday, we showed something stunning: European junk bonds yields were the same, and in some cases lower, than comparable-maturity 10Y US Treasurys.
    ***
    In other words, the distortion unleashed by Mario Draghi’s CSPP, or corporate bond buying program unveiled last March, has made European junk bonds “safer” than US government-issued paper.

    This post was published at Zero Hedge on Aug 10, 2017.


  • Policy From Behind

    This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
    When the Mario Draghi as head of the ECB first introduced negative rates in early June 2014, his reasoning was very clear. As he said in the opening of his statement imposing NIRP on Europe, ‘Today, we decided on a combination of measures to provide additional monetary policy accommodation and to support lending to the real economy.’ The way in which NIRP (the only policy rate which was and has been negative is the ECB deposit account, the so-called floor of the euro money corridor) is thought to support loan creation is by penalizing banks for holding idle reserves.
    It’s a tough sell to banks, for sure, but even more in terms of common sense. Broadly speaking, it’s very difficult to encourage a positive financial outcome with only a stick. Conventional wisdom suggests that low funding rates are the carrot, the incentive to make money on the curve. But that’s not how banking works, as the real issue is always risk-adjusted return. If returns are low and risks perceived to be high, then funding costs almost don’t matter.

    This post was published at Wall Street Examiner on July 31, 2017.


  • Doug Noland: Five Years of Whatever it Takes

    This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
    July 25 – Bloomberg (Paul Gordon and Carolynn Look): ‘Five years ago today, Mario Draghi was talking about bumblebees. The European Central Bank president’s speech in London on July 26, 2012, became instantly famous because of his pledge to do ‘whatever it takes’ to save the euro. But for all the power and clarity of that phrase, he started his remarks more obliquely. ‘The euro is like a bumblebee. This is a mystery of nature because it shouldn’t fly but instead it does. So the euro was a bumblebee that flew very well for several years. And now – and I think people ask ‘how come?’ – probably there was something in the atmosphere, in the air, that made the bumblebee fly. Now something must have changed in the air, and we know what after the financial crisis.’ At the time, the currency bloc was being buffeted by soaring bond yields in peripheral nations as speculators bet the union’s fundamental flaws would rip it apart. Draghi’s answer was to state unequivocally that the immediate crisis fell under the ECB’s responsibility and he would deal with it. ‘The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.’ That pledge was followed by a program to buy the debt of stressed countries in return for structural reforms, and in that respect the words alone proved to be enough. Yield spreads collapsed even though the program has never been tapped.’

    This post was published at Wall Street Examiner by Doug Noland ‘ July 29, 2017.


  • Five Years Ago Today…

    ime flies when you are printing money.
    As Citi’s FX desk is kind enough to remind us, it was five years ago today that Donald Trump was a businessman and TV personality, and ECB President Mario Draghi vowed that:
    ‘The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.’
    He then compared the common currency to an insect:
    ‘The euro is like a bumblebee. This is a mystery of nature because it shouldn’t fly but instead it does. So the euro was a bumblebee that flew very well for several years. And now — and I think people ask ‘how come?’– probably there was something in the atmosphere, in the air, that made the bumblebee fly. Now something must have changed in the air, and we know what after the financial crisis.’

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


  • Doug Noland: New Age Mandate

    This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
    A journalist’s question during Mario Draghi’s ECB post-meeting press conference: ‘… There was a sharp reaction from financial markets to your Sintra speech. You must have looked at the Fed experience of 2013. Is there any concern in the Governing Council that the so-called tantrum or a similar reaction can happen in the eurozone when you start discussing changes in your stance?’
    Draghi: ‘I won’t comment on market reactions, but let me give you the bottom line of our exchanges: basically, inflation is not where we want it to be, and where it should be. We are still confident that it will gradually get there, but it isn’t there yet, and that’s why the Governing Council reiterated the forward guidance, the asset purchase programme, the interest rates and all this package of monetary accommodation; and reiterated that the present very substantial monetary accommodation is still necessary. Let me read the introductory statement: ‘Therefore a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline inflation developments in the medium term.’
    Draghi continued: ‘But let me just make clear one thing: after a long time, we are finally experiencing a robust recovery, where we only have to wait for wages and prices to move towards our objective. Now, the last thing that the Governing Council may want is actually an unwanted tightening of the financing conditions that either slows down this process or may even jeopardise it; and that’s why we retain the second bias, or let’s call it, reaction function. ‘If the outlook becomes less favourable or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset purchase programme in terms of size and/or duration.’ And I think the Governing Council has given enough evidence that when flexibility is needed to achieve its objectives, it has been very able to find all that was needed. So that’s why we keep this bias.’
    This exchange gets to the heart of a momentous issue. Recall the swift market reaction to ‘hawkish’ Draghi’s comments from Sintra (June 26-28 ECB Forum on Central Banking) and, soon after, ECB officials expressing that markets had misinterpreted his remarks. Markets this week were awaiting ‘dovish’ clarification. Draghi soundly beat expectations.

    This post was published at Wall Street Examiner on July 22, 2017.


  • Nobody told the euro that Mario Draghi was dovish

    If Mario Draghi was trying to talk down the euro, it didn’t go so well.
    The European Central Bank president attempted to strike as dovish a stance as was possible given the circumstances in his news conference Thursday. He emphasized the lack of a pickup in underlying inflation, insisted the Governing Council won’t really think about tapering until the fall, and banged away on how the central bank could actually ramp up its quantitative easing program, should conditions deteriorate.
    The performance was seemingly a disappointment to anyone looking for reassurance when the ECB will lay out what it plans to do with its quantitative easing program in 2018. The ECB is committed to continuing it program of 60 billion a month in bond purchases through the end of the year, ‘or beyond.’
    But euro bulls didn’t appear to care. The shared currency EUR/USD, -0.0086% jumped during the news conference and then extended gains, topping $1.16 versus the dollar and trading at its highest level since August 2015.
    The news conference performance was in contrast to a speech in Portugal late last month that got investors primed for a QE wind-down. At that conference, Draghi’s emphasis on how reflationary pressures were replacing deflationary pressures was the trigger.

    This post was published at Market Watch


  • Market Talk- July 21st, 2017

    We did eventually see a mixed close in US with the NASDAQ setting new gains but the late rally failed to convince Asian markets of the rally and having seen ECB unchanged, we saw Asian indices small down. It was a reasonably light session to close the week as main core markets drifted. The Nikkei watched the yen trade better (last seen trading towards the 110 handle) so having a negative effect on stocks resulting in a negative -0.2% close. Shanghai and Hang Seng gave a little back also after the recent consistent positive momentum, which is a fair performance when considering recent currency strength. Top talking points were surrounding the disconnect between the bond and stock markets, but also the weakness in the USD and the strength in gold. The USD has been losing support as we approach an almost 2% decline against the Euro but that is having a significant effect on European stocks.
    As Mario Draghi has kept the currency going the negative effects are being seen on equities, and a resurgence of bond spread tightening. It appears the fixed-income market is being the adult in the room seeing the road clear to continue the carry tightening play. That said, US stocks have held in well as earnings plays its supporting role but we should have a clearer picture next week when we hear from the Federal Reserve. Core markets closed with almost 2% declines which for foreign investors is really starting to hurt even providing for the recent euro rally.

    This post was published at Armstrong Economics on Jul 21, 2017.


  • Why the Gold Price Could Continue Beyond Today’s 4-Week High

    This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
    Over the last week, the gold price has bounced back above the $1,200 threshold. With the metal currently trading at $1,251, it’s set to post a weekly gain of 1.7%. The price of gold’s rally this week to its highest level since June 23 came mostly on the back of comments from Mario Draghi, president of the European Central Bank (ECB). Draghi said during the bank’s policy meeting on Thursday that the ECB had not yet formalized plans to roll back monetary policy stimulus.
    The Bank of Japan (BoJ) also said its inflation expectations were not meeting targets, with the current 1.1% inflation rate below the previous forecast of 1.4%. The BoJ noted that a dovish monetary policy would persist for some time.
    And that echoed what U. S. Federal Reserve Chair Janet Yellen said in her Congressional testimony last week, when she admitted the global inflation slowdown could call for an ‘adjustment’ to the Fed’s policy.

    This post was published at Wall Street Examiner by Peter Krauth ‘ July 21, 2017.


  • 21/7/17: Professor Mario: Meet Irish Austerity Unsung Hero

    In the previous post covering CSO’s latest figures on Irish Fiscal metrics, I argued that the years of austerity amount to little more than a wholesale leveraging of the economy through higher taxes. Now, a quick note of thanks: thanks to Professor Mario Draghi for his efforts to reduce Government deficits, thus lifting much of the burden of real reforms off Irish political elites shoulders.

    This post was published at True Economics on Friday, July 21, 2017.


  • “ECB Or Not To Be”: A Preview Of What Mario Draghi Will Say

    Looking at today’s main event, the much anticipated ECB announcement in which Draghi may (or may not) announce a hawkish shift to the cental bank’s policies and/or reveal the bank’s tapering plans, Citi (whose titled we borrowed) gives the 30 second summary, and says that the market seems quite split on whether the ECB will remove the asset purchase program easing bias, but thinks that there’s room for mild disappointment. After all, it says, this meeting is just a warm up for the September meeting (and Jackson Hole). CitiFX Strategist Josh O’Byrne points out that the biggest market fear at the moment appears to be long positioning and “this risks morphing into FOMO for the next leg higher.” For the press conference, Citi expects Draghi to slightly tweak some of the language from Sintra to lean a little bit more towards the dovish side.
    The bank’s expectations are summarized in the following handy cheat sheet:

    This post was published at Zero Hedge on Jul 20, 2017.


  • World Stock Markets Firmer; ECB Meeting Conclusion Awaited

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    (Kitco News) – Most world stock markets were firmer overnight, continuing to see upside support from generally upbeat corporate earnings reports. U. S. stock indexes hit record highs on Wednesday and are poised to move still higher when the New York day session begins.
    Gold prices are lower in pre-U. S.-session trading today. Some mild profit taking from the shorter-term futures traders is featured after recent good gains in the yellow metal.
    In overnight news, the Bank of Japan at its latest monetary policy meeting Thursday scaled back its inflation expectations to suggest its easy-money policies can remain in place longer.
    The European Central Bank is meeting Thursday. The marketplace is awaiting the ECB’s stance on future monetary policy for the Euro zone. ECB President Mario Draghi’s press conference will be the highlight of the ECB meeting.

    This post was published at Wall Street Examiner by Jim Wyckoff ‘ July 20, 2017.


  • Janet Yellen’s Bitcoin Troll Gets $15,000 In Donations

    In what was perhaps the most amusing act of protest to occur during testimony by one of the world’s most powerful central bankers since ECB President Mario Draghi was glitter-bombed by far-left activist Josephine Witt two years ago, an anonymous bitcoiner trolled Federal Reserve Chairwoman Janet Yellen by holding up a hand-made sign that read ‘Buy Bitcoin’ during Yellen’s testimony before the House financial Services Committee on Wednesday.
    ***
    Though the attendee and a friend who accompanied him were ultimately asked to leave by a staffer, the moment quickly went viral on twitter, sparking a community-wide hunt to uncover the brazen bitcoiner’s identity and bitcoin wallet ID so they could send him donations as a sign of solidarity.
    The community’s response to the still unnamed man’s act of defiance yielded dozens of tweets, memes and, to date, more than $15,000 in donations to a bitcoin wallet purportedly belonging to the young troublemaker.

    This post was published at Zero Hedge on Jul 13, 2017.


  • Draghi Said To Address Jackson Hole Followed By ECB QE Tapering Announcement

    Just in case traders haven’t gotten whiplash from all the hawkish-to-dovish-to-hawkish shifts in central bank posturing over the past month, here is the WSJ which reports that for the first time in three years, ECB’s Mario Draghi is scheduled to address the Fed’s Jackson Hole conference in August, “in a speech that is expected to give a further sign of the ECB’s growing confidence in the eurozone economy and its reduced dependence on monetary stimulus.”
    While the Fed debates whether to hike rates in December (market odds are now roughly 50%) and announce the winddown of its balance sheet in September, the biggest question facing the global market is the future of the ECB’s 60 billion QE program, currently due to run through December, and when it will start tapering. Technically, according to Deutsche, even more important is the BOJ’s QE but that particular monetization program is likely to continue well into 2018 as the Nikkei reports. As such the marginal flow of liquidity in global markets is in the hands of Mario Draghi.

    This post was published at Zero Hedge on Jul 13, 2017.


  • Fade the Great Rotation into Europe

    This is a syndicated repost courtesy of theinstitutionalriskanalyst. To view original, click here. Reposted with permission.
    News last week that European Central Bank chief Mario Draghi was considering an end to the ECB’s extraordinary purchases of securities quickly let some air out of the Great Rotation into EU stocks. Sure the euro surged against a weakening dollar, but Europe’s mountain of bad debt remains unresolved – even after the election of Emmanuel Macron to the French presidency. Yet hope springs eternal in some quarters after Draghi’s claim of a successful ‘reflation.’
    ‘All the signs now point to a strengthening and broadening recovery in the euro area,’ Draghi told the ECB’s annual conference. ‘Deflationary forces have been replaced by reflationary ones,’ the former head of the Bank of Italy declared. Draghi’s bull call on inflation provides optimism for relief on excessive levels of bad debt, albeit in a context where the EU’s rules on resolving dead banks remain entirely subjective.
    The July 4 approval of the latest state-supported rescue for Banca Monte dei Paschi di Siena (Montepaschi) illustrates the deflationary challenges still facing Europe. As part of the overhaul, Reuters reports, Montepaschi ‘will transfer 26.1 billion euros to a privately funded special vehicle on market terms, with the operation partially funded by Italian bank rescue fund Atlante II.’ The bank will receive 5 billion euros in new public equity funds for its third bailout in a decade.

    This post was published at Wall Street Examiner on July 4, 2017.


  • SWOT Analysis: Gold Has Outperformed the Stock Market Since 2000

    Strengths
    The best performing precious metal for the week was silver, with a fall of just 0.51 percent with platinum just behind that. Following wild price swings on heavy volume Monday and Tuesday in a suspected erroneous trade, gold traders and analysts remained bullish for a second week, reports Bloomberg. On Monday, 1.8 million ounces of the yellow metal were sold in a single minute and on Tuesday prices spiked in early European trading with about 815,000 ounces of gold bought in five minutes – a suspected reverse on the Monday fat finger trade. The euro has climbed to a 13-month high on speculation that Mario Draghi’s ECB is poised to reduce unprecedented monetary stimulus, writes Bloomberg News. This has allowed Europeans to pay the least this year to buy gold, the article continues, while comments from Fed Chair Janet Yellen this week did little to support the U. S. currency. HKEK and the Chinese Gold & Silver Exchange Society signed MoU on Thursday to consider cooperation on matters such as product promotion and storage vaults, according to a statement on the Hong Kong Exchanges & Clearing website. MoU signifies strategic partnership that aims to build a major gold and commodities trading center in Asia Pacific, said CGSE President Haywood Cheung in a statement, reports Bloomberg.

    This post was published at GoldSeek on 3 July 2017.


  • When “Whatever It Takes” Ends

    Via Global Macro Monitor,
    On Tuesday, June 27th, Super Mario said this,
    ‘Deflationary forces have been replaced by reflationary ones.’ – Mario Draghi
    And here is how global 10-year bond yields reacted,
    The German 10-year Bund yield increased 77 percent – OK, from a low base – and bonds across the world from Canada to Australia to the United States were tattooed.
    Change In Fundamentals?
    Absolutely not!
    Bond yields haven’t been trading on economic fundamentals for several years due to central bank financial represssion via quantitative easing (QE), ZIRP and NIRP. We have been pounding the table on this point,
    Lot’s of hand wringing these days about the flattening yield curve. We still maintain our position that the signal from the bond market is significantly distorted due to the global central bank intervention (QE) into the bond markets. See here and here.
    Most of what is happening with the U. S. yield curve is technical. – Global Macro Monitor, June 22, 2017

    This post was published at Zero Hedge on Jun 30, 2017.


  • Euro Surges, Yields And Stocks Rise As Central Banks Deliver Coordinated Message

    The euro soared to the highest level in over a year while bond yields and global shares also climbed, as an ongoing barrage of coordinated hawkish comments from central banks signaled the era of easy money might be coming to an end for more than just the United States. S&P futures were fractionally in the green following the best day for US equities in two months, as banks climbed after passing the Fed’s stress tests and announcing bigger than expected shareholder payouts.
    Asian stocks posted broad gains and European shares were little changed while oil climbed for the sixth consecutive day, with WTI trading above $45. The euro rose for a third day against the dollar as hawkish comments from Mario Draghi this week boosted bets the ECB is preparing to unwind stimulus, while the ECB’s attempt to walk back Draghi’s hawkishness was roundly ignored. EUR/USD rose as much as 0.4% to 1.1425, highest since June 2016.
    ‘It will take more than anonymous ECB sources to cool the desire to bet on the euro and dump the dollar,’ says Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. ‘Many investors are tantalized by the prospect of key quarterly meetings in September producing no move from the Fed but a plan to wind down quantitative easing at the ECB.’ The residual sentiment from Draghi’s statement meant yields across developed markets continued their upward move, with Bunds back to 0.40%, nearly doubling in the past three days.

    This post was published at Zero Hedge on Jun 29, 2017.


  • EURUSD, Bund Yields Plunge After ECB Tells Market ‘You Misjudged Draghi’s Comments’

    Just as we warned was likely (how many times have we seen this game played), The ECB has come out this morning to explain to the market that the reaction to Draghi’s hawkish speech yesterday was entirely mistaken. The reaction is clear – EUR and Bund yields are tumbling.
    Vice President Vitor Constancio scrambled to set the record straight, saying the remarks were ‘totally’ in line with existing policy and the response by investors was hard to understand.
    Following the euro’s biggest daily jump in over a year, in what could be interpreted as verbal intervention, ECB’s Constancio said that market reactions aren’t always understandable and that Draghi didn’t say anything new in regards to recent ECB policy.
    Mario Draghi’s speech in Sintra on Tuesday was ‘totally’ in line with recent ECB policy, ECB Vice President Vitor Constancio said in an interview on CNBC.
    Never a good thing though when you're the Master of Communication but you need to explain your speech twice.
    — Frederik Ducrozet (@fwred) June 28, 2017

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


  • Where Is Today’s “Rack” Trade?

    Ever have a pairs (spread) trade where both sides were moving against you? Ouch! Been there, don’t want to do that. Well, this is what we call the rack trade (Kudos to Doug Skrypek for coining the term).
    You can usually find these rack trades where the fast money is way offside. Where is that today, you ask? Long 10-year T-Notes and short crude oil.
    Recall earlier this year, the fast money had record shorts in the T-Note at 2.60 percent and record longs in crude oil and $50-55 bbl.. Betting against that crowd would have made you a lot of money.
    Notes and bonds are down today, which we would attribute to Mario Draghi’s comments that deflation is dead and QE is on its way out the door in Europe.

    This post was published at Zero Hedge on Jun 27, 2017.