Was Draghi’s Conference Call Part Of Some Grand Plan?
There is a sense of disbelief and denial out there. Some people cannot believe Draghi meant what he said. it would be too harsh, too wrong, etc. Personally I think he meant what he said. Europe, not just Germany, have an aversion to printing and a belief that austerity and time will work. But what […]
US Stocks Reasonably Well Behaved So Far…
But credit markets and banking stocks are not so happy. SNR bank CDS is Europe is 25 wider, SOVX is 25 wider. Italian 5-year bond yields are 53 bps higher, back to 6.68%. GLE.FP (SocGen) traded at 20.42 earlier today and is at 18.70 now. HYG is down a little bit, but that looks like […]
The “Treaty” Negotiations
Well, it seems like the ECB is telling the countries they need to change the treaty if they want the ECB to act more like the Fed (giving up the pretense of sterilization). Maybe the move is designed to push the issue and make the summit come up with an even bigger plan (regardless of […]
Away From The Headlines…
Away from the headlines, I was wondering what is happening with the Greek “private sector involvement”. It seems that they will receive enough money to pay off their 7 billion EUR of debt coming due this year. Greece has 22 billion coming due in the first quarter next year. Why would banks negotiate in good faith […]
(BN) *DRAGHI SAYS EBA REPORT WILL BE REASSURING
EBA? European Banking Authority. Shocker that another 3 letter entity would produce a reassuring report. I have to admit, I had to google what an EBA is. In the meantime, Draghi also said that the plan of lending money to the IMF so the IMF can lend the money bank may not fit into the […]
(BN) *DRAGHI SAYS TREATY SAYS NO MONETARY FINANCING
Not sure what exactly no “monetary” financing means, but I suspect it isn’t what the market was hoping for. Maybe they can continue to pretend to “sterilize” but this seems like he is stepping back. Did Germany spend an entire week saying the ECB was independent so they wouldn’t take all the blame for this? […]
(BN) *MERKEL SAYS FINANCIAL INDUSTRY MUST ‘SERVE THE PEOPLE’
So many headlines, so little ability to figure out what any of it means. The financial industry must “serve the people” yet, they just got unlimited money for 3 years on whatever collateral they can scrape up? How the ECB can promise that without printing is a big question. On the other hand, why back […]
How Real Is The Rally In Corporate Credit?
IG17, the CDX index has been very strong, though it has stabilized at these levels for the past couple of days. The “basis” has become very rich. The index is trading more than 7 bps tighter than the fair value. This is a clear sign that the market has been squeezed and that hedges are coming off but the rally […]
Act II Begins
The intermission is over and now we get to the heart of the matter. ECB We will get some actual information this morning. The ECB will cut rates, 25 bps at a minimum and possibly 50 bps. That isn’t news and is priced in. Any pop on a 25 bp cut is likely to be […]
IMF
I do not believe that the IMF can create a new plan above its existing unallocated money without new commitments from its members. The EU is effectively out. The US will struggle to approve anything. China, Russia, and Brazil are not necessarily in position to increase their commitments as they all have domestic problems. Japan […]
