The ECB and Mario Draghi made some fairly dramatic moves in European monetary policy last week. They weren't entirely unexpected but the market response indicates some disappointment that they didn't do the full monty and initiate outright QE. Draghi has spoken recently about his desire to see a lower Euro and the last couple of weeks things have been going [...]
What is a "widowmaker"? Merriam Webster defines it as "something dangerous to a worker's life or health". More specifically the term comes from the logging industry and describes a loose limb hanging high in a tree that falls on and kills a logger. On Wall Street for the last 25 years or so, it has had a somewhat different meaning. [...]
Mario Draghi was out yesterday with comments about the recent strength of the Euro (via the WSJ): WASHINGTON—European Central Bank President Mario Draghi on Saturday ratcheted up his warnings about the strong euro, saying a further rise in the exchange rate would trigger additional monetary easing to keep inflation from falling too low. "A strengthening of the exchange rate requires further monetary [...]
To say that Greece is an economic and fiscal mess is to be repetitive. While the imprint of victimization stains much of the economic collapse, it is at least somewhat strongly applicable in the reminder that financialism is a huge strain in the long run. As with nearly everything European since last summer, the whispers run toward recovery even in [...]
Well, that didn't take long. A couple of months ago, Ben Bernanke started the inevitable process of weaning the markets off his monetary methadone. He talked openly about the process of winding down quantitative easing, tapering bond purchases and eventually normalizing monetary policy - assuming the economy cooperated and sustained its feeble but forward momentum. Unfortunately, the markets threw a [...]
The rumors of the ECB rate cut had become rather ubiquitous in the past few weeks. Confidence in the European economy has been indirectly proportionate to those rumors, particularly as Germany seems to be heading south again after a short-lived reprieve. France is just a downright mess. But the rate cuts that were just announced will have no impact on [...]
From friend of Alhambra, Brian Cronin: The first rule in politics is that you never believe anything until it’s officially denied. “The euro is irreversible and is not in danger of collapsing” said ECB president Mario Draghi as the central bank left rates unchanged last week. He said they will come up with more measures over the coming weeks to [...]
There's an old saying on Wall Street that the market will always act in a way that frustrates the majority of market participants. If that is true, then it goes without saying that the majority must be bearish because this market has had ample opportunities to move lower and steadfastly refuses to do so. Coming into last week the conventional [...]
Stock markets took off in the middle of last week as Mario Draghi promised to save the Euro: Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough. To the extent that the size of the sovereign premia (borrowing costs) hamper the functioning of the monetary policy transmission [...]
The Fate of the Euro, and Euro Investors By John L. Chapman, Ph.D. June 17, 2012 Washington, D.C. The world economy is truly suspended on a knife’s edge at the moment, as events in Europe push toward a settlement after years of reckoning postponement. Global stock markets, led by undervalued U.S. equities, would soar in the event of credible commitment to [...]
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