Thursday, 24 October 2019

The Draghi legacy

US equity indexes closed moderately mixed, sp +5pts (0.2%) at 3010. Nasdaq comp' +0.8%. Dow -0.1%. The Transports settled -0.5%.




US equities opened on a positive note, but the gains were shaky right from the open.

In early morning, yours truly noted...

... well, 14mins to be precise...

Trump took the first swipe at Print Central in some weeks. Indeed, it would seem that Trump does not realise that the Fed has already spun up the printers.

The afternoon saw further minor chop, leaning upward into the close to settle at 3010, but notably under the opening high of 3016. Volatility remained subdued, with the VIX settling -2.1% at 13.71. S/t outlook still offers significant downside to tag/fill four gaps to 2911/2893. 

The Draghi legacy

Note the negative German and French bond yields

Today saw the President of the ECB - Mario Draghi, host his last meeting and press conf'. One of the media hacks asked about his legacy, with his response to "never give up". Whilst I can respect that sentiment, Draghi leaves behind a trail of horror.

Exhibit 'A' - Deutsche Bank (DB), monthly,

Draghi took over the ECB Nov'1st 2011, when DB opened at $32.19. Today, DB settled at $7.89.

I could highlight many other European financials, most of which have been ground to dust across the past eight years. Negative rates are a poison to the financials, and it remains the height of irony, that the institution tasked to protect the European economy, has consistently harmed it. 

Lagarde will take the helm Nov'1st 2019, with rates at -0.50% and monthly QE of €20bn. Its safe to say that in addition to requesting fiscal stimulus from various EU governments, she will cut rates toward -1.00%, and increase QE to €40/50bn by mid 2020.

I will close on the note that whilst the current mainstream media hacks continue to pander and fawn to the central banks, the financial historians of the 22nd century won't be so lenient.

Extra charts in AH (usually around 5pm EDT) @

Goodnight from London
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