Month: March 2018

Saudi Arabia and other oil rich Gulf Cooperation Council (GCC) allied states like the UAE have long managed to escape the scrutiny of media and international human rights bodies thanks to their deep pockets and security relationship with the West. Their collective oil, weapons, and infrastructure investment interdependency with Britain and the US have generally translated into Western governments, media, and human rights organizations toeing the party line on the gulf sheikhdoms, content to (with a few sporadic exceptions) uncritically present them as some kind of “reform-minded” terror-fighting benevolent monarchies looking out for democratic interests and championing human rights.

This is currently being demonstrated more than ever during Saudi Crown Prince Mohammed bin Salman’s (MBS) extensive and ongoing tour of the United States after a visit to the UK earlier this month. The kingdom’s heir apparent landed in Washington nearly two weeks ago and met with Trump and other high US officials before embarking on a multi-city tour across the United States.

Last Tuesday MBS met with Bill and Hillary Clinton, Kissinger, Senator Chuck Schumer, and UN Secretary General Antonio Guterres during a stop in New York City.  On Friday, he also met with the CEOs of Morgan Stanley and JPMorgan, James Gorman and Jamie Dimon.

He is scheduled to stop in Seattle and then California over the weekend, where he plans to strengthen ties with tech companies while meeting with Northwest business leaders.

Not unexpectedly, mainstream media and politicians have fawned over the 32-year old prince’s visit. Americans can even find a slick, nearly 100-page, ad-free magazine at their local supermarket newsstand which is entirely devoted to praising MBS and his “New Kingdom” (in the words of the magazine’s title), produced by the owner of the National Enquirer – American Media Inc.

I finally found a gift for Thomas Friedman’s birthday! https://t.co/3B7pqwHVeP

— Jeet Heer (@HeerJeet) March 26, 2018

The magazine of course has conveniently left out news of Saudi Arabia’s vicious 3-year long scorched earth bombing campaign over Yemen, which has left millions of Yemeni civilians displaced since 2015, and according to conservative UN estimates from early this year, has killed over 5,000 civilian noncombatants. 

However, yet more hard empirical proof has emerged demonstrating that MBS and his allies in the West are decimating entire cities and civilian infrastructure in already deeply impoverished Yemen in their fight against Houthi rebels. 

France 24 recently produced a graphic, based on satellite imagery captured through the opening two years of the war, showing just how devastating the Saudi coalition aerial campaign has been in Yemen’s capital city of Sanaa – which had a population approaching 2 million people before the war, and is the country’s largest city. 

According to France 24:

Satellite radar data from the European Space Agency shows the extent of Sanaa’s destruction. The capital of Yemen, part of which is listed as a UNESCO World Heritage Site, is in the grip of the war that has ravaged the country for three years.

Powerful new evidence from satellite imagery of the progressive Saudi-UAE destruction of Sanaa, the capital of #Yemen, shows clearly #Saudi — and US –guilt in war crimes. Send this to your member of Congress and demand action! https://t.co/hcXJU77Zok

— Gareth Porter (@GarethPorter) March 29, 2018

The France 24 report continues:

SAR satellite data from the European Space Agency (ESA), compiled and analyzed by Masae Analytics, a privately held company specializing in data collection and analysis, measures the extent of destruction in the capital between February-March 2015 and May 2017…

“The extent of the destruction in Sanaa is quite considerable, since the whole city is affected, said Emmanuel de Dinechin, associate director of Masae Analytics, interviewed by France 24. There are visible areas on the map that were targeted from the beginnin, and which were pounded fairly frequently during the period of analysis.”

The US itself has been an integral part of the coalition (also including Bahrain, Kuwait, UAE, Egypt, Sudan, and with the UK as a huge supplier of weapons) fighting Shia Houthi rebels, which overran the Yemen’s north in 2014.

Saudi airstrikes on the impoverished country have involved the assistance of US intelligence and use of American military hardware. Cholera has also made a comeback amidst the appalling war-time conditions, and civilian infrastructure such as hospitals have been bombed by the Saudis.

Absurd hypocrisy. The UN Security Council — including the US, UK, France, Russia, and China — condemned Houthi missile attacks on Saudi Arabia, but did not say a word about the tens of thousands of Saudi airstrikes that have massacred Yemeni civilians.https://t.co/bzIkVhOhwC

— Ben Norton (@BenjaminNorton) March 29, 2018

The war in Yemen has been drastically under-reported in US media, which tends to focus almost exclusively on human rights in places like Russia or Syria, where President Bashar al-Assad is consistently portrayed as little more than a homicidal maniac bent on massacring his own civilian population.

But as we reported last summer, the United Nations is in possession of a secret report which details a litany of horrific war crimes on the part of the coalition, including the bombing of dozens of schools, hospitals, and civilian infrastructure. 

The leaked 41-page draft UN document, was summarized at the time by Foreign Policy:

“The killing and maiming of children remained the most prevalent violation” of children’s rights in Yemen, according to the 41-page draft report obtained by Foreign Policy.

The chief author of the confidential draft report, Virginia Gamba, the U.N. chief’s special representative for children abused in war time, informed top U.N. officials Monday, that she intends to recommend the Saudi-led coalition be added to a list a countries and entities that kill and maim children, according to a well-placed source.

Early in the war the prestigious Columbia Journalism Review produced a short study which attempted to explain, according to its title, Why almost no one’s covering the war in Yemen. Other analysts have since criticized the media and political establishment’s tendency to exaggerate Iran’s presence in Yemen and further willingness to ignore or downplay the clear war crimes of US client regimes in the gulf: while Iran-aligned states and militias are framed as the region’s terrorizers, the Saudi-aligned coalition’s motives are constantly cast as praise-worthy and noble.

Meanwhile, the Pentagon this week reiterated its official (Orwellian) line that the US military’s deep level of assistance to the Saudi bombing campaign is actually geared toward reducing civilian harm. As Al-Monitor reports: “Speaking to reporters at the Defense Department on the heels of a meeting with Saudi Arabia’s Crown Prince Mohammed bin Salman last week, Mattis said a contingent of US advisers deployed to help with intelligence sharing are engaged in a ‘dynamic’ role to help ensure a reduction in civilian harm.”

But Al Monitor also notes that civilian deaths have continued unabated, while further quoting Mattis as saying, “This is the trigonometry level of warfare.”

So the official Pentagon line on Yemen seems to be that as it directly assists the Saudis in dropping bombs on civilians, it is actually helping those very civilians. Interesting logic.

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In what is only the latest outrageous ruling by a California judge so far this year, Starbucks and a handful of other coffee chains lost a yearslong legal battle against a consumer advocacy group trying to force coffee companies to attach cancer warnings to their packaging, according to Reuters. 

The Council for Education and Research on Toxics (CERT) sued 90 coffee retailers on the grounds they were in violation of a state law requiring companies to warn consumers about potentially cancerous chemicals in their products. Several defendants settled before the final decision and agreed to post the signage and pay millions in fines.

A chemical called acrylamide, which is one of the byproducts of roasting coffee beans, is present in brewed coffee and is listed as a potential carcinogen. CERT’s lawsuit was filed back in 2010.

Per Reuters, Los Angeles Superior Court Judge Elihu Berle ruled in a decision dated Wednesday that the defendants in the lawsuit had failed to prove that coffee isn’t a carcinogen.

Of course, Starbucks’ lawyers aren’t the only ones having difficulty proving this.

Research shows that coffee can lower the incidence of diabetes and liver disease – and even prolong life. The World Health Organization removed coffee from its “possible carcinogen” list in 2016.

One professional researcher contacted by CBS said there’s not enough evidence, in his opinion, to warrant such a warning label on coffee. Coffee companies have said removing acrylamide from brewed coffee would make it implausibly expensive and difficult to prepare in stores.

Others have said that if the potato chip industry was able to remove acrylamide from its product (which it did after being sued by CERT), Big Coffee could also accomplish it.

But regardless of whether a warning is truly warranted, many California coffee shops already hang warnings advising customers about the dangers of acrylamide.

But what’s worse for companies like Starbucks is that if the industry loses the inevitable appeal (companies have already said they’re “considering it”), the judge could impose a stiff civil penalty. By law, it could be as high as $2,500 per person exposed and per incident over the span of eight years. That could be an astronomical figure in California, the most populous state in the US, with 40 million residents.

If the ruling does stand, coffee companies might decide it’s easier and cheaper to print warnings on all of their packaging – rather than producing separate packaging just for California.

So once again, the impact of a California judge’s ruling will be felt across the entire country.

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The stock market is at record highs and people with FICO scores as low as 500 are once again happily obtaining mortgages. Not only that, but these mortgages are once again being securitized and are in demand by yield chasers.

All of the elements that are necessary for the 2008 subprime crisis to repeat itself are starting to fall back into place. Aside from the fact that we have inflated bubbles across basically all asset classes for the most part, not the least of which is evident in the stock market, the Financial Times reported today that not only are subprime mortgage backed securities becoming prominent again, but that the chase for yield was what fueling demand:

Issuance of securities backed by riskier US mortgages roughly doubled in the first quarter from a year earlier, as investors lapped up assets blamed for bringing the global financial system to the brink of collapse a decade ago. Home loans to people with scratches and dents in their credit histories dwindled to almost nothing in the aftermath of the crisis, as litigation-weary lenders retreated to patch up their balance sheets.

But over the past couple of years a group of specialist firms has begun to bring the loans back, navigating a dense web of new rules drawn up to protect borrowers and investors in the $9.3tn US home-loan market. Last year saw issuance of $4.1bn of securities backed by loans that would have been called “subprime” before the last financial crisis, according to figures from Inside Mortgage Finance, with the pace picking up in the latter half of the year. The momentum has continued into 2018, with deals worth $1.3bn in the first quarter — twice the $666m issued in the same period a year earlier.

Our central banks have done such a great job of getting us out of our last crisis that the recovery has prompted a mortgage originators and real estate investors to basically do the same exact thing that they were doing 2006 to 2007. After all, mortgage levels are already almost back to 2008 levels.

(Source)

If that wasn’t disturbing enough, the hedge fund partner that FT quotes in the article says that the subprime market has “a lot of room to grow“ as if it were some type of new emerging market generating productivity, and not just a carbon copy repeat of exactly what happen nearly 10 years ago.

“The market is . . . starting from such a small base that it has a lot of room to grow,” said Jamshed Engineer, a partner at Axonic Capital, a New York hedge fund with more than $2bn in assets under management.

“[Investors] are definitely chasing yields. Whenever these deals come out, for the most part, they are oversubscribed.”

The Financial Times article tries to couch the fact that all hell could be breaking loose yet again at some point soon by citing Dodd Frank reforms that we reported in March are already past the Senate. The key provisions of the rollback are:

• Relaxes a host of reporting requirements for small – medium banks, and to a smaller extent, large banks

• Eliminates a reporting requirement introduced by Dodd-Frank designed to avoid discriminatory lending

• Relaxes stress testing requirements intended to show how banks would survive another financial crisis

• Raises the threshold for banks which are not subject to enhanced liquidity requirements, stress tests, and enhanced risk management, from $50 billion to $250 billion – exempting several institutions which could pose systemic risks down the road.

• Allows megabanks such as Citi to count municipal bonds as “highly liquid assets” that could be used towards the “liquidity coverage ratio,” – assets which can be quickly liquidated during a crisis. 

• Calls for a report on the risks and benefits of algorithmic trading within 18 months

Despite the fact that the FT states that 500 FICO scores are getting approved for mortgages, S&P, one of the willfully ignorant and blind rating agencies that missed the subprime crisis thinks that everything is going to be fine:

“The risk is contained, in our view,” said Mr Saha.

For the way that our Federal Reserve has addressed the problems of 2007 or 2008, these are the end results that they deserve, but the American people ultimately do not.

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Once again, despite the flurry of so-called experts who were quoted in the financial media saying President Trump has no idea what he’s talking about when he tweeted that Amazon “are putting many thousands of retailers out of business”, somebody with experience running one of the world’s largest retailers shocked a handful of financial journalists on CNBC when he said Friday afternoon on “the Closing Bell” that, actually, Trump has a point…

As Bill Simon, former CEO of Walmart US, said Congress should look into splitting up Amazon.

“They’re not making money in retail, and they’re putting retailers out of business,” Simon told CNBC.

Simon said Amazon has operated its retail segment at a loss while relying on more profitable business segments – like Amazon Web Services – to offset these losses. The company’s explicit goal is to drive its competitors out of business before seizing their market share.

It’s because of this type of behavior that the government should intercede.

“It’s anti-competitive, it’s predatory, and it’s not right,” said Simon. “It’s not going to hurt the big ones. Walmart can adjusted. It’ll be there. Costco will continue to thrive.

“It’ll hurt small retailers, and it’ll hurt specialty chains,” he said. “You see what’s happened to Toys R Us and department stores. JC Penney is in trouble. And it’s because Amazon sells below cost and continues to do that,” Simon said.

“It’s destroying jobs and it’s destroying value in the sector.”

Trump published his controversial tweet early Friday, reigniting the selling pressure on Amazon’s share price.

The battle over whether Amazon should pay more taxes centers on a 1992 Supreme Court decision which ruled that states couldn’t collect sales taxes gathered by mail-order catalog unless the business is physically located in that state.

As one might imagine, this ruling – issued a year before the consumer-Web revolution began in earnest – is at the center over the battle over whether e-commerce businesses should pay more in local and state taxes.

And as Gerald Storch told CNBC the ruling is “an antiquated decision.”

But its existence means that the Supreme Court, not the president, must be the driving force in upending the status quo.

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Authored by Mac Slavo via SHTFplan.com,

Many users have been dropping Facebook, ceasing to use social media, or looking into the data that’s been collected about them.  But if you think that what Facebook knows about you is scary, check out what Google knows about you.

Dylan Curran, an information technology consultant, took a look at just what Google knew about him. Even with his experience as a web developer, he was shocked. “I was really like: ‘Oh, my God. This is preposterous,’” Curran said.

When he requested his data from Google, he found that it was constantly tracking his location in the background, including calculating how long it took to travel between different points, along with his hobbies, interests, possible weight, income, data on his apps, and records of files he had deleted.  But that was just the tip of the iceberg.

Although Curran thinks what Google is doing is harmless and not at all malicious (we’ll agree to disagree there), he did say it’s a little unsettling that the tech giant knows so many things about him and he feels uncomfortable now that he knows how closely he’s being tracked.

“It’s wrong to trust any entity that big with so much information,” he said. “They’re just trying to make money,” and at some point, “someone is going to make a mistake.” But this information and revelation definitely struck a chord with some, and they aren’t happy about it. Curran’s original tweet now has 159,000 talking about it.

Want to freak yourself out? I’m gonna show just how much of your information the likes of Facebook and Google store about you without you even realising it

— Dylan Curran (@iamdylancurran) March 24, 2018

Google tracked every single place Curran had been, right down to how long he was there and the time he left.

2. This is every place I have been in the last twelve months in Ireland, going in so far as the time of day I was in the location and how long it took me to get to that location from my previous one pic.twitter.com/I1kB1vwntT

— Dylan Curran (@iamdylancurran) March 24, 2018

“All Google users are being tracked by default in terms of physically where [they’re] going and located,” Scott J. Shackelford, an associate business professor at Indiana University focusing on cybersecurity law and policy said, according to NBC News. 

“That is shocking to a lot of people.”

A spokesperson for Google wanted the public to know that everyone needs to be aware of their online privacy choices and review them regularly.

“In order to make the privacy choices that are right for them, it’s essential that people can understand and control their Google data,” the spokesperson wrote in an email. 

“Over the years, we’ve developed tools like My Account expressly for this purpose, and we’d encourage everyone to review it regularly.”

Google has made an array of privacy tools available through the My Account feature. It will allow users see their personal data and tracking history.  It also allows people to turn off tracking mechanisms or delete individual pieces of data they want gone from the archives.

However, as The Duran’s Alex Christoforou notes, it gets far worse.

Fox News is reporting that the social spy network is actually recording and archiving your telephone conversations and text messages that you have outside of the social network.

That’s right, when your friend calls you on your mobile to invite you for a beer don’t be surprised if you see an ad for Heineken next time you visit your FB feed.

Here is Dylan to explain it all…

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After raising an astounding $850 million in a presale for its token, Telegram, a popular encrypted messaging app that was created by the same people behind VKontakt – better known as the Russian Facebook – has raised $1.7 billion, making it the largest ICO on record.

It managed to raise this staggering sum through a public token sale despite not having any plans to monetize its service. In fact, the company’s CEO, Pavel Durov, has explicitly said he plans to use the money to develop the Telegram Open Network blockchain, a payments system based off Telegram’s Gram token that he hopes will one day rival Visa Inc. and MasterCard.

Telegram recently passed the 200 million monthly active users mark, with more than 700,000 new users signing up each day. Despite this, Durov has said the company has no plans to try and monetize its users. Instead, he hopes to keep the app free and unsullied by ads for as long as possible.

Telegram raised $850 million from 94 investors in March after completing its earlier funding round in February. The company “may pursue one or more subsequent offerings,” the British Virgin Islands-registered firm said in a filing to the US Securities and Exchange Commission on Thursday.

We imagine the news of Telegram’s success will help sooth nervous crypto investors following bitcoin’s worst-ever quarterly performance (once again, cryptos lead the broader market as the “just BTFD” strategy used by countless traders has been rendered obsolete).

“Raising the planned amount is a success for Telegram, given that the Bitcoin decline in recent weeks made investors more cautious toward crypto-assets,” said Gennady Zhilyaev, a former executive of Templeton Emerging Markets Group in Russia, who now invests in virtual currencies and initial coin offerings.

It’s also notable that the offering was so successful, considering that regulators in Japan are cracking down on Binance – an exchange that has become a haven for trading in ICO tokens – amid a broader crackdown on unlicensed exchanges following a massive hack at CoinCheck.

Read the filing below:

2018.03.30telegram by Anonymous JJ6eerL on Scribd

 

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Authored by Doug French via The Mises Institute,

Every 10 years or so there is a banking crisis. We are due. However, the furthest thing from most people’s minds with the Trump boom is a banking/financial crisis, except for a few folks at the Brookings Institution, who just released a paper entitled “Liquidity Crisis in the Mortgage Market.”

You Suk Kim, of the Federal Reserve Board; Steven M. Laufer, who also labors on the Federal Reserve Board along with Karen Pence, plus, Richard Stanton of the University of California, Berkeley, and Nancy Wallace, also of University of California, Berkeley, to give away the punchline from their paper’s abstract, write, “We describe in this paper how nonbank mortgage companies are vulnerable to liquidity pressures in both their loan origination and servicing activities, and we document that this sector in aggregate appears to have minimal resources to bring to bear in a stress scenario.”

John and Joan Q. Public believe the 2018 mortgage business is like George Bailey’s Building & Loan in “It’s a Wonderful Life.” People deposit money, bankers lend it out, keeping the mortgage on their books. Easy Peasy.

As the folks from Brookings point out, it’s not that easy in these dark days of financial engineering. George Bailey’s handshake, promise and maybe a few words on a document to be signed by the borrower which meant simply, “I’ll pay you back,” has become a financial instrument, to be traded and hypothecated by faceless financial bureaucrats, each one taking a sliver of profit off the top.

Everyone remembers the crash of 2008 and plenty explanations have been posited. What the writers for Brookings explain is,

The literature has been largely silent on the liquidity vulnerabilities of the short-term loans that funded nonbank mortgage origination in the pre-crisis period, as well as the liquidity pressures that are typical in mortgage servicing when defaults are high. These vulnerabilities in the mortgage market were also not the focus of regulatory attention in the aftermath of the crisis.

They continue,

Of particular importance, these liquidity vulnerabilities are still present in 2018, and arguably the potential for liquidity issues associated with mortgage servicing is even greater than pre-financial crisis. These liquidity issues have become more pressing because the nonbank sector is a larger part of the market than it was pre-crisis, especially for loans securitized in pools with guarantees by Ginnie Mae.

George Bailey and his little financial institution are nowhere to be found.

The authors quote former Ginnie Mae president Ted Tozer concerning the stress between Ginnie Mae and their nonbank counterparties.

… Today almost two thirds of Ginnie Mae guaranteed securities are issued by independent mortgage banks. And independent mortgage bankers are using some of the most sophisticated financial engineering that this industry has ever seen. We are also seeing greater dependence on credit lines, securitization involving multiple players, and more frequent trading of servicing rights and all of these things have created a new and challenging environment for Ginnie Mae. . . . In other words, the risk is a lot higher and business models of our issuers are a lot more complex. Add in sharply higher annual volumes, and these risks are amplified many times over. . . . Also, we have depended on sheer luck. Luck that the economy does not fall into recession and increase mortgage delinquencies. Luck that our independent mortgage bankers remain able to access their lines of credit. And luck that nothing critical falls through the cracks…

Tozer said these words in 2015. The mortgage engine is built for perfection: a thriving economy, with low interest rates, allowing everyone, from the mortgage borrowers to the credit line providers and securitizers to keep their promises.

However, the world is anything but perfect.

Nonbank mortgage providers essentially borrow short and lend long, using warehouse lines of credit from banks to fund mortgages. From 2012 to the third quarter of 2017, commitments on warehouse lines has increased 70 percent. Of course, if all goes well, a mortgage will be sold quickly into the secondary market (on average 15 days) and the line will be reduced.

The Brookings authors identify three vulnerabilities in the process.

1) margin calls due to aging risk (i.e., the time it takes the nonbank to sell the loans to a mortgage investor and repurchase the collateral) and/or mark-to-market devaluations, 2) roll-over risk and 3) covenant violations leading to cancellation of the lines.

These vulnerabilities are very real, should there be a sudden increase in interest rates or other significant change in the market that causes collateral values to drop. Most nonbank lenders have multiple warehouse lines. However, cross default provisions will trigger a scramble amongst warehouse lenders for a mortgage originator’s assets should it default on one of its lines.

The authors explain,

These sources of warehouse credit began to dry up rapidly in the run-up to the financial crisis as the slowdown in the securitization markets made it difficult for the nonbanks to move loan originations off the warehouse lines and the premiums paid for subprime warehoused loans evaporated. In 2006:Q4 there were 90 warehouse lenders in the U.S. with about $200 billion of outstanding committed warehouse lines; however, by 2008:Q2 there were only 40 warehouse lenders with outstanding committed lines of $20–25 billion, a decline exceeding 85%.34 By March of 2009, there were only 10 warehouse lenders in the U.S. In addition, runs on SIVs led to the collapse of this form of warehouse funding by the end of 2007 … and it has not returned as a funding source post-crisis.

Mortgage servicers have liquidity issues because they are required to continue making payments to investors, tax authorities, and insurers if mortgage borrowers quit making payments. Servicers are eventually reimbursed for these “servicing advances,” however, they need to finance the advances in the interim.

For example, servicers were stressed last year when hurricane victims were allowed payment forbearance by Ginnie Mae and the GSEs. Fortunately, the servicers were geographically diversified enough to manage through the strain.

Again, everything is dandy if borrowers make their payments. However, as Mike “Mish” Shedlock explains,

Nonbanks are vulnerable to macroeconomic shocks, rising interest rates, home price declines and job losses, often with a bare minimum down payment.

This is happening while debt-to-income DTI ratios are on the rise (Fannie Mae increased its DTI ceiling from 45 percent to 50 percent last July 29) and median FICO scores are dropping.

This is hardly surprising given homes are not affordable.

The crash clock is ticking.

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We find it amusing how much digital ink continues to be spilled to predict i) when the ECB will end its QE and ii) whether it will hike before or after it finally stops purchasing government and corporate bonds, or funnier yet, start selling them. The reason for that is that over the past 4 years, at the first indication of even the slightest market disturbance, the ECB comes rushing in to assure the market that all shall be well. As such, the world’s biggest hedge fund, which now owns more than 40% of Europe’s GDP in securities…

… remains forever entwined with the fate of the European capital markets.

The latest example of this was apparent in the latest week ended March 23, when the ECB nearly doubled its corporate bon buying the moment the market hit turbulence.

As the ECB reported several days ago, in the week ending March 23rd the ECB stepping up its purchases of corporate bonds under the Corporate Sector Purchase Programme, “oddly” at a time when EUR denominated IG non-financial spreads accelerated their march wider, and are now 23bp wider since February 2.

As Goldman calculates, after averaging €1.4 billion in weekly corporate bond purchases YTD, the ECB purchased €2.2 billion – 55% above their 2018 average and nearly double the €1.26BN in purchases from the prior week – in an effort to calm the market just as yields blew out.

It gets better: according to Goldman calculations, in the month of March, the ECB allocated 22% of its total APP purchases towards corporate securities. This is up from 18% in January and February, and only around 10% (on average) over the first 18 months of the program (through December of last year).

Some context: while on one hand Goldman makes it abundantly clear that the ECB is trapped and can not extricate itself from price formation without blowing up the bond market (it now owns roughly 15% of all outstanding European corporate bonds), and Draghi finds it unfathomable to allow the market selloff, and thus not only intervenes, but does so in force, the bank which spawned Mario Draghi forecasts a gradual tapering between September and December. At least there is no discussion on whether the ECB will taper its corporate bond buying program, something which the chart above clearly shows is impossible unless the ECB is willing to risk a blow out in European corporate yields.

Which also begs the question: if Draghi considers it a matter of urgency to double down on ECB bond purchases when yields move by a modest 20 bps, what will he do when the European junk and IG markets start sliding in 1% or higher daily increments… and how long until the market grasps that there is no “exit” unless central banks are willing to see everything they’ve worked on for the past decade, crash and burn?

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