another site
There is no news as a catalyst here but bonds, FX, commodity, and stock markets are smashing around as Twitter break below its open price. JPY is rushing higher against the USD (as is EUR which has retraced Fib 61.8% of its losses from Draghi). Treasury yields are collapsing. Nasdaq and all the other US equity indices are dumping as momo names suffer the most.
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/sEKHKxm5-y4/story01.htm Tyler Durden
Inflation vs deflation vs stagflation
The primary business of banks is lending.
In the states I made this point when most analysts insisted that ZIRP was good for the banks, to wit…
Now remember, I’ve been very bearish on the EU and thier banks and sovereign debt in particular, since Q! 2010 – way before most – reference Pan-European sovereign debt crisis. Yesterday morning if you were to Google the term EU recovery, you would see something like this in return…
Well, somebody better tell Draghi, as per Bloomberg: ECB Cuts Key Rate to Record Low to Fight Deflation Threat
The European Central Bank cut its benchmark interest rate to a record low after a drop in inflation to the slowest pace in four years threatened its mission to keep prices stable.
Policy makers meeting in Frankfurt today reduced the main refinancing rate by a quarter point to 0.25 percent. The decision was predicted by three of 70 economists in a Bloomberg News survey. The ECB kept its deposit rate at zero and trimmed the marginal lending rate to 0.75 percent. ECB President Mario Draghi will hold a press conference at 2:30 p.m.
The ECB now has just one more quarter-point cut left before reaching zero, increasing the likelihood of unconventional tools such as quantitative easing or a negative deposit rate if prices slow further or the economic recovery stalls. Euro-area inflation is less than half the ECB’s target and unemployment is at the highest level since the currency bloc was formed in 1999.
“There comes a point where inflation is so weak, and coming in weaker than anticipated, that the case for loosening policy becomes too hard to resist,” said Richard Barwell, senior European economist at Royal Bank of Scotland Group Plc in London, who predicted the cut. “Bad unemployment numbers only make the case stronger.”
Does it seem like I’ve predicted the future hear once again as that Financial Nostradamus Dude???
A Fed-style quantitative easing program has repeatedly been ruled out by ECB policy makers. The central bank is barred by European Union treaties from financing state debt, making large-scale purchases of government bonds open to a legal challenge.
While Draghi has floated the prospect of a negative deposit rate, the rate for commercial lenders who park excess cash at the central bank, policy makers have said that its effects can’t be adequately predicted. A negative deposit rate could hurt banks’ profitability by lowering money-market rates, potentially hampering credit supply to companies and households and reducing banks’ incentive to lend to other financial institutions.
“If inflation stays low, as seems likely, and the threat of inflation expectations becoming unanchored to the downside increases significantly, then all the tools in the box can come into play,” said Ken Wattret, chief euro-area economist at BNP Paribas SA in London. “But knowing the way the ECB operates
and how long it has taken to try and get support for a refi rate cut, doing the big stuff could take some time.”
Well, I believe QE has already been implemented by the ECB accepting trash sovereign debt as marketable collateral, but that’s a discussion for another day. Just listen to the Financial Nostradamus dude when he warns what happens when a larger, admitted QE program is instituted. For one, you’d probably eliminate that inflation problem… replacing it with…
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PbCun3Pkp0s/story01.htm Reggie Middleton
Inflation vs deflation vs stagflation
The primary business of banks is lending.
In the states I made this point when most analysts insisted that ZIRP was good for the banks, to wit…
Now remember, I’ve been very bearish on the EU and thier banks and sovereign debt in particular, since Q! 2010 – way before most – reference Pan-European sovereign debt crisis. Yesterday morning if you were to Google the term EU recovery, you would see something like this in return…
Well, somebody better tell Draghi, as per Bloomberg: ECB Cuts Key Rate to Record Low to Fight Deflation Threat
The European Central Bank cut its benchmark interest rate to a record low after a drop in inflation to the slowest pace in four years threatened its mission to keep prices stable.
Policy makers meeting in Frankfurt today reduced the main refinancing rate by a quarter point to 0.25 percent. The decision was predicted by three of 70 economists in a Bloomberg News survey. The ECB kept its deposit rate at zero and trimmed the marginal lending rate to 0.75 percent. ECB President Mario Draghi will hold a press conference at 2:30 p.m.
The ECB now has just one more quarter-point cut left before reaching zero, increasing the likelihood of unconventional tools such as quantitative easing or a negative deposit rate if prices slow further or the economic recovery stalls. Euro-area inflation is less than half the ECB’s target and unemployment is at the highest level since the currency bloc was formed in 1999.
“There comes a point where inflation is so weak, and coming in weaker than anticipated, that the case for loosening policy becomes too hard to resist,” said Richard Barwell, senior European economist at Royal Bank of Scotland Group Plc in London, who predicted the cut. “Bad unemployment numbers only make the case stronger.”
Does it seem like I’ve predicted the future hear once again as that Financial Nostradamus Dude???
A Fed-style quantitative easing program has repeatedly been ruled out by ECB policy makers. The central bank is barred by European Union treaties from financing state debt, making large-scale purchases of government bonds open to a legal challenge.
While Draghi has floated the prospect of a negative deposit rate, the rate for commercial lenders who park excess cash at the central bank, policy makers have said that its effects can’t be adequately predicted. A negative deposit rate could hurt banks’ profitability by lowering money-market rates, potentially hampering credit supply to companies and households and reducing banks’ incentive to lend to other financial institutions.
“If inflation stays low, as seems likely, and the threat of inflation expectations becoming unanchored to the downside increases significantly, then all the tools in the box can come into play,” said Ken Wattret, chief euro-area economist at BNP Paribas SA in London. “But knowing the way the ECB operates
and how long it has taken to try and get support for a refi rate cut, doing the big stuff could take some time.”
Well, I believe QE has already been implemented by the ECB accepting trash sovereign debt as marketable collateral, but that’s a discussion for another day. Just listen to the Financial Nostradamus dude when he warns what happens when a larger, admitted QE program is instituted. For one, you’d probably eliminate that inflation problem… replacing it with…
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PbCun3Pkp0s/story01.htm Reggie Middleton
Nope, no bubble here… Having traded up to $50 (over 33x Price-to-Sales), it seems hitting every analyst profit target (aside from Topeka’s Anthony) within one hour of its release was enough for most… The ‘profit-taking” has started and now TWTR is trading back below its break price… But do not worry – everyone can rest assured as Cramer just said “we’re out of the woods here.” Of course, as everyone knows, it’s not where you start, it’s where you finish that counts…
Only Topeka sees more…
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/c8XscMAZV2I/story01.htm Tyler Durden
Today’s AM fix was USD 1,316.00, EUR 973.45 and GBP 818.46 per ounce.
Yesterday’s AM fix was USD 1,317.00, EUR 975.05 and GBP 817.66 per ounce.
Gold climbed $6.40 or 0.49% yesterday, closing at $1,317.20/oz. Silver climbed $0.10 or 0.46% closing at $21.78. Platinum rose $13.25 or 0.9% to $1,460.99/oz, while palladium rose $13.50 or 1.8% to $751.50/oz.
Gold in Euros, 30 Day – (Bloomberg)
Today, all eyes are on the ECB rate decision. The ECB is expected to leave rates unchanged at 12:45 GMT (7:45 EDT), but may indicate that it will reduce rates soon which would be gold supportive, particularly in euro terms.
Gold in euro terms is down 23.4% year to date. It appears to be consolidating between EUR 900/oz, the low on June 28th and EUR 1,100/oz, gold’s high back in late May. A signal from the ECB that it is going to loosen monetary policies even further could be the spark that gold needs to help prices get momentum to the upside again.
There is increasing pressure on the ECB, particularly from the banking sector, to adopt the ultra loose monetary policies being pursued and experimented with by the Federal Reserve. Policies, incidentally, which have not succeeded in reviving the moribund U.S. economy.
This pressure and a lack of inflation today may lead the ECB to signal that they intend reducing interest rates from 0.5% soon. They may also consider adopting even more radical monetary policies involving quantitative easing (QE) or the creation of euros in order to buy or monetise government debt as the U.S. is doing with their $85 billion a month bond buying programme.
An even more radical option of negative deposit rates is also being considered. There are suggestions that the ECB is considering charging banks for depositing their reserves with the ECB by imposing a negative deposit rate.
Many banks would then pass on this negative rate to depositors meaning that extremely low yielding deposit instruments could become negative and actually cost depositors money.
Gold in Euros, 3 Year – (Bloomberg)
Expectations the ECB would cut its 0.5 refinancing rate rose last week after official figures showed a fall in euro zone inflation. Citizens in most European nations would likely question the figures as the real world experience of people in most European countries is of rising prices.
Draghi’s news conference, when he may prepare the ground for a cut in December, is at 13:30 GMT.
World Currency Ranker, Euro in G10 and Gold, Year To Date – (Bloomberg)
If the ECB suggest that they will reduce rates to a new record low of 0.25%, this would put pressure on the euro and lead to higher prices in gold terms.
In dollar terms, the euro remains above strong chart support at $1.3462 from a trendline drawn from lows hit in early July. Technical analysts say a break below this line could lead to further losses for the euro, which only last week traded as high as $1.38 before the weak inflation data.
The euro will come under pressure if Draghi signals the possibility of negative deposit rates.
As soon as the ECB rate decision is over, attention will move to Friday’s U.S. jobs number. A poor jobs number tomorrow, should see gold rise on safe haven buying due to concerns about the struggling U.S. economy. A weaker economy will likely lead to a continuation of ultra loose monetary policies.
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/YqWxOhAXP1s/story01.htm GoldCore
+73% at the open… HFT activity is extreme
$TWTR hits 2,200 trades in a second. Much higher than $FB during it’s IPO
— Eric Scott Hunsader (@nanexllc) November 7, 2013
For now TWTR has reached $47.23…
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/NCX7IvBAoMI/story01.htm Tyler Durden
With JPM having stolen the spotlight for every possible instance of fraud and market manipulation in the past year, it was easy to forget there are other prominent banks that engage in precisely the same deceptive practices as, well, everyone else. One such prominent bank is none other than everyone’s old favorite bloodthirsty mollusc, Goldman Sachs, which in a filing reported that “currencies and commodities were added to a list of financial products and related activities that are subject to investigation. The filing also added options trading and technology systems and controls to the list.” So, pretty much everything is being investigated.
Bloomberg reports that “Investigators are looking at the firm’s “trading activities and communications in connection with the establishment of benchmark rates,” Goldman Sachs said in the filing. The company “is cooperating with all such regulatory investigations and reviews.”
As noted above, Goldman is merely the latest bank to join pretty much everyone else, who is now under investigation.
At least eight banks including Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM) have said they are being investigated by authorities examining the $5.3 trillion-a-day foreign-exchange market and are co-operating. Citigroup, JPMorgan and Barclays Plc (BARC) have suspended or put on leave some of their most senior currency traders amid the inquiry. No one has been accused of wrongdoing.
The U.S. Federal Reserve is examining legal and regulatory exemptions that have allowed banks including Goldman Sachs to trade and own raw materials such as oil, coal and metals, a person with knowledge of the matter said last month.
None of this should be surprising. What should, however, come as a big shock is that while JPM reported it has not had one trading loss either in Q3 or all of 2013 to date, Goldman just announced it lost money on a far more realistic 23% of all trading days, or 15 of 64, in the quarter.
It seems that unlike JPM, Goldman is taking the government’s fraud investigations seriously.
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/VAWuuDer0JU/story01.htm Tyler Durden
With everyone’s attention focused on TWTR’s release and following this morning’s insta-lift from Draghi’s surprise, US equity markets are falling fast (led by Nasdaq weakness on moar momo failures) – reverting all the gains and some. While we fully expect more “self-help” declarations as the day wears on, IB has already released a statement that Pink Sheet stock market data will be unavailable until further notice… and that NASDAQ has disable direct routing for TWTR… what a mess…
Pink Sheets Break
NASDAQ Breaks
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/aO4uAjpx7wM/story01.htm Tyler Durden
What inventory boosts give in the current quarter, inventory lack of boosts take in future quarters. At least that is what Goldman’s Jan Hatzius just stated in his note summarizing not only the just released Q3 GDP, but his first Q4 tracking forecast, which he cut from 2.0% to 1.5%.
To wit:
BOTTOM LINE: GDP grew more quickly than expected in Q3, but the surprise came mainly from a larger-than-expected inventory contribution and a smaller-than-expected decline in government spending. Consumer spending and business fixed investment were less strong. Initial jobless claims declined as expected with no special distortions noted by the Labor Department. We started our Q4 GDP tracking estimate at 1.5%.
- GDP grew at a faster-than-expected 2.8% rate in Q3 (vs. consensus +2.0%). Personal consumption expenditures?the largest component of GDP?rose a modest 1.5% (vs consensus +1.6%), with strong growth in goods consumption offset by meager growth in services consumption. Business fixed investment increased at a disappointing 1.6% rate, with a 3.7% decline in equipment investment. Offsetting slightly disappointing PCE growth and sluggish business fixed investment, inventory accumulation contributed eight-tenths to headline growth, while federal government spending posted a smaller-than-expected 1.7% decline. (Federal spending has tended to show some degree of residual seasonality in recent years, with stronger growth in Q2 and Q3, and weaker growth in Q1 and Q4.) In addition, residential investment – which reflects new construction with a lag – rose a solid 14.6%. Stripping out the contribution from inventory investment, real final sales increased at a moderate 2.0% pace.
- In light of the composition of Q3 growth?driven by a substantial boost from inventories and a smaller-than-expected decline in government spending, we started our Q4 tracking at 1.5%, five-tenths below our prior assumption of 2.0%. Inventory investment tends to subtract from growth following quarters showing a positive contribution, while we expect the smaller-than-expected decline in Q3 government spending to result in even weaker Q4 spending than we had anticipated.
Which is great news for stocks: even more economic deterioration means even more BTFATH.
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/hWYmheG8an8/story01.htm Tyler Durden
It just gets better and better: TRADING RANGE: TWTR (NYSE): 42.0000-46.0000
As a reminder, at $44/share, Twitter’s valuation rises to $31 billion!
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/VQvINGAMwEA/story01.htm Tyler Durden
