Draghi On Monday – Devil In The Details

There is a very important detail of Draghi’s proposed “ECB QE Program” that looks to have escaped the larger headline news  (suggesting that Draghi’s program will provide the next boost for markets and ultimately save The E.U Zone from disaster ).

Draghi suggested last week that The ECB “will not be buying securities if” their yields are below the ECB’s deposit rate of minus 0.2 percent.

Well…….with Eighty-four of the 346 securities in the Bloomberg Eurozone Sovereign Bond Index with rates below zero ( including all German bonds due in six years or less ) it remains to be seen just “what will be bought” and in what kind of amount.

We’ve all seen Draghi “talk the talk” so many times in the past, so again the question comes to mind if “this time”he can “or will” walk the walk.

Imagine the set up for markets so widely expecting the ECB QE Program to “somehow” put a shelf under the economic destruction currently sweeping Europe…only to realize that once again Draghi pulls the carpet out from under, offering far less than what was originally proposed.

It would not surprise me in the least to see the final bottom to be put in on The EURO triggered by a less than expected result from The ECB ‘s “supposed” QE Bazooka.

We’ll find out here on Monday / Tuesday as the program is expected to begin.

17 Responses

  1. Dress March 8, 2015 / 5:39 pm

    Kong, you are back! Great!

    I think they will try whatever they can to spend that €60bn a month and get this message across. Doesn’t matter how it actually plays out. The HFT algorithms don’t understand it anyways.

    • Pot Stock Watch March 8, 2015 / 6:05 pm

      It’s just one little detail I noticed that I thought “might” line up with this market.

      We’ve obviously seen the selling of EURO in anticipation of the program launch…well…..tomorrow it is so…..who knows – perhaps “markets lower on dissapointment from Draghi” hits the headlines.

      So we’ll see.

  2. bulltill2020 March 9, 2015 / 2:48 am

    Yeah Kongo go ahead again picking bottoms selling dax nikei USD again same post as always when will you learn i know you dont let my post through with your scam service i know you kind of people you arent a trader

    • Pot Stock Watch March 9, 2015 / 5:56 am

      Ya your posts are just golden – I really appreciate your effort here at the blog.

      Keep it up my good man – oh…..and whatever you do…..don’t look at The EUR or GBP here this morning.

      And ya….looks like The SP 500 and Nikkei are looking fantastic here as well.

      I suggest “you” buy both with both hands.

  3. David March 9, 2015 / 10:05 am

    Getting a little bounce on EURO over 1.09 earlier. If we get legs I think we can get as high as 1.12. Outside of that, longer-term I fear this will overshoot to the downside way below parity sometime next year. Then, a long-term buy will be golden.

    This bounce on GBP looks like a good time to start building shorts running into “uncertainty” (the May elections); once that is out of the way, medium-long term buys in GBP look good.

    • Pot Stock Watch March 9, 2015 / 10:18 am

      Looking out that far ( later this year ) lower in EUR would appear to make sense, unless of course we get QE5 out of The U.S – which I expect we will.

      This pair will volley back n forth in a very wide range over the next year as both economies ( and monetary policies ) are completely out of this world / wack.

      I love it…..The ECB essentially printing money out of thin air to buy bonds that provide a negative ( or as close to negative as can get ) interest rate.

      This ( along with the current U.S phony baloney ) really does say alot with respect to where Central Banks really consider the global economy is at.

      Plans like this ( as insane / non sensical as they are ) only drive the point home even further.

      This thing is a house of cards built on pillars of sand, and I’m just glad I’m not a long term investor – still buying this bullshit.

      Somebody gonna get wacked here “real hard” soon enough.

  4. David March 9, 2015 / 12:03 pm

    I’d luv to see EUR/USD volley back and forth for a while as I actually prefer ranging markets; it’s just been on a 1 way trip down for so long now. It’d also be nice to get some longer-term shorts in at say 1.15 or so, 1.20 would be a dream (that is a gap that still needs to be filled someday).

  5. Benno March 9, 2015 / 7:04 pm

    “We’ve all seen Draghi “talk the talk” so many times in the past, so again the question comes to mind if “this time”he can “or will” walk the walk.”

    At this point isn’t he contractually obligated to do what was formalized? Isn’t this point where the rubber finally, after all these years with this blowhard, meets the road? There is a set schedule of times and amounts, right? He has to do it. I think if certain cusip#’s fail to meet purchasing specifications these nuts will just add to the list and include other things. We all know these CBs will just make stuff up on the fly if necessary. That may cause them to have to go way down the quality curve, though. Hmmm.

    • Dress March 9, 2015 / 8:10 pm

      ECB is more restricted than the FED. The FED doesn’t give a damn shit anyways. In the EU there is more rule of law and actually a different mindset regarding lawfulness.

      • madness March 10, 2015 / 1:53 am

        EU also had a law that stated hey would never monetize debt yet we have QE in EU now.

        The law can and has been “modified” with the sue of subtle changes in definition. EU will do whatever it can to survive so I wouldn’t really count on “the law” or “rules” to judge what the ECB can and cannot do.

  6. madness March 10, 2015 / 1:54 am

    *** “With the use of subtle changes” (correct typo above)

    • Dress March 10, 2015 / 5:59 am

      The law says the ECB cannot directly monetize debt. They didn’t break the law. They just do it indirectly. 😉

      • Pot Stock Watch March 10, 2015 / 7:01 am

        It’s a complete gong show one way or another and will do nothing to improve the economy but…..

        The money keeps flowing – and the biggest ponzi on Earth keeps on rolling.

        Short of “declaration of war” ( which is likely where all this is headed anyway ).

      • madness March 10, 2015 / 7:27 am

        My point exactly 🙂 They bend the law and the definitions to get what they want so the law/rules all count for nothing.

        It’s us, the general population and tax payer, that will eventually have to suffer the consequence of all this irresponsible action. People in Western worlds are to fearful to upset the apple cart, they would rather be like sheep that is looked after by a crony system than a wolf left to fend for itself. Most people in the Western are too soft and hate the idea of enduring hardship which is why CB’s and govts have been allowed to get away with what they have. It’s a case of “better the devil you know”.

        When the climactic fall does come, only the extreme wealthy will be comfortable, the rest, including the middle classes, had better get ready to queue up at the soup kitchens.

        Still, we can always barter our newly acquired $350/$17,000 Apple Watches should we absolutely have to 😀

        • Pot Stock Watch March 10, 2015 / 7:50 am

          Great points, and yes it is certainly a case of the boys at the top rinsing the general masses.

          But….at least for those of us with the understanding of what this “truly is” – we’ll get our shot.

          It’s the sheeple that continue to support / beleive in this garbage that will “always” be left holding the bag, and in this case a really , really “big bag”.

      • Dress March 10, 2015 / 7:28 am

        The US declared war on Germany when they said you can’t have back their frigging gold. But Germany dropped the pants and bent over. They don’t have an army and are an American vassal state anyways.

        • Pot Stock Watch March 10, 2015 / 7:54 am

          Exactly.There is so much of this “underlaying stuff” as with Germany and the gold, that the common man really has no idea ( as to only see it thru mainstream media )

          Things are very shaky right now if you ask me…..geopolitically we are up to our ears in it, but still the need ( even moreso the need ) to keep the sheep docile and unaware.

          Keep everything all ” happy happy” until they are lined up to the slaughter house. A quick “pin through the brain” and that’s all she wrote.

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