I think this is a pretty fair statement, but in another email today Larry Edelson, someone (only) associated with the same company, Money and Markets, has sent out an email saying the DOW will go to 31,000 by 2016 and please watch his video to understand the reasons why. To my mind, at the very least this is an irresponsibile statement. It’s time, I think, for people to do their own homework.~J
What Will the Impact Be on the Euro? Bonds? Stocks?
All eyes on Wall Street were focused on Frankfurt this morning. So what did European Central Bank President Mario Draghi deliver?
First, he said the ECB would launch a 60-billion-euro-per-month ($69 billion) QE program on March 1.
The program will initially run through at least September 2016, meaning it will ultimately total around 1.1 trillion euros ($1.3 trillion). But he also suggested at the press conference that it could become open-ended QE if it didn’t work.
Second, he announced that the ownership of the purchased bonds will be split by the ECB and national central banks. The idea is to force some of the risk of loss down to the individual countries that make up the euro zone in the hopes of spurring governments to take their own stimulus efforts.
At his press conference today, Mario Draghi gave the markets a jolt
with his version of QE and risk sharing.
So how did the market react? With a heck of a lot of volatility! The euro initially fell, then rallied, then fell again to as low as 1.343 against the dollar. Gold rallied sharply, then dipped, then rallied back again.Third, he did not follow the path of other central banks like the Swiss National Bank or Denmark’s central bank, and lower all its benchmark interest rates into negative territory. The main refinancing rate was held at 0.05 percent, while a separate deposit facility rate remained at negative-0.2 percent.
Long-term U.S. Treasury bond yields? They surged before the news, then fell after it, then rallied to finish the day slightly higher. Stocks were all over the map, too, rising sharply, then reversing lower, then reversing higher again to finish up more than 250 points on the Dow.
What does that tell me? Investors don’t know what the heck to make of the ECB’s latest gambit … especially because it’s coming on the heels of several other central bank surprises. That includes the surprise cut from Canada’s central bank yesterday, and the “Swiss Shocker” a few days before it.
“These central bankers have NO IDEA what to do!”
Here’s what is clear to me: These central bankers have NO IDEA what to do! They’re throwing everything at the wall to see what sticks. They’re moving with increasing frequency. And they’re not even coordinating those moves anymore. It’s an all-out banker brawl, with investors like you caught in the middle.Oh and while we’re at it, Denmark’s central bank followed the ECB move by cutting its main deposit rate again — to negative-0.35 percent today. It had already lowered that rate to negative-0.2 percent from negative-0.05 percent on Monday.