Several news sources are reporting that the European Central Bank is considering moving to Negative Interest Rates in yet another attempt to combat sluggish economic growth in the Eurozone.
Keep in mind that this comes on the heels of their surprise interest rate cut two weeks ago which caught the markets completely off guard. That hit the Euro hard back then and once again, it is getting slammed today as a result.
Gold seemed to catch a bit of a bid on this news but the moves higher are running into selling thus far.
One way of looking at this is that DEFLATION fears are becoming so serious to monetary officials that they are effectively nocking their last arrow on the string to fire. If this move fails to generate any lending/economic activity/growth, what then??
Here is a good story to read dealing with the news....keep in mind that this is not a done deal, yet... the idea is probably being floated to gauge market reaction.
http://www.bloomberg.com/news/2013-11-19/nikkei-futures-gain-on-weak-yen-after-u-s-stocks-retreat.html
Euroland copying the US will further chase money into the US stock markets as draconian measures of taxation rip whatever Euro middle class that was left to shreds as the mentality to force money (by spending) into the system by punishing savers with no interest savings fails again and again.
ReplyDeleteThe meddling in economic cycles makes things worse so what do they do? Meddle some more. The definition of insanity...
you got it anonymous; all the CB's are caught between the devil and the deep blue sea, as the Deflationary Monster relentlessly asserts itself; sparks
DeleteSteve in this crazy environment of deflation. What do you do? Stocks go up like crazy generally and deflation quietly gets worse.
DeleteConcord; if still long stks, carefully drag stops up underneath every day and when they gap down hard, do not bitch, because liquidity will disappear; your fill will be bad, but you are out and that is what matters. As for commods, just keep selling the rallies, but understand that the big $ is gone and so has liquidity here also, so just remember that it is better to miss moves than lose $. Temper your expectations and have a Grey Goose on me; sparks
DeleteThanks Steve,
DeleteI understand what you are saying loud and clear. This market is being played by the Fed and the people in it are slaves to it. I see it and understand they are trying to control it with jawboning both up and down.
Concord; Steve;
DeleteThat is good counsel Steve. Concord - I would keep an eye on the Ten Year Treasury note yield. If it starts pushing to up near the 3% level once again, my guess is that all this taper talk will once again disappear as the Fed doves will be out in full force to talk interest rates down once again.
The big key will be how the US equity markets behave - if they start to rollover for any reason, I expect the FOMC governors to start getting extremely nervous and will put the kibosh on any hawkish talk coming out of that group.
This terrible news if true, expect the ECB to come out with a denial? Maybe not.
ReplyDeleteWith the velocity of money near zero and unprecedented funds sitting in various companies bank accounts (financial and commercial) we are seeing proof positive that easy money alone will not fix the problem.
My personal (conservative / libertarian) conclusion is "too much regulation". These current government folks including FED tinker with simplistic fixes based on idealistic goals. Because they do not understand the real system the unintended consequences are dire.
Overt theft from savers.
ReplyDeleteIf they do this in the US, I will immediately dump every single dollar I own and convert it into gold. Enough is enough.
NOT SO FAST on this NEGATIVE INTEREST RATE:
DeleteThis is OUTSTANDING NEWS! I hope it comes to the U.S.A. soon.
Loans might go NEGATIVE % also and then we can take out free money and have the banks pay us.
www.thenewsunit.com
Well looks like "Tapering' is imminent.
ReplyDeleteAnyone who invested in the "QE to Infinity" folly fared very poorly the last few years.
Gold is getting absolutely smoked right now.
maybe I am a Hoosier Mark, but I think the tapering idea has been beaten to death and does not matter anymore. What is $20B a month anyway? sparks
DeleteMinus 0,1% per year only to insure my cash?
ReplyDeleteI take it, Sir!
Make my day, and make it minus 1%, I will still take it!
Because as a big european bank totally bankrupt with real Tier 1 ratio near 3 or 4 max, I know the other banks are in the same shape. I don't trust any of them. I won't loan money to any of them. I will keep the money for myself as well in case my balance gets worse, to avoid immediate bankruptcy. There is only one bank I still trust : the ECB. All the other ones are zombies and I will not withdraw my money from the ECB deposit facility, as it is the only safe place left for it.
The total debt cumulated of the top 8 largest banks in US represent 56% of their GDP. And they are afraid of a bankruptcy there? Hahaha.
The total debt cumulated of the top 4 largest French banks represent more than 3 years of French GDP.
Deutsche Bank's derivative assets are estimated at 55 Trillion euros.
You want me to put my money back in the inter-banking system for fear of a mere 0,1% loss per year? You have to be kidding.
so Hubert, you still think your Euro lives on? sparks
Deletethe BLS, BIS, IMF, World Bank, FED, BOE, ECB, BOJ, and last but not least, the BRICS or should I say brics, who are no doubt scared to Jesus Christ as to what is now unfolding. All these donkeys in power have not the slightest clue as to what to do, and you know what? They ought to just let the game play out and for the mkts to all clear. What are the chances for that? Yep, you are right. Nada, zip, zilch and zero; sparks and that is all
DeleteAgreed Steve.
DeleteLike a scared rookie pilot pulling on the plane stick while stalling, instead of letting go down and regain its balance.
The rookie scared to death pilots of the CBs will pull the stick until the plane hits the ground hard.
On off button wearing out. Needs replacement
ReplyDeleteAbout SP500, actually many of my indicators are converging into possible imminent move down in this market.
ReplyDeleteI'm still waiting for long CDUR to go red, but IF it does, I will try a massive short on the SP 500, under the amused eyes of Mark :)
I said IF, but will let you know as usual :)
Relax everyone..we know how this works.
ReplyDeleteBernanke says QE until employment improves, market moves up.
FOMC says tapering to start at any moment, DOW starts to roll over...oh ..oops.
By the end of the week a Fed governor will come out with another jaw bone statement that will be uber dovish and up the DOW will go.
You better buy the dips and don't dare short it.
This is such blatant bull shit !
I wonder if the rest of the world is getting just a little sick and tired of the US pulling these stunts on a monthly basis.
Wow I just turned on INFOWARS to listen to Alex Jones and he has a commercial going there advertising guess what? BITCOINS! :-)
ReplyDeleteUNBELIEVABLE!
At this point in time I'm one of the Americans that is looking forward to the SHTF scenario. I think some of you here are ready too--if you know what I mean?
Ready and able News.
DeleteLimbaugh, jones, blah blah; sparks
DeleteNews Unit
ReplyDeleteDon't hold your breath waiting for SHTF...hold your nose and buy the DOW on dips.
The DOW can run along without me. I lost my worthless fiat to the ILLEGAL LEGAL SYSTEM just before this GREATEST WEALTH TRANSER IN HISTORY began its PARABOLIC ASCENT.
DeleteHad to LIQUIDATE my OSK, CBI, SIRI, F, NFLX, and GE stocks.
Now I don't have enough to make a difference.
I'm looking forward to that NEGATIVE % LOAN from the banks. Will they pay us? :-)
Still holding onto my stocks, this is yet another "false flag" to spook equity investors, I don't think we are going to crash, mainly because the bank stocks and retail stocks are still super strong.
ReplyDeleteI'm still suffering from my bullion holdings, should have dumped that crap when I could have back on that last big bounce in August, I could have parlayed that into stocks and made some good money.
Mark
DeleteYep, the market will rally back before the week is out.
Have I mentioned that it is backstopped by the Fed? I think I have.
I plan to try and trade some of my bullion for a motorcycle...at least it is something to actually have fun on while it tanks in value.
Mark I am surprised you hold gold or have during your many missives railing against it. I mean really why have you held it considering your feelings?
DeleteNews Unit
ReplyDeleteI don't think it works that way.
Your money in a bank account will receive negative interest, as you will pay them to park money in a bank account.
They do not want people to hoard money, this forces you to....surprise...buy Equities whether they are worth it or not. The thugs on Wall Street (backed by the Fed) want what remains of your wealth, and you know what?, they will get it.
I was thinking on the order of taking out LOANS. Of course I know they will never hand out FREE MONEY but the thought was at least entertaining enough.
DeletePerhaps they will require certain MINIMUM DEPOSITS and/or MINIMUM BALANCES to even do business with them?
It's all up in the air now but things don't look good for old fashioned savers anymore. We are a dying breed.
Looks like this could be the mother of all gold bug stomp fests.
ReplyDeleteMy broker tells me that in the case of gold miner shares he cannot ever recall seeing such a hated asset class.
$1000 here we come.
Not to worry, it will come back...don't know when but it will.
"If the Goodman of the house had known in what watch the thief ........
ReplyDelete....
Probably not a lot of Larry Summers fans here but this speech is worth a listen.
ReplyDeleteHow anyone can read this speech and expect monetary tightening any time soon is beyond me!
ReplyDeleteThe selling in the overnight continues.
ReplyDeleteThis is just sickening, I'm glad I went short this morning….actually…shorting gold seems to be a money maker no matter when you do it.
Hi this one is great and is really a good post
ReplyDeleteLow APR cards