Tag Archives | European Central Bank

Oil Mar16

Oil market speculators profit as central banks hand out free cash

Oil markets are entering a very dangerous phase.  Already, many US energy companies have gone bankrupt, having believed that $100/bbl prices would justify their drilling costs.  Now the pain is moving downstream. The problem is the central banks.  Hedge funds have piled into the oil futures markets since January, betting that there would be lots […]

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“Debt-financed growth model has reached its limits”, admits German finance minister

Central bank policy-making is becoming more and more dysfunctional, as German Finance Minister Wolfgang Schäuble‘s comments highlighted on Friday: “The debt financed growth model has reached its limits.  It is even causing new problems, raising debt, causing bubbles and excessive risk taking, zombifying the economy….and may have laid the foundation for the next crisis.” One clear sign […]

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Brexit poll creates UK, euro interest rate rise risk

Financial markets are very bad at evaluating political risk.  They assume people will always be rational, and expect a ‘business as usual’ scenario to continue.  But as we all know, people are not always rational.  And emotion, as today over immigration may cloud their judgement. This week has seen the first signs of this complacency […]

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FT

If only the central banks could print babies

The Financial Times has kindly printed my letter below, arguing that central bank stimulus can’t restore growth to previous Super Cycle levels. Sir, John Plender’s excellent analysis “Central banks’ waning credibility is the real threat to confidence” (Insight, February 17) highlights the need for a new narrative to explain the economic slowdown of recent years. […]

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Nikkei v Shang Feb16

Tokyo, Shanghai stock markets fall; yen rises 8% in 2 weeks

Pity poor Janet Yellen, you might say.  The head of the US Federal Reserve told the Senate last week that she had been “quite surprised” by the collapse of oil prices since mid-2014.  And she added that the rise of the US$ was similarly “not something that we had expected” (you can see the testimony […]

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Great Unwinding sees oil fall 65%; US$ rise 22%; US 10-year rates rise 25%

The Great Unwinding of policymaker stimulus was the major issue in financial markets in 2015.  And it is set to have even greater impact in 2016 once Phase 3 begins.  The chart above highlights the astonishing changes that have taken place since the Unwinding began in mid-August 2014; Phase 1 has so far seen Brent […]

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ECB President has New York temper tantrum as Board blocks major new stimulus

“There is no doubt that if we had to intensify the use of our instruments to ensure we achieve our price stability mandate, then we would.”  (Mario Draghi, New York, Friday) Pity poor Mario Draghi, President of the European Central Bank (ECB).  He is used to the adulation of markets – and adores his nickname […]

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Schengen Dec15a

EU warns euro may disappear as political, economic risks rise

The excellent new Spielberg movie, Bridge of Spies, vividly captures the building of the Berlin Wall in 1952.  It also reminds us of the excitement when the Wall fell, and European borders reopened after 47 years. Now, Europe’s borders are closing again, pressured by vast Syrian refugee movements and terrorist massacres. France, Germany, Austria and Sweden have […]

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Gloom turns to boom as US economic data disappoints, again

“If only US GDP growth could remain negative in Q2, what a lot of money we could make”.  You could almost hear the excited chatter in financial markets on Friday, as news spread that revised data showed the US economy had seen negative growth in Q1. This is yet another example of the upside-down world […]

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OFR Mar15

US watchdog warns on today’s “quicksilver markets”

What could go wrong in today’s financial world?  Many stock markets in the West are hitting new highs, and central banks are promising they will do nothing to spoil the party.  But as Gillian Tett of the Financial Times warned on Friday: “Before anyone gets too thrilled about equities, they should read a sobering research document from […]

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