European Central Bank

The Biggest Event Risks In June

The Biggest Event Risks In June

Today being the first day of June, and the start of the last month of the first half of 2016, we thought it would be aptly appropriate to list down some of the biggest event risks that June will bring. These are the known unknowns — uncertainties which we already know about but not their outcomes.

The biggest risks in June (in our opinion) will be the EU referendum by the UK in the later part of the month, the June ECB monetary policy decision and press conference, the June FOMC statement and interest rate decision, and lastly the BoJ's monetary policy decision.

We feel markets will likely be most sensitive to these types of events, having chopped around for almost half a year now. There is great anticipation for guidance on where to go next, and we feel markets will likely take cues from central banks, chiefly the Fed.

Bill Gross: About Helicopter Money

Bill Gross: About Helicopter Money

Technology and mass robotization are probably the single biggest threats to our jobs. Jobs of both the blue and white collars are gradually being replaced by robots that are much more cost efficient and productive. Plus, robots have no want for minimum wages, or hold strikes in protest for what is now a huge skill deficiency in the labor force across the world.

So will politicians and central planners dabble with the risk of upsetting the status quo for a potential change in direction? Unlikely.

Rather, Janus Capital's Bill Gross believes central planners will stick to what they have always been best at: Printing money (QE), lowering interest rates or bringing them sub zero as we've seen recently, and fiscally stimulating economies with debt funded programs thereby creating a false impression of prosperity when there isn't.

Bill Gross: Careful Of What You Wish For With Negative Rates

Bill Gross: Careful Of What You Wish For With Negative Rates

"30-40% of developed bond markets now have negative yields and 75% of Japanese JGB’s do" is how Bill Gross likes to drop some perspective onto the world that has become so numb to the new age central banking tool known as NRIP, or negative interest rate policy. It's absolutely perverse, and it's everywhere like how Vampire Squid has its tentacles all over political campaigns in America.

Business cycles have become so influenced by asset price inflation, or in some cases deflation, that they have lost a good deal of traction with the more traditional Keneysian theory of aggregate demand and aggregate supply.

Gross ultimately warns that if global economies continue to merely drift on stagnant waters, failing to see a breakaway renaissance in output growth, we might be in for a rude awakening when the chickens come home to roost. Eventually they shall.

ECB Cuts Rates, Boosts QE & Murders Euro Shorts

ECB Cuts Rates, Boosts QE & Murders Euro Shorts

Read that again. Does the title make any sense? Just how did the ECB murder euro shorts with even more easing?

The ECB has made its move this week. Even lower negative interest rates, more QE, and rhetoric that should all else equal send the euro tumbling to new lows.

But exactly the opposite happened an hour after news hit the wires. Baffled yet? Well, most traders were. The stupendous volatility this single event has brought to the financial markets is difficult to overstate.

Contrary to intuition, the euro (EURUSD) is some 420 pips north of Thursday's lows, making this one of the largest and most brutal intraday reversals we've seen in a long while. Yields on core European sovereign debt are all higher, instead of lower. Such moves make little sense considering how much looser monetary policy is now in the Eurozone. Or does it? Let us explain.