ECB Cuts Rates Further

[errolanderson]

ECB chairman Draghi announced this morning a further 10 point drop in the European Central bank deposit rate from -0.20 to -0.30%. The cut means banks in-effect must pay more for the ECB to hold their money.

Also, the QE program of $60 billion Euros printed monthly to be expanded until March, 2017.

This was viewed as disappointing by the market as a deeper rate cut was expected. The Euro has actually turned higher as a result, the U.S. dollar is falling.

Odds of a Bank of Canada rate cut appear growing.

The U.S. Fed appears hell-bent to increase rates 1/4% on Dec 16th. IMO, this is insane timing of a U.S. rate hike when the U.S. economy is again sputtering.

European inflation data released yesterday was viewed as disappointing which shows little impact from massive QE stimulus.

Insane central bank economics at its best . . .

[TOM4CWB]

Errol,

Isn't this about the US election... raise rates now... USQE then has more room to suck up bad bonds... keep the markets moving... banks being shored up as tax incentives are reduced...[diverting to US Highway/infrastructure funding]

Plugging in that peice is like China does!!!

[errolanderson]

Tom, hope you are wrong, but you might be right. Certainly there is immense pressure from Wall Street, the Fed's boss.

Interesting fallout in the U.S. dollar today. The market may be finally sniffing that recession risks for the U.S. are increasing heading into 2016.

IMO, a Fed rate hike at a time the U.S. economy is contracting is ridiculous. To me, this could be a historic mis-step by the Fed.

We will all know very soon.

[crusher]

What about confidence. When the central banks keep expanding QE doesn't that send a signal that their economy is weak.

Let the US raise the rate, Yellen talk up their strengths, and see if the ball can start rolling in the other direction.

[errolanderson]

The risk is; the Fed could inadvertently ignite a recession. Then what?

This occurred in 1937 when the Fed hike rates at the most inopportune time . . . the rest is history.

[ajl]

Given that this has been tryed 10000 times around the world and failed 10000 times that they would quit after a while. With negative demographics, Europe will not ever grow again. A 25 basis point token interest rate increase will not likely have much affect on the US. The 1937 recession was caused by FDR's new deal. After an initial spike in 34-35 the hangover was felt by 1937. Government economic meddling always has a down side. Our biggest problem today is the fact that people believe the new deal solved the depression. It did not and the economy did not recover until WW2.

[errolanderson]

ECB statement this morning has triggered the largest one-day loss in the U.S. dollar against the Euro since 2009.

[cottonpicken]

Doesn't make sence to me it move that much on that news. Wonder if something else is going on behind the scenes.

[crusher]

Stocks down large in North America, grains are up. Nothing makes any sense, just have to pick and choose your spots then move on. 6 today, its all good.

[errolanderson]

U.S. dollar is getting absolutely destroyed today. Euro is flying.

Crude oil, gold prices are rising as a result. Spot loonie should get a lift out of this.

[cottonpicken]

This is a massive move in the dollar on this news,even Goldman was forcasting a reverse of this so obvious they are trying to two step ahead because if the usdx would continue to rise and then have a great spike if hike comes on the 16th your talking pretty serious turmoil in the carry trade and most everything else. So I'm guessing this does point to a small hike coming but it's all so insane who cares. Gives insidereds a time to unwind and reposition.

There are reasons some want king dollar to remain king dollar.

[cottonpicken]

Often wondered why such giant things get so little attention.

[errolanderson]

cotton . . . IMO, this will be the shortest lived Fed tightening cycle ever.

A 1/4% rate hike on December 16th appears a-go despite U.S. manufacturing and export sectors turning recessionary. U.S. retail sales are slowing. What's left is their service sector and the clock is ticking on-this- one.

The extreme volatility in the U.S. dollar this week is a 'clear warning' of further economic turmoil ahead. Goldilocks economic thinking is going to come to haunt the U.S. Federal Reserve.

[perfecho]

CP...the attention part..the majority of us don't get it...makes your head hurt...reason doesn't seem to work...the US has been going through downturn after downturn and yet they keep 'strengthening"...everything is upside down and yet equities seem to keep having banner years...QE seems to keep equities going, but others flounder...kinda like politics, easier to not care.....

[cottonpicken]

Total credit market debt is annuli zing around 11% that's like a seven year doubling. Us soverign is around eight years. In eight years your talking 36 trillion in 16 years 72 trillion. The purchasing power of paper is going to have to get reset.