Draghi Speaks the Truth; ECB Will ‘Do What it Must’
Words are important. This is not just a headline, it is a reality…
Draghi says ECB will ‘do what it must’ on asset buying to lift inflation
Not ‘do what it thinks would be the best course for the European economy’, not ‘choose the path of least resistance in guiding the financial system to recovery’… the ECB will DO WHAT IT MUST.
As I have written til I’m blue in the face for the last 10 years, we are in the age of ‘Inflation onDemand‘©, 24/7 and 365. “…do what it must”… let that sink in for a moment.
Japan is trying to kill the Yen, China is dropping interest rates and the world over we have a rolling inflationary operation that is little more than a game of Whack-a-Mole. BoJ popped up a couple weeks ago and now this one… (more…)
Last night, I was intrigued to see that, in spite of the USD/JPY powering to lifetime highs again, the ES had simply stopped caring. For the longest time, as long as the Japanese Yen kept heading toward toilet paper status, U.S. equities kept surging, thanks to the flood of carry trade money. and yet as USD/JPY roared toward 119, the ES rolled its eyes and remained in the red.
I was pleased this morning to look at the USD/JPY (even before I bothered with the ES) and saw it virtually unchanged. I swiftly changed charts to the ES, and sure enough, it was down 8. Huzzah! So with ES, NQ, and YM all solidly in the red right now, we’ve got a good, solid chance of not having every single index known to man close at a lifetime high again today.
The zero sum game of competitive global currency devaluations is on like Donkey Kong. Anyone still sleeping comfortably, confident that all will end well, best brace themselves for a resounding wake up call. Be alarmed, Japan just jacked the joint, and the jerry rigged monetary jig is up. Moving forward, all the other Asian export economies will promptly be forced to keep up with their FUBAR neighbor, the juiced Japanese Joneses.
Each Nation State in the Far East is now completely compelled to competitively devalue in tandem, in order to maintain export market share, in a desperate attempt to avert their outbound container super ship cargoes from running westwards on empty. (more…)
SPX reached Mike Vacchi’s Bet The House level yesterday, stayed there for minutes rather than hours, and then retraced seventeen points before bouncing. I had a really fun day after three days of dreary intraday tape this week, and it was great to have a two sided day. What had the bears actually achieved by the end of the day? Um ……… well …….
Not a great deal really. A marginal lower low was made on SPX for the day but while that might be interpreted as a downsloping H&S forming, it can equally be interpreted as a sideways megaphone forming here. We will need price to set direction today to see whether we are finished on the upside short term. If we get back to Bet The House, which is at 2043.50 ES today, then I’ll be looking for short entries again. SPX 5min chart:
SPX hit my 1940-5 target range yesterday and at the moment seems to be failing there. That fail looks very bearish but I’ll be assuming that this is a retracement only unless we break through the MA support cluster in the 1970-80 area to open up a possible retest of the 200 DMA at 1920, and then break hard through that on that retest. Until then I will be assuming that we are looking for a retracement before a move to new highs. SPX daily chart: