Unfair! Unfair!

Unfairly Easier

What the Hell Does This Even Mean?

Also, the statement is in quotes, but Trump is the source.

Currency War Fears

MarketWatch reports ‘Currency war’ fears rise as Trump slams Draghi’s hint at more ECB stimulus

Tweetstorm Trigger

The Wall Street Journal reports ECB Signals Possible Rate Cut Prompting Trump Tweets.

Mr. Draghi said Tuesday that ECB policy makers would consider in the coming weeks how to adapt their policy tools “commensurate to the severity of the risk” to the economic outlook. Options include extending the time frame before the next interest-rate increase, a reduction in the already negative policy rate or restarting bond purchases.

Asked in an interview with ABC News’s George Stephanopoulos about whether criticism of Fed Chairman Jerome Powell could undercut Mr. Powell’s credibility, Mr. Trump said, “Yes, I do. But I’m gonna do it anyway.”

Investors responded favorably to Mr. Draghi’s remarks, sending the euro down by more than half a cent against the dollar, to $1.1187. Yields on 10-year German government bonds fell to a fresh all-time low of minus 0.315% as investors digested the prospect of fresh bond purchases by the ECB. French 10-year yields dropped sharply and hit 0%, their lowest ever.

“The rate-cutting genie is out of the bottle,” said Bart Hordijk, FX market analyst at Monex Europe. “This opens the trapdoor to lower levels” of the euro against the dollar.

ECB Target Interest Rate Already at -0.4%

Interest rates at -0.4% did not help Europe and -1.0% or any other absurd number won't either.

Nonetheless, the ECB is prepared to act.


Draghi Responds

Draghi responded that the ECB Does Not Target its Exchange Rate.

“We have our remit, we have our mandate,” Draghi told an audience at the ECB’s annual forum in Sintra, Portugal, on Tuesday. Our mandate is price stability defined as a rate of inflation which is close to but below 2% over the medium term.”

He iterated that the euro zone’s central bank is “ready to use all the instruments that are necessary to fulfill this mandate.” “And we don’t target the exchange rate,” he said to applause from the crowd.

So what?

The move has the same effect.

Warren in Bed with Trump

Yesterday, I noted Elizabeth Warren in Bed With Trump: Both Want to Sink the Dollar.

I had no idea a currency war Tweetstorm was coming today.

But here we are.

The fact remains, there is no economic benefit to this nonsense. It is always a benefit for the consumer to get more for their money than less.

Sadly, Warren, Trump, the ECB, Bank of Japan, and Bank of China all want the same fool thing: Higher inflation and less for your money.

Race to the Bottom

In the race to the bottom, the ECB is ahead.

  1. Negative interest rates are not only absurd, they damage bank profitability
  2. The Italian Mini-BOT will lead to the breakup of the Eurozone.

Mike "Mish" Shedlock

BIS Points Finger at Yellen, Draghi: Warns About “Unthinkably” Low Interest Rates.

In it latest quarterly report, the BIS (Bank of International Settlements), pointed a direct finger at Fed chair Janet Yellen with an even bigger point at ECB president Mario Draghi.

Is There a Limit to Draghi’s Negative Interest Rate Madness?

On Thursday, ECB president Mario Draghi lowered the deposit rate on money parked at the ECB to -0.4% from -0.3%. Draghi also cut the main refinancing rate by 5 basis points to 0%.

ECB Warns Slowdown Isn't Temporary: Draghi Announces Bold Stimulus Plan

Mario Draghi surprised even the doves with his bold new stimulus plan. It won't help one iota.

Currency War Intensifies, Dollar Strengthens: How Long Before Trump Reacts?

The ECB cut rates further into negative territory and the BoJ is expected to do the same. How long before Trump reacts?

Italy Bond Yields Surge In Confrontation with ECB President Mario Draghi

Mario Draghi warns "Undermining EU budget rules carries high price for all". Italian bond yields surged.

Dear Mario Draghi: About Your Victory Over Deflation Speech in March

In March, ECB President Mario Draghi declared victory over deflation. Let's take a look at Eurozone inflation since his victory speech.

Draghi-In-Wonderland: ECB Bond-Buying Announcement

There were wild fluctuations today in European bonds as the ECB announced it would Hold Interest rates at Zero but Taper Bond Purchases.

ECB Declares Victory Over Deflation: Hallelujah!

ECB President Mario Draghi Declares Victory Over Deflation. That’s much like shouting hallelujah when you miss the game-winning field goal.

More Currency Wars: Swiss Central Bank Poised to Cut Interest Rate to -1.0%

The Swiss national bank is not happy with appreciation of the Franc. Its solution is likely another rate cut to -1.0%.