Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Takeaway seems to be that more actions are coming from the ECB but Draghi wants it to happen in concert with the Euro rescue fund which has yet to launch. The launch should be coming in a month so it sounds like we will have our interventions from both the Fed and ECB between late August (Jackson Hole speech) and September (when Euro rescue fund launches and ECB comes in to support).
So it just seems Draghi was in the planning stage to do a combination purchase of Euro rescue fund buying primary debt with the ECB buying secondary when he made his comments last week, and wanting both actions to work in concert. But the market wants it NOW. So the market is reacting a bit whiny. But it certainly sounds like it is coming down the pike.
With that out of the way just have the employment report tomorrow in terms of massive headlines, and then weeks of speculation of when the next central bank actions come. Today’s selloff just puts the market smack dab in the middle of this range and ascending channel.
One key comment I just read was Draghi is surprised by all the attention on the bank license for the ESM. If he is throwing water on that fire it is certainly interesting as that was the way for the ECB to buy (in theory) unlimited amounts of debt, or at least much more than it can do right now without leverage.
EDIT 9:15 AM – looks like we will open in the mid 136s on the SPY. If the index fills the gap from Draghi a week ago, we’ll go all the way down to the bottom of this trend range.
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