European Central Bank

With speculation of helicopter money in Europe spreading like wildfire, here is a simple summary of how the ECB may have no choice but to go with the "final solution" and engage the "chopper" for one simple reason: by pushing bond yields lower, the ECB is now actively impairing the functioning of Europe's banks, and it's getting to the point where European bank stocks are now back to crisis lows, leading to questions about their viability. Here is the explanation courtesy of DB's Jim Reid.

Submitted by Mike Krieger of Libertyblitzkrieg

The ECB’s Monetary Policy Is Now Creating a Rush Into Derivatives

One of the most catastrophic things central banks have done in the post financial crisis period is destroy financial markets. Investors are no longer investors, they’re merely helpless rats running around the lunatic central planning maze desperately attempting to survive by front running the latest round of central bank purchases.

There were two notable things about a report released by the ECB this morning as part of its Occasional Paper Series titled "Profit distribution and loss coverage rules for central banks", which purportedly analyzes "how profit distribution rules can affect the amounts distributed and the financial strength of central banks."

The market's slumberous levitation of the past month, in which yesterday's -0.3% drop was the second largest in 4 weeks and in which the market had gone for 15 consecutive days without a 1% S&P 500 move (in March 2015 the sasme streak ended at day 16) may be about to end, after an overnight session, the polar opposite of yesterday's smooth sailing, which has seen a sudden return of global risk off mood.

In a quiet start to the week following last week's surprisingly strong rebound which followed a stronger than expected jobs report (perhaps to demonstrate that good news is once again good news), Japan stocks continued to sink as the USDJPY dropped to fresh lows, while commodities declined for a fifth day as the supply glut from crude to copper weighed on prices, dragging down commodity currencies. European equities rose, rebounding from a one-month low.