Payrolls Friday – the first Friday of the month – why not today? Always a spectacle of over-analyisis and dubious conclusions. But the ‘market’ loves it.
Question is – with much more to follow – what ‘market’ even exists?
This morning I read ‘risk assets are consolidating near their highs.’ And I wondered – apart from my PNL – who or what was exactly at risk? I also caught a line about ‘the trend for authoritorial market interference.’ And thought of Orwell.
This ‘trend’ is central bank interventionism has exploded since 2008 and I think its safe to say we’re way beyond the ‘Greenspan Put’ – but I’ll stick to Europe.
According to Bloomberg – ‘Draghi’s cash tonic makes banks smile.’ I bet it did. Especially the Italian & Spainish banks who once more took down almost 1/2 (Euro 250billion) of the 2nd LTRO. First time round they poured money into buying their own sovereign debt – upping their holdings by Euro 70-80billion to over Euro 500billion. Perhaps they’ll do the same again.
But this is a market?
The ECB is responsible for a functioning banking system. It is not responsible for propping up insolvent &/or over-leverged institutions. The net result is that some of the most vulnerable banks in the most fiscally challenged sovereigns are safely joined in their collective fates. But at whose risk? Who will ‘bail out’ the sovereigns &/or banks when/if the time comes? The taxpayer of course – but of what nationality?
The banking elite is not a risk – we’ve seen first hand in Ireland that no-body goes to jail, no-body gets fired for incompetence, and all ’employment contracts (bonuses et al)’ must be honored – god forbid!
The politicians will sacrifice anything for the illusion of stability.
These markets are not free.