ECB Continues Negative Rates

The first big story of the morning is that the European Central Bank held interest rates unchanged.

Monetary policy decisions

2 June 2016

At today’s meeting, which was held in Vienna, the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively.

Regarding non-standard monetary policy measures, on 8 June the Eurosystem will start making purchases under its corporate sector purchase programme (CSPP). Moreover, starting on 22 June, it will conduct the first operation in its new series of targeted longer-term refinancing operations. Further information on implementation aspects of the CSPP will be released after the press conference on the ECB’s website.”

All of this left the US futures about even.

The next big question is what the US Federal Reserve will do when they meet in less than two weeks.

In the meantime, we don’t expect the markets to really take off like a rocket, although we are poised to head higher and on any weakness, I will likely exit my present short position.

Great Jobs Data

Next up from the Breakfast Specials is the Challenger Job Cuts report. Cue the PR dept:

The number of job cuts announced by U.S.-based employers fell sharply in May, with a total of 30,157 planned workforce reductions recorded during the month, according to the latest report released Thursday from global outplacement consultancy Challenger, Gray & Christmas, Inc.

The May total was 53 percent lower than the 64,141 job cuts announced in April. It represents the lowest monthly total since last December, when 23,622 job cuts were recorded.

Last month saw 27 percent fewer cuts than the same month a year ago, when employers reported plans to shed 41,034 workers from their payrolls.

To date, employers have announced 275,218* job cuts in 2016, 13 percent more than the 242,830 job cuts announced during the first five months of 2015.

So with all this, look for the market to back and fill and look for some other reason to stampede up, or down.  Dow futures were down a fraction and short of a disaster in the Federal numbers tomorrow, looking like it might be time to get long for the blow off rally.

Thanks to the reader who said the MSM is starting to echo our blow-off top forecast.  Gosh, and only a year after we started looking at the possibility…hell, they’re catching up!

Politics – Useless as Always

Headlines only:

Trump’s personal, racially tinged attacks on federal judge alarm legal experts.” Or, is Trump maybe talking about this? “Judge Presiding Over Trump University Case Is Member Of La Raza Lawyers Group…” La Raza means the race, so I’m not sure why a judge would belong to what sounds like a racially-oriented group…and not recusing.

President Barack Obama Backs Expanding Social Security.

Hillary Clinton has $42 million in the bank

A year ago, I told you she would effectively buy the office. So far, that has yet to be proven wrong.

Yes, I hate being right.

OK, off to another eye appointment…more tomorrow.

9 thoughts on “ECB Continues Negative Rates”

  1. “Yes, I hate being right ”

    George I know what you mean.. its darn hard to be humble when you hit the nail on the head so many times..

  2. Interest rates going negative. Wouldn’t that be great if consumer credit could go negative? No more 6% student loans which cannot be forgiven in bankruptcy, no more 30 year mortgages stuck at 5+ % because someone’s FICO score dipped a little. Take ’em negative.

    I’d love a nice 1% 15 year mortgage and more 0% car loans. It would certainly boost the economy.

    I think one of the only ways to get jobs going again in the USA is deflation, lower overall prices and drift the value of money upward again. One way to raise the value of money is to have less of it. We can do that by paying mortages off sooner and unlevering the fractional reserve banking process that creates money out of thin-air.

    Debt – it’s what’s great until the burden is too great to be able to ever see a way to pay it off. Welcome to America.

    I think everyone should read Brian Czech’s book “Supply Shock: Economic Growth at the Crossroads and the Steady State Solution”

  3. Governing Council of the ECB should be hung high and the same should be done to the members of the FED. If the public cannot see this all hope is gone! Question remains: With what to replace them?

    • I am sure many saw a mess coming in 2007-2008. The issue is who was willing to act on it – meaning, who would take profits and pay taxes knowing that they were “pretty sure” of a 50% market decline? You can also “go short” and do things like sell ITM covered calls, buy VIX ETFs or leveraged things like UVXY and outright short growth stocks like PCLN, TSLA and others…

      I know a lot of investors are “long shares only” but George and others have taught us to look at the market neutrally at all times and just act based on the expected things to come. But “when they come” is the hard part.

      I sell puts – I think I have about 200 short put contracts in my account now. But if the market goes down, it gets ugly. Got ugly for me in February this year but I didn’t budge and everything worked out fine. The market is choppy now and hopefully the Fed doesn’t break it anytime soon. Very “managed and manipulated” if not entirely controlled by market makers. When they go on vacation and the algorithmic robots stop working overtime, then things could glide down to a support level in the 1850s on the S&P. But right now, the S&P has pierced and broken out of a downward channel and it looks like it has support to go to George’s “blow off top” at some point. 2150-2200 is the range to look at.

  4. Oh, and here is just another MSM (I’m sure in your opinion) LIE, about the Wonderfully Patriotic Trump advisor/delegate Types-

  5. ” . . . I’m not sure why a judge would belong to what sounds like a racially-oriented group…and not recusing.”

    Are you kidding me, or just being facetious ? In this day and age you are either on this side or that, no more room left to be in the middle and unbiased. I doubt there are many jurists qualified to make decisions which are supposed to be without agenda, strictly based on the facts and without prejudice.

    Not trying to imply that Donald can be accused of having scruples, he’s a businessman after all, and it was a business model based on selling the ability to sell, which should’ve been a real large clue to those participants who are now being convinced to complain that they were snookered into losing their money for a worthless education on how to take other people’s money.

    Clinton has no room to talk about his tactics, and frankly I, for one, am tired of hearing her voice, with it’s fake efforts at making it sound deeper so we might be led to believe she actually has cojones. Pedantic blather is just that, be it from a man, a woman, or a woman who has lost her marbles because she really wants to be a man.

    To tell you the truth, if she pops-off and tells us that she’s decided she’s really transgender and changes her name to Llary I’ll seriously have to consider joining your friend down in Ecuador.

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