European Central Bank announces €60bn a month of quantitative easing

After months – no years – of waiting, Mario Draghi finally announced the European Central Bank is pushing the button on quantitative easing.

It comes roughly six years after the US and the UK embarked on their own versions of QE, and more than two-and-a-half years after Draghi vowed to do “whatever it takes” to save the euro.

Here is a quick summary of what we learned:

  • The programme will involve purchases of €60bn a month, split between private and public sector assets
  • Purchases will run from March to the end of September 2016, totalling €1.1tn
  • There is however some ambiguity on the timing of the end of the scheme, given Draghi also said purchases would be “conducted until we see a sustained adjustment in the path of inflation which is consistent with our aim of achieving inflation rates below, but close to, 2% over the medium term”
  • The governing council’s decision to start QE now was not unanimous
  • The ECB won’t buy more than 25% of each issue of government debt, and not more than 33% of each issuers debt
  • In a concession to Germany (long opponents of eurozone QE), Draghi promised that national central banks would bear most of the risk of their governments defaulting, with just 20% of the new bond-purchases subject to “risk-sharing”.
  • The ECB has not ruled out buying Greek bonds, but said certain (unspecified) criteria would have to be met
  • Draghi said QE would not be enough in itself to revive the eurozone economy – structural reforms at country level are also essential
  • Markets have broadly welcomed the announcement

via European Central Bank announces €60bn a month of quantitative easing – live | Business | The Guardian.

First reactions: 1 EUR=1.14 USD, German 2-year notes have a negative (-0.18%) yield, markets up reasonably, volatility spiked, gold up over $1300.

Methinks it’s a good thing for Europe, albeit way too late. But this is the right path (apart from the radical solution of abandoning the euro). Coupled with growth policies at the European and national level (such as more infrastructure spending in Germany, more structural reforms in places like France and Italy and Cyprus) and less austerity it may even have a chance to keep the Euro alive and kicking into the next decade. However I wouldn’t bet on it. So go USD!

Big day today – watch it live on The Guardian

9am CET/8am GMT: Discussion on the ending of America’s quantitative easing programme; with Christine Lagarde, Santander chief Ana Botin, Gary Cohn of Goldman Sachs, Ray Dalio of Bridgewater, and former US Treasury chief Larry Summers

10.15am CET: Debate on European growth, with German vice-chancellor Sigmar Gabriel, Irish leader Enda Kenny, Dutch PM Mark Rutte and Finland’s PM Alex Stubbe.

10.30am CET: Unicef press conference on growth and inequality, including former UK PM Gordon Brown

11.30am CET: Egypt’s president Sisi is speaking

12.30pm CET: Debate on pandemics such as ebola, including UN secretary general Kofi Annan


2.15pm CET: Angela Merkel’s special address to Davos

2.30pm CET: Mario Draghi’s press conference begins in Frankfurt

4.45pm CET: How can tech firms retain our trust? Including Sir Tim Berners-Lee, Yahoo’s Marissa Mayer, and Vodafone chief Vittoria Colao.

5.45pm CET: Future of the Digital Economy, including Microsoft chief Satya Nadella, Facebook’s Sheryl Sandberg, and Eric Schmidt of Google

via Davos 2015 Day 2, and ECB’s QE decision – live | Business | The Guardian.

GDX: Indexul minerilor

Screen Shot 2013-09-13 at 14.45.14NYSEARCA:GDX: 24.97 -0.29 (-1.15%) – Market Vectors Gold Miners ETF.

GDX e un ETF de companii miniere din domeniul aurului. Cand aurul creste, GDX creste mai mult decat aurul; cand aurul scade GDX se prabuseste.

Acum GDX e la valori nemaiintalnite din 2008, cand in panica Marii Recesiuni actiunile, inclusiv ale minerilor, s-au prabusit. E adevarat ca in ultimii 2 ani, pe fondul scaderii pretului aurului de la un maxim de peste $1800 la cotatia actuala de $1331, profiturile minerilor au fost afectate semnificativ – dar totusi comparatia cu 2008 e exagerata, pentru ca atunci aurul costa $800-$900/uncie.

Intrebarea mare este: ce se va intampla cu aurul – si implicit cu GDX – in perioada urmatoare.

Scenariul bullish este legat de amanari ale tapering-ului QE, si/sau de pornirea lenta a acestuia (probabilitate destul de mare, cu posibili succesori ai lui Bernanke la Fed precum dovish Yellen si hawk-turned-dove Larry Summers care, controversially, tocmai a fost leaked ca si castigator).

Apoi, situatii dramatice care afecteaza actiunile (gen razboi in Siria, blocaj in Congres privind ridicarea debt ceiling-ului sau incetinirea cresterii economice si/sau a crearii de locuri de munca noi) vor impinge banii din actiuni, cel putin pe termen scurt, sa se refugieze in aur.

Asta pare perspectiva imediata, care poate fi speculata cu o pozitie long GDX.

Pe termen mai lung insa, o data cu cresterea dobanzilor si finalul QE probabil ca aurul va scadea si minerii vor fi afectati.

Vad deci posibilitatea de a specula GDX pe termen scurt cumparand call-uri out-of-the-money, de pilda 30 (de ianuarie) care acum e $0.89, care sa fie vandute imediat dupa o crestere a GDX inapoi spre/peste 30. E o miscare foarte riscanta, dar care poate aduce profituri spectaculoase, pe care o propune si Cody.


Celalalt miner al tarii :)

Carpathian Gold Inc. 

CPN e o companie canadiana de minerit care are aproape terminata o cariera de aur open-pit in Brazilia, de unde va incepe sa extraga inca din trimestrul curent cam 100.000 uncii de aur pe an pentru 7-8 ani, care ar trebui sa ii ofere un EBITDA de 61M/an si un payback period pentru capitalul investit de 3 ani la 1250$/uncie. Partea frumoasa e ca managementul a vandut deja in avans productia pe primii doi ani la 1600$/uncie la inceputul anului.

Actiunea a fost lovita masiv de scaderea pretului aurului si in ultima saptamana de asocierea cu GBU, fiindca detine si o licenta de explorare si face studii de pre-fezabilitate la Rovina/Colnic/Ciresata, la vreo 20 km de Rosia Montana, unde propune doua exploatari open-pit si una in adancime folosind flotare.

Lasand la o parte afacerea din Romania, cred ca CPN va exploda de indata ce va incepe sa produca aur in Brazilia, ceea ce va fi cat de curand. Curat value investing!

Game plan for a completely corrupted market – The Cody Word

Thinking it through to the end-game then, the question we’re answering seems to be, is the system and the stock market doomed? If the major markets are rigged, artificially being inflated and/or deflated, corrupted, and not regulated or policed in a fair manner, then doesn’t that mean we are doomed to become a banana republic? Knowing the U.S. has only 4% of the world’s population, what has been the key reason for our nation’s outsized wealth and power? I would argue that it was partly that we had the strongest rule of law and enforcement of all rights equally that gave the world confidence in our system and financed much of that wealth and power. If we no longer enforce laws equally or have faith in the fairness of our banking systems and the markets they support (or is now that the markets support the banks?), then why would people keep confidence in our system and markets?

And economic confidence is not a zero-sum game in which some other country that’s slightly less corrupt than our new system is going to get all that wealth that we are now leaving on the table. The systems and markets in China, Russia, Brazil, the EU, and Britain are no better than the new system and markets here in the US. Cuba, Japan, Mexico, Korea (North or South), Iceland aren’t exactly safe havens for your money now are they? You can bet on Canada or Australia or some other country if you want, but if the world loses faith in the other biggest sovereign systems and markets, I can’t imagine your money is safe anywhere across a border, no?

via Game plan for a completely corrupted market – The Cody Word – MarketWatch.

Suna dramatic, dar adevarat. Grija fratilor!