Goldman FX Head: "No Central Bank Conspiracy" To Crush The Dollar, "We Are Right, The Market Is Wrong"

Anyone having listened, and traded according to the recommendations of Goldman chief FX strategist Robin Brooks in the past 4 months, is most likely broke.  First it was his call to govery short the EURUSD ahead of the December ECB meeting, which however led to the biggest EURUSD surge since the announcement of QE1.  Then, two weeks ago, ahead of the ECB meeting he "doubled down" on calls to short the EUR ahead of the ECB, the result again was a EUR super surge, the biggest since December. And then, as we previously reported, ahead of the FOMC's uber-dovish meeting, Brooks released a note titled the "The Dollar Rally Is Far From Over" in which he said the following: "today brings the latest FOMC meeting. We expect the Fed to signal that it wants to continue normalizing policy, which means three hikes this year and four in 2017, with the statement referring to the risks as “nearly balanced,” reverting to phraseology used in October, just before December lift-off. Overall, our sense is that the outcome will be more hawkish than market pricing, in particular given that the FOMC may leave open the option of tightening at the April meeting."

He couldn't have been more wrong, and the result was the biigest two-day crash in the US Dollar.

In sum, just his latest three calls have resulted in nearly 1000 pips worth of losses. Add 50x leverage and...well, we know why hedge funds are getting obliterated.

One thing we didn't know is  whether after being spectacularly wrong for three consecutive times, Brooks would finally thrown in the towel and stop crucifying muppets. We got the answer this morning, when not only has Goldman's chief FX strategist quadrupled down on his wrong-way bets, saying it's not Goldman that is wrong, but the central banks (as he puts it, "an unfortunate series of misfires from central banks, most notably the ECB"), and perhaps more importantly, quashes speculation that there is a central bank conspiracy to move the dollar lower, to wit. "we see no conspiracy to stabilize exchange rates", which is all the confirmation we needed that the Shanghai G-20 summit was indeed just a mini Plaza Accord "conspiracy" (in Goldman's words) to force the dollar lower, if only for the time being until the impact of the soaring Yen and Euro slams Japanese and European stocks low enough, and we go back to square one at which point Goldman will finally be right, and the USD will soar 15% higher in very short notice.

Here is Brooks' full note:

Going up is hard to do

Over the past year, the Fed has repeatedly arrested the Dollar rise (Exhibit 1) and this week’s FOMC, with the shift in rhetoric towards caution over external risks, marked another iteration. We have sympathy for the Fed’s dilemma. After all, BoJ and ECB easing led the Dollar to rise sharply in H2 2014, before US monetary policy normalization could even begin. For the Fed, this is a major headache because – if our expectation for Fed hikes is correct – USD could rise another 15 percent (Exhibit 2), i.e. underlying appreciation pressure is large. This might be why the Fed is modulating its message, for fear that sounding upbeat could trigger another sharp rise in the Dollar. In this FX Views, we make three points: (i) dovish shifts from the Fed over the past year have only been able to put the Dollar into a holding pattern, they have not reversed the 2014 rise; (ii) data will ultimately force the Fed’s hand, which is why our US economists have stuck with their call for three hikes this year; and (iii) the underlying case for the divergence trade is stronger, not weaker, given that a dovish Fed will spur US outperformance versus the Euro zone and Japan. Going up is hard to do, but the Dollar will go up.

There is no doubt that Wednesday’s FOMC was a dovish surprise. But it is important to distinguish between what this week may signal (delayed tightening) and what it does not (a return to easing). This distinction matters because – as we have learned over the past year – delay only arrests Dollar strength, it does not reverse it. In the big picture, our first commandment for 2016 FX still stands, which is that – following the large rise of the Dollar in H2 2014 – the growth and inflation picture looks robust, which means that underlying momentum in the US is stronger than it appears. This is one reason why our US team has stuck to its call for three hikes in 2016 and why we believe data will ultimately force the Fed’s hand. In the interim, there are obviously questions around the Fed’s reaction function. The one thing that stands out to us is that recent Fed statements have become more volatile: dovish in September over global risks, hawkish in October with the signal for imminent lift-off, dovish in January with the suspended risks balance, and dovish again this past week (Exhibit 3). This argues against taking this latest surprise too seriously. If we are right about data, the Fed could quickly reverse course, in line with our US team’s call.

There is mounting concern – after the recent run of unhelpful central bank meetings – that the divergence trade is over. But from a fundamental perspective, this week’s dovish shift from the Fed will only spur US outperformance versus the G10, which is pronounced even with the Dollar substantially stronger over the last two years (Exhibit 4). For the US in such a setting to loosen its financial conditions at the expense of its G10 peers makes no sense (Exhibit 5), something that has only been compounded by the ECB’s pivot to credit easing (Exhibit 6), given that Euro strength in the wake of that decision has been undoing some of the positives from tighter credit spreads. Overall, the fundamental case for the divergence trade is stronger, not weaker, after the latest Fed meeting.

Pessimism over the divergence trade is compounded by worries that the February G20 meeting may have seen a behind-the-scenes agreement for the ECB and BoJ to desist from policies that could push the Dollar stronger. Comparing the February communique with that from September, there are two notable changes. First, the February communique contains language that countries should refrain from “disorderly moves” in their exchange rates, a reference to China and in line with our view that a large, one-off devaluation of the RMB is unlikely. Second, the September communique contained language that “monetary policy tightening is more likely in some advanced countries,” a reference to US monetary policy normalization. That language is missing from the February communique, which we think reflects US officials’ concern over market moves at the time. With the rebound in risk since then, we think that omission is dated, much as the past week’s dovish shift from the FOMC may turn out to be. We see no conspiracy to stabilize exchange rates, just an unfortunate string of misfires from central banks (most notably the ECB), which will ultimately reinforce the divergence theme.

Goldman's determination to see the USD higher probably means that the dollar has quite a bit downside left. Recall from our post yesterday, that the best trade to take advantage of this is to sell the USD during US hours offset by a dollar long during the rest of the trading day.

Only once Brooks is Gartmaned, will it be safe to go long the USD again, a move which will also unleash the next leg lower in crude, and thanks to China's promptly response, global stock markets too.

http://www.zerohedge.com/news/2016-03-20/goldman-fx-head-no-central-bank-conspiracy-crush-dollar

A Strange Pattern Emerges When Trading The US Dollar In 2016

One of the more surprising market developments of 2016 has been the violent obliteration of those who had taken part in the biggest consensus trade of 2015, namely long the USD. As the Fed finally admitted earlier this week, the US economy is sputtering and is woefully incapable of handling 4 rate hikes, or 3 for that matter. In fact, the Fed will be lucky to push through even one more rate hike without the Chinese Yuan collapsing and unleashing even more capital outflows (which precipitated the major market swoons in the summer of 2015 and early 2016) arguably the main topic during the alleged Shanghai G-20 "central bank accord." The result: this week saw the biggest two-day USD collapse against a basked of foreign currencies in years, and currently the DXY is trading at a lower level than a year ago.

However, to say that the dollar selloff is a development would be incorrect: as Bank of America points out, Dollar selling has been going on for the past three months. 

But what is more curious is when during the day this selling has taken place.

As Bank of America's FX quant strategist, Vadim Iaralov writes, "ahead of the Fed, the USD was already trending lower against 8 out of 9 G10 currency pairs with GBP being the only exception. The surprisingly-dovish Fed has only further accelerated the decline in the US dollar. The decline started in late January and has occurred during the critical local New York trading hours. The US hours downtrend looks likely to continue in the near future."

What becomes immediately visible when one looks at the chart below is that all of the USD selling in 2016 has taken place during US hours.

This, according to BofA chief FX strategist, Athanasios Vamvakidis means that "the market moves would be consistent with EM central bank interventions."

Perhaps: if true it would suggest that some very notable "EM" central banks (a polite euphemism for the PBOC) have been dumping the USD during US hours, which in turn would explain the coordinated attack against the USD - now with Fed participation - ever since the Shanghai G-20 meeting (although it would not explain why Japan or Europe would be willing to piggyback on this trade as while China wants a weaker dollar, Europe and Japan want the USD as strong as possible).

Whatever the reason, and whoever may be causing this odd temporal divergence, thanks to BofA's observation an interesting arb emerges: buy the USD during Asia and UK hours, and sell during the US day, sit back and collect the profit.

Then again, now that this trade has been exposed and every FX trader sure to jump on it, we would expect precisely the opposite to take place: dollar strength during US hours offset by weakness during the rest of the trading day. We will update readers when the temporal regime changes, which we are confident it will in the not too distant future.

http://www.zerohedge.com/news/2016-03-19/strange-pattern-emerges-when-trading-us-dollar-2016

EES: Splitting Pennies Book Preview released

Checkout this preview of Splitting Pennies - Understanding Forex

Splitting Pennies Book Preview by Elite E Services FX

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JPM Announces $1.9 Billion Buyback One Month After CEO Jamie Dimon Buys 500,000 Shares In The Open Market

On February 12, Jamie Dimon made headlines when he bought 500,000 shares, or some $26 million worth of JPM stock which coming one day after the market hit its lowest point in the recent selloff, has become known as the "Dimon Bottom." Was it just good timing or was there something more to the purchase some wondered. As it turns out the purchase may have been nothing more than Jamie frontrunning his own company's multi-billion buyback, because as JPM announced moments ago, the company of which he is a CEO, just authorized the repurchase of an additional $1.9 billion in stock over the next three months, thereby assuring CEO Jamie of an even great profits on his recent acquisition.

From the release:

JPMorgan Chase & Co. (NYSE: JPM) (“JPMorgan Chase” or the “Firm”) today announced that the Firm’s Board of Directors has authorized the repurchase of up to an additional $1.88 billion of common equity through the end of the second quarter of 2016 as part of the Firm’s current equity repurchase program. This amount is in addition to the $6.4 billion of common equity authorized for repurchase by the Board last year. The Firm has received a non-objection from the Board of Governors of the Federal Reserve System to this increase in the amount of common equity that may be repurchased under the Firm’s 2015 capital plan.

The timing and exact amount of purchases of common equity by JPMorgan Chase under its equity repurchase program will depend on various factors, including market conditions, the Firm’s capital position, internal capital generation, alternative investment opportunities, and legal and regulatory considerations; the Firm’s repurchase program does not include specific price targets or timetables, and may be executed through open market purchases or privately negotiated transactions, including the use of Rule 10b5-1 programs, and may be suspended at any time.

And now the legal question: did Dimon have knowledge that JPMorgan would conduct this buyback just one month ago when he purchased JPM stock in the open market to make a "statement." We doubt any regulators will ask this obvious question as even if he did, it will surely be chalked up to merely just another "tempest in a teacup."

http://www.zerohedge.com/news/2016-03-17/jpm-announces-19-billion-buyback-one-month-after-ceo-jamie-dimon-buys-500000-shares-

Plot Thickens In New York Fed Heist As $30 Million In Cash Said Delivered To Mystery Chinese Man

One week ago, we documented the Hollywood-esque theft of $100 million from accounts held at the NY Fed and belonging to the central bank of Bangladesh.

In many ways, the heist was elegantly planned and executed and in others it was comically amateurish.

Here are the basics: On February 5, Bill Dudley's New York Fed was allegedly “penetrated” when “hackers” (of supposed Chinese origin) stole $100 million from accounts belonging to the Bangladesh central bank. The money was then channeled to the Philippines where it was sold on the black market and funneled to “local casinos” (to quote AFP). After the casino laundering, it was sent back to the same black market FX broker who promptly moved it to “overseas accounts within days.”

Basically, hackers got ahold of Bangladesh’s SWIFT codes and bombarded the NY Fed with requests for funds from the country’s FX reserves. Mercifully, the Fed declined to clear separate transfers worth some $870 million, but not before $100 million got away.

Four transfer requests totaling $81 million went through, but a fifth was held up when whoever was making the request tried to have $20 million sent to an imaginary NGO called Shalika Foundation but accidentally spelled “foundation” as “fandation.”

According to the Philippine Daily Inquirer, the money was routed to three casino bank accounts via the Jupiter Street, Makati City, branch of Rizal Commercial Banking Corp. The country’s gaming regulator was investigating.

Now, we get new details on what is a truly fascinating story.

First, we learn that the hackers who spelled “foundation” wrong weren’t the only ones to do something silly. The requests came in on a Friday, which is notable because as WSJ writes, “Friday is the weekend in Bangladesh and the central bank’s offices were closed.”

So, “the fact that the money was being wired to personal bank accounts in the Philippines rang alarm bells,” but apparently, the fact that it was a weekend did not.

Still, there were people at the office.

In fact, it was a printer error that tipped Bangladesh off to the scam. “Zubair Bin Huda, a joint director of Bangladesh Bank, found the printer tray empty when he looked on the morning of Feb. 5 for confirmations of SWIFT financial transactions that are normally printed automatically overnight,” Bloomberg reports. “Because it was a Friday -- a weekend in Muslim-majority Bangladesh -- Huda left the office around 11:15 a.m. and asked his colleagues to help fix the problem [but] it took them more than 24 hours before they could manually print the receipts, which revealed dozens of questionable transactions that sent the bank racing to stop cash from leaving its account with the Federal Reserve Bank of New York to the Philippines, Sri Lanka and beyond.”

As the story goes, Huda came into the office on Saturday and found a flashing message on the terminal connecting to the SWIFT system that read: “A file is missing or changed.” Finally, once Huda managed to get the things up and running his team found “receipts show[ing] the Federal Reserve Bank of New York sent back queries to Bangladesh Bank against 46 payment orders in different messages,” Bloomberg recounts.

Well at that point, it was panic time but because it was Saturday, no one was home at the NY Fed. 

Anyway, the crack squad at the Philippine anti-money laundering agency has determined that someone needs to check out the branch manager at the bank where the money ended up. That manager is one Maia Santos Deguito. “[She] is a key player here because if you don’t have the cooperation of the branch manager, this could not have been done,” Senator Serge Osmena, vice chairman of the country’s blue ribbon committee, which investigates major issues, told reporters on Wednesday.

That’s correct. It’s also “slightly” suspicious that the CCTV cameras at the branch weren’t working when the money was withdrawn. Rizal wouldn’t immediately comment on the CCTV “issue.”

Deguito decided to essentially plead to fifth in a hearing and it’s easy to understand why. She apparently ignored requests from the Bangladesh central bank to stop the transfers.

After the money left the bank it went to two casinos and "a man of Chinese origin," according to Reuters. 

"$29 million ended up in an account of Solaire, a casino resort owned and operated by Bloombery Resorts Corp which is controlled by Enrique Razon, the Philippines' fifth-richest man in 2015, a further $21 million went to an account of Eastern Hawaii Leisure Co., a gaming firm in northern Philippines," and that, according to Teofisto Guingona, head of the Philippine Senate's anti-corruption committee, is where "the paper trails ends" because "casinos are not covered by the country's anti-money laundering laws."

So what of the mysterious "Chinese" man? Well, we don't know. All we know is that he ended up receiveing $30 million in cash in three deliveries via an FX broker called Philrem Service Corp which of course wouldn't talk to Reuters.

Meanwhile, Bangladesh’s central-bank governor, Atiur Rahman - this poor guy...

... took the fall, saying he "took moral responsibility" for the loss. He resigned after seven years at the bank. 

We're sure that any day now, Bill Dudley will set up a small table in his back yard, surround himself with reports sitting in the grass, and fall on his sword as well. After all, it's his "moral responsibility." 

(Bangladesh... hmmm... is that some place we can see from the roof at 33 Liberty?)

http://www.zerohedge.com/news/2016-03-16/plot-thickens-new-york-fed-heist-30-million-cash-said-delivered-mystery-chinese-man

EES: Making Sense of Cents

Forex remains to be the largest market in the world and the least understood.  Central banks have more influence on global markets than any other force.  In other words, monetary policy is the ONLY economic indicator(s) investors should be watching, because let's face it, if the Fed raised rates to 10% like they should do and called in all that QE money, stocks would collapse.

But yet Forex remains a mystery, something that someone may have mentioned or you heard about.. wait FX is a TV channel?  or graphics?  a movie?

One has to wonder who is more stupid, is it the clowns that worked for the big FX banks getting fined, jailed, or fired for misbehavior - or PBOC who seems intent to destroy not only any hope of becoming a 'real' currency (let alone a world reserve currency) but killing their trade markets as well:

In September last year, Chinese regulators stepped on the throat of a 'fair' market in equity futures trading and for all intent and purpose killed the Chinese equity market. Tonight - after 2 days of Yuan weakness - having warned everyon from Soros to Kyle Bass that "betting against the Yuan can't possibly work," The PBOC just unleashed plans for so-called "Tobin Tax" on FX transactions (which implicitly taxes each transaction, reducing liquidity, raising margins and reducing leverage).

Meanwhile, there is a real world demand for Forex, and the CME group is reporting record volumes, even 6% more than the previous record:

CME Group (NASDAQ:CME), one of world’s leading derivatives marketplaces, announced that on March 10 it reached record trading volumes for forex futures and options. The record 2 517 334 contracts were traded on the Chicago Mercantile Exchange (CME). The number is 6% higher than the previous record of March 6, 2010. Also on March 10, were traded the record 2 350 478 forex futures contracts, exceeding by 142 061 the previous record of 2 208 417 contracts from May 6, 2010. 

The record volumes were driven by the Euro FX Futures (EUR/USD) trade: $127.13 billion in notional value in futures and $18.5 billion in options.

As central banks become more and more like big hedge funds, and Forex markets become more volatile, there will be a growing need for Forex for any investment portfolio.

More and more public companies report 'currency headwinds' - the most notable recent report comes from Toys R Us:

Toys “R” Us Inc. said revenue slipped 2.6% in the latest quarter as the retailer faced currency headwinds over the holiday period.

The foreign exchange volatility was partially offset by the rise of same store sales of 2.3% in the fourth quarter. Currency woes, however, had a negative $169 million impact.

For the year, the toy store’s same store sales increased a modest 0.9%.

“Throughout the year, and especially during the holiday season, we focused on improving our execution to deliver a positive and memorable shopping experience to our customers,” said Dave Brandon, chief executive officer. “We significantly improved our performance, but we can and will make further progress on our quest to achieve flawless execution in every aspect of our operations.”

It must take a multi-million dollar salary to make such a bombastic statement... losing millions because of a lack of internal financial controls (i.e. no Forex hedging) and at the same time, state that we are on a 'quest to achieve flawless execution in every aspect of our operations.'  Or maybe 'flawless' is executive-speak for misplacing a few million in the Forex market.  This guy should run for political office!

But it shouldn't be alarming, in the meetings leading to the "Nixon Shock" and the modern free floating Forex system, genius statesman Henry Kissinger admitted honestly "Economics is not my Forte."

Secretary Kissinger: But if they ask what they're doing—let me just say economics is not my forte. But my understanding of this proposal would be that they—by opening it up to other countries, they're in effect putting gold back into the system at a higher price.

Mr. Enders: Correct.

Secretary Kissinger: Now, that's what we have consistently opposed.

Mr. Enders: Yes, we have. You have convertibility if they—

Secretary Kissinger: Yes.

Mr. Enders: Both parties have to agree to this. But it slides towards and would result, within two or three years, in putting gold back into the centerpiece of the system—one. Two—at a much higher price. Three—at a price that could be determined by a few central bankers in deals among themselves.

So, in effect, I think what you've got here is you've got a small group of bankers getting together to obtain a money printing machine for themselves. They would determine the value of their reserves in a very small group.

There are two things wrong with this.

Secretary Kissinger: And we would be on the outside.

We want money printing machine! We want money printing machine! (childish dancing and yelling)  

If The Fed had any sense, they would immediately raise rates to 10%, the US Dollar would soar.  Prices of imports would plummet.  Money would flow to USA like a river.  Exports, would need to be managed - but anyway the USA is a net-importer and it costs us nothing to print money and buy from foreigners.  

It's amazing, the lack of understanding out there for the most important market in the world - the global money markets; FOREX.  On the one hand, our money is worth less and less every year (most economic actors are Forex losers).  On the other hand, Forex hedging is simple to use; and it's possible to even make money by trading Forex.  

Elite E Services, Inc. published a book for those who want to know more about Forex "Splitting Pennies" on sale on kindle and in print from Lulu.  

http://www.zerohedge.com/news/2016-03-15/making-sense-cents

Having Killed Their Equity Market, China Unleashes "Tobin Tax" For FX Market

In September last year, Chinese regulators stepped on the throat of a 'fair' market in equity futures trading and for all intent and purpose killed the Chinese equity market. Tonight - after 2 days of Yuan weakness - having warned everyon from Soros to Kyle Bass that "betting against the Yuan can't possibly work," The PBOC just unleashed plans for so-called "Tobin Tax" on FX transactions (which implicitly taxes each transaction, reducing liquidity, raising margins and reducing leverage).

Deputy central bank governor Yi Gang raised the possibility of implementing a Tobin tax late last year in an article written for China Finance magazine, and now, as Bloomberg reports, it is on!

China’s central bank has drafted rules for a Tobin tax on currency trading, according to people with knowledge of the matter.

Rules are aimed at curbing speculative trading, say the people, who asked not to be identified as the discussions are private

An initial tax rate may be set at zero so as to allow authorities time to set up rules without immediately implementing the levy, people say

Tax is not designed to disrupt hedging and other FX transactions undertaken by companies, people say

Rules still need final approval by central government and it’s not clear how quickly they may be implemented, people say

People’s Bank of China doesn’t immediately respond to faxed request seeking comment

What happens next? Well that's easy... This!~

NOTE: Yes that is real... and Yes there is 'some' volume there

Good luck unwinding those levered shorts... and even if the hedgies are profitable, we suspect the tax will be tiered to enable the maximum pain to be extracted from so-called speculators.

“The Tobin tax can be considered as a form of capital control,” says Andy Ji, a foreign-exchange strategist and economist at CBA in Singapore.

“The levy will hurt market sentiment and cause investors more panic, as this shows that the existing capital controls are not enough to curb outflows,” Ji says; “Now is not a good time to roll out Tobin tax as the market is already concerned about whether China will be able to increase capital account convertibility in the coming years, and this is another step backward to achieve that goal”

Simply put this imposition of a Tobin Tax suggests PBOC is expecting a lot of volatility and is trying to minimize any possibility of momentum ignition and speculation as much as possible.

Charts: Bloomberg

http://www.zerohedge.com/news/2016-03-14/having-killed-their-equity-market-china-unleashes-tobin-tax-fx-market 

EES: Splitting Pennies the book released

Forex is all around you, even now, as you read this webpage.

You have had a feeling all your life, something is wrong with our world.

Something about our economic system just doesn't add up.

Where does all the money go?  The government?  What do "They" do with it?

Every minute, our money is worth less and less.

We are forced to work more, and more; to compensate for this discrepancy.

Who is to blame?  How does this system function?

Is there a way to profit from it?

Is there a way to protect ourselves from this financial Matrix?

What does the future hold?

Splitting Pennies answers all this and more.  Splitting Pennies is the defining doctrine describing our global financial system through the prism of its mechanism: Forex.  Increase your Forex IQ or enjoy a story of modern finance.

DISCLOSURE: FOREX IS THE BIGGEST BUSINESS IN THE WORLD THAT YOU KNOW NOTHING ABOUT.  

BY READING THIS BOOK YOU'LL KNOW MORE THAN A HARVARD MBA.

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Ex-JPMorgan Broker Blew $20M of Client Money Gambling, Gets 5 Years

A former JPMorgan Chase & Co. broker who said he stole millions of dollars from customers because his brain was “hijacked” by an addiction to sports gambling was sentenced to five years in prison.

Michael Oppenheim, who at one point had about 500 clients and almost $90 million under management at JPMorgan, got so deeply in debt that, according to his lawyer, even his bookie expressed sympathy for him.

The former broker also got a break from U.S. District Judge Analisa Torres, who said at a hearing in Manhattan Tuesday that his battle with gambling addiction and his care for his disabled daughter were why she gave him less than the 10 years prosecutors sought. She also noted that Oppenheim’s gambling intensified just months after the daughter was born.

“I am cognizant that gambling is a mental disorder which is aggravated during periods of stress and depression,” said Torres, who also credited Oppenheim for expressing remorse for his crimes.

Oppenheim wagered on weekly National Football League games starting in 1993 and eventually moved to online sports betting, his lawyer, Paul Shechtman, told Torres during the hearing. After losing hundreds of thousands of dollars while working at JPMorgan, Oppenheim began stealing from clients to attempt to make up his losses, he said. Oppenheim eventually began options trading in technology stocks like Apple Inc., losing as much as $2.7 million in one day in a fruitless effort to pay back clients, Shechtman said.

http://www.thinkadvisor.com/2016/03/09/ex-jpmorgan-broker-blew-20m-of-client-money-gambli?ref=hp-financial-news

Draghi Delivers The Bazooka: ECB Announces Surprise Refi, Marginal Rate Cuts; Boosts QE To €80BN, Adds IG Bonds

Well, the people wanted a "bazooka-sized" surprise from Draghi, and they got it.

Moments ago the ECB announced not only a 10 bps cut to the deposit rate expected pushing it to -40%, but also announced a 5 bp rate cut to the refinance (pushing it to 0.00%) and the marginal lending rate (now at 0.25%), and also boosted QE by €20bn to €80 billion per month, the addition of afour new targeted TLTROs each with a maturity of 4 years, but the most surprising announcement was that the ECB would also for the first time include investment grade euro-denominated bonds issued by non-bank corporations along the list of assets that are eligible for regular purchases.

In other words, Draghi finally delivered his bazooka.

Full announcement:

Monetary policy decisions

At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:

(1) The interest rate on the main refinancing operations of the Eurosystem will be decreased by 5 basis points to 0.00%, starting from the operation to be settled on 16 March 2016.

(2) The interest rate on the marginal lending facility will be decreased by 5 basis points to 0.25%, with effect from 16 March 2016.

(3) The interest rate on the deposit facility will be decreased by 10 basis points to -0.40%, with effect from 16 March 2016.

(4) The monthly purchases under the asset purchase programme will be expanded to €80 billion starting in April.

(5) Investment grade euro-denominated bonds issued by non-bank corporations established in the euro area will be included in the list of assets that are eligible for regular purchases.

(6) A new series of four targeted longer-term refinancing operations (TLTRO II), each with a maturity of four years, will be launched, starting in June 2016. Borrowing conditions in these operations can be as low as the interest rate on the deposit facility.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

More from Draghi in 45 minutes.

http://www.zerohedge.com/news/2016-03-10/draghi-whips-out-bazooka-ecb-announces-surprise-refi-marginal-lending-rate-cuts-boos

This 4,000-Year-Old Financial Indicator Says That A Major Crisis Is Looming

Submitted by Simon Black via SovereignMan.com,

Over 4,000 years ago during Sargon the Great’s reign of the Akkadian Empire, it took 8 units of silver to buy one unit of gold.

This was a time long before coins. It would be thousands of years before the Lydians in modern day Turkey would invent gold coins as a form of money.

Back in the Akkadian Empire, gold and silver were still used as a medium of exchange.

But the prices of goods and services were based on the weight of metal, and typically denominated in a unit called a ‘shekel’, about 8.33 grams.

For example, you could have bought 100 quarts of grain in ancient Mesopotamia for about 2 shekels of silver, a weight close to half an ounce in our modern units.

Both gold and silver were used in trade. And at the time the ‘exchange rate’ between the two metals was fixed at 8:1.

Throughout ancient times, the gold/silver ratio kept pretty close to that figure.

During the time of Hamurabbi in ancient Babylon, the ratio was roughly 6:1.

In ancient Egypt, it varied wildly, from 13:1 all the way to 2:1.

In Rome, around 12:1 (though Roman emperors routinely manipulated the ratio to suit their needs).

In the United States, the ratio between silver and gold was fixed at 15:1 in 1792. And throughout the 20th century it averaged about 50:1.

But given that gold is still traditionally seen as a safe haven, the ratio tends to rise dramatically in times of crisis, panic, and economic slowdown.

Just prior to World War II as Hitler rolled into Poland, the gold/silver ratio hit 98:1.

In January 1991 as the first Gulf War kicked off, the ratio once again reached 100:1, twice its normal level.

In nearly every single major recession and panic of the last century, there was a sharp rise in the gold/silver ratio.

The crash of 1987. The Dot-Com bust in the late 1990s. The 2008 financial crisis.

These panics invariably led to a gold/silver ratio in the 70s or higher.

In 2008, in fact, the gold/silver ratio surged from below 50 to a high of roughly 84 in just two months.

We’re seeing another major increase once again. Right now as I write this, the gold/silver ratio is 81.7, nearly as high as the peak of the 2008 financial crisis.

This isn’t normal.

In modern history, the gold/silver ratio has only been this high three other times, all periods of extreme turmoil—the 2008 crisis, Gulf War, and World War II.

This suggests that something is seriously wrong. Or at least that people perceive something is seriously wrong.

There are so many macroeconomic and financial indicators suggesting that a recession is looming, if not an all-out crisis.

In the US, manufacturing data show that the country is already in recession (more on this soon).

Default rates are rising; corporate defaults in the US are actually higher now than when Lehman Brothers went bankrupt back in 2008.

These defaults have put a ton of pressure on banks, whose stock prices are tanking worldwide as they scramble to reinforce their balance sheets against losses.

I just had a meeting with a commercial banker here in Sydney who told me that Australian regulators are forcing the bank to increase its already plentiful capital reserves by over 40% within the next several months.

This is an astonishing (and almost impossible) order.

The regulators wouldn’t be doing that if they weren’t getting ready for a major storm. So even the financial establishment is planning for the worst.

Good times never last forever, especially with governments and central banks engineering artificial prosperity by going into debt and printing money.

These tactics destroy a financial system. And the cracks are visibly expanding.

So while the gold/silver ratio isn’t any kind of smoking gun, it is an obvious symptom alongside many, many others.

Now, the ratio may certainly go even higher in the event of a major banking or financial crisis. We may see it touch 100 again.

But it is reasonable to expect that someday the gold/silver ratio will eventually fall to more ‘normal’ levels.

In other words, today you can trade 1 ounce of gold for 80 ounces of silver.

But perhaps, say, over the next two years the gold/silver ratio returns to a more historic norm of 55. (Remember, it was as low as 30 in 2011)

This means that in the future you’ll be able to trade the 80 ounces of silver you acquired today for 1.45 ounces of gold.

The final result is that, in gold terms, you earn a 45% “profit”. Essentially you end up with 45% more gold than you started with today.

So bottom line, if you’re a speculator in precious metals, now may be a good time to consider trading in some gold for silver.

http://www.zerohedge.com/news/2016-03-08/4000-year-old-financial-indicator-says-major-crisis-looming

OANDA agrees acquisition of FX accounts of IBFX/TradeStation Forex

Talking of the consolidation that has taken hold of the US Forex market is hardly bringing any news. Today saw one more piece of proof in this respect, as provider of online trading services OANDA has just announced an agreement to acquire all of the forex accounts of IBFX, Inc. (TradeStation Forex), in a transaction whose financial terms were not disclosed.

IBFX (TradeStation Forex) is the forex dealer firm subsidiary of TradeStation Group, Inc. and is exiting the forex dealer business.

The transfer is set to happen on March 4, 2016.

From March 5, 2016, TradeStation Technologies will offer to the IBFX customers who switch to OANDA, subscriptions for a real-time TradeStation FX platform integrated with OANDA’s forex price feed. This will enable those customers to continue to perform research and analysis on TradeStation FX, including charting, strategy design and strategy testing and optimization, before placing their trades as OANDA clients on their new OANDA order execution platform.

Ed Eger, President and Chief Executive Officer, OANDA Global Corporation, says,

“TradeStation Forex clients are used to top technology and a broker that puts them first. This will continue with OANDA. Our shared values on these crucial matters were a key reason for striking this deal, rather than any others we’ve recently considered. These new clients join a rapidly growing OANDA community at a time when market volatility is high. We’re showing our new clients why OANDA is known for innovative tools and technologies to assist the FX trader as well as exceptional execution and client service. We’re confident that both professional and part-time traders will be happy at OANDA. In fact, we’ve even arranged for introductory free access to some of our advanced services used by elite traders.”

John Bartleman, President of IBFX and TradeStation Securities, Inc., TradeStation Group’s broker-dealer/futures commission merchant operating subsidiary, says,

“We believe that OANDA is one of the best online forex dealers in the world and are confident that TradeStation Forex clients will be well served. Forex has always been a small part of our business, and now we will be able to focus all of our online brokerage resources on TradeStation Securities’ equities, options and futures business, and our forex clients will have the benefit of being served by a firm that dedicates its focus to forex trading.”

https://leaprate.com/2016/02/oanda-agrees-acquisition-of-fx-accounts-of-ibfxtradestation-forex/ 

EES: Liquidity System now on MQL marketplace

Checkout Liquidity at the MQL5 marketplace or you can simply search "Liquidity" on the "Market" tab inside your MT4/MT5 terminal!

Liquidity is designed specifically to create volume. It is designed for those with existing sufficient positive alpha in their Forex accounts, but with little volume. Liquidity trades constantly, on both sides of the market.

By using a parameter rich open skeleton design, Liquidity can be used in near infinite ways (inside the mathematical confines of the Forex market, and broker limitations). Also because of this design, Liquidity can become a plethora of micro-strategies.

For example, Liquidity can be used to trade during a market lull, such as in between important data announcements. During this time normally the majority of algorithms are quiet or inactive. If this is the case for your algos, Liquidity is the perfect overlay / companion strategy to add to your quant portfolio!

In its most basic form, liquidity can be used to grid the market with a combination of market orders and limit orders. In its most advanced form, liquidity can be used to trade constantly, on both sides of the market, with risk management.