can you spell QE?
That said, no “manipulative operative” I have seen thus far – including QE and even negative interest rates; holds a candle to the ECB’s hare-brained scheme to monetize investment grade corporate bonds. Which, per the title of today’s article, commenced yesterday, as part of the expansion of Draghi’s unprecedented QE program – now in its 15th month, at €80 billion of freshly printed Euros per month. I mean, at least when the Fed was monetizing mortgage-backed bonds – which they still own, of course – it was because they were taking bad assets off of bad balance sheets. However, in the ECB’s case, they are adding investment grade corporate bonds to their “portfolio” because they are running out of sovereign bonds to purchase. Luckily for the Fed, they were able to end QE ( LOL) when they only owned a third of all Treasuries (mostly at the long end of the yield curve) and half of the mortgage-backed bonds. That said, rest assured Whirlybird Janet will be forced – by plunging economic activity and expanding currency wars – to re-start QE sooner rather than later; so don’t be surprised if she joins Goldman Mario in the “most insane, destructive Central bank scheme to date.”
As I wrote 17 months ago, the “deformative” destruction wrought by post-2008 Central bank lunacy is unparalleled in history – and exactly why copper, perhaps the most industrially-sensitive of all commodities, may break below $2.00/lb by week’s end. However, in monetizing the bonds of healthy companies like Anheuser Busch Imbev, the ECB is catalyzing an explosion of debt issuance, and bubblicious speculation, in a corporate sector already drowning in record-high leverage. Heck, Toyota just issued Japan’s lowest-ever yielding corporate bond yesterday – three-year notes yielding 0.001%, with the clear understanding that it may well be “monetized” by Central bankers!
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