Draghi’s Shock And Awe Bazooka Backfires With Huge Whipsaw

Investment Advisor Representative - Sitka Pacific Capital Management • Mar 10, 2016 at 11:35 AM EST

ECB president Mario Draghi pulled out a bazooka today with a package that allegedly exceeded expectations.

QE goes from €60bn to €80bn
ECB to buy corporate bonds
ECB Cut the deposit rate to -0.4% from -0.3%
The The main refinancing rate fell by 5 basis points to 0 per cent

The Financial Times reported “The euro dropped sharply in response to the package of measures – a clear sign that the central bank had manage to excel even aggressive expectations.”

Oops!

Second Thoughts

It’s not the news that matters, it’s the market’s reaction to it. The market had strong second thoughts.

(Click on image to enlarge)

That’s a huge 2.7% swing in about 3 hours.

So much for the bazooka theory. Is this a “clear sign” Draghi failed?

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