Draghi Decides on Euro Printing Magnitude Today
Could the euro (NYSEARCA:FXE) get crushed today? Could be. It’s Mario Draghi’s last few months as head of the money-printing central nervous system of Europe, the European Central Bank, a name they came up with out of sheer creativity. Today’s meeting of the governing council of the bank in Frankfurt, will determine whether Draghi will take an aggressive stance on new economic stimulus, as if the current negative deposit rates in the Eurozone aren’t aggressive enough, or if he’ll just notch rates down to slightly more negative, in what would probably be called a “hawkish” move. Taking them all the way back up to zero, of course, would be mind-boggling extreme fiscal conservatism, like buying a Ferrari but without the accessories and with only bovine leather instead of kangaroo leather seats. The only question seems to be whether he will unleash monetary stimulus today, or in September, one month before he steps down.
Watch the reaction of the dollar (NYSEARCA:UUP) in response to any aggressive move (by analysts standards) and the resulting move in precious metals, which could tell us if the current rally in metals is ignoring moves in the dollar-euro exchange rate or not.
In what could be seen as historical poetry, Draghi will be stepping down on the same day that the United Kingdom will be leaving the European Union, assuming Boris Johnson stays true to his word, which is really not at all a certainty.
Boris Johnson Fires All Remainers in Cabinet, Goes Full Brexit
In a sign that Boris Johnson means business (maybe) about leaving the European Union on October 31st, the new British Prime Minister has fired half of former British Prime Minister Theresa May’s cabinet, purging it of all soft-core Brexiters and other Remainers, keeping only the most hard-core Brexit supporters who are OK with following through with a no-deal Brexit. Dominics both Raab and Cummings, Jacob Rees-Mogg, Priti Patel, and Esther McVey, all hard Brexiters who voted against May’s Brexit deal and even resigned over it because in their view it kept them in the EU in everything but name, have replaced more moderates in cabinet positions. “We are going to fulfill the repeated promises of parliament to the people and come out of the EU on 31 October, no ifs or buts,” Johnson said. Let’s see.
Johnson says he aims to cut a deal with the EU and get rid of the Irish backstop, which would otherwise basically keep the UK in the EU because there is no other way to prevent a hard border between Ireland and Northern Ireland. He probably won’t be able to get the EU to agree to this and instead we’ll see a game of chicken. He has said that the chances of a no-deal Brexit are “one in a million”. In the words of Lloyd Christmas, “So you’re telling me there’s a chance!” Except in this case, the chances that any of the other 999,999 possibilities end up as reality over the one-in-a-million no-deal Brexit scenario are very slim. One could argue that this means that the chances aren’t actually one-in-a-million. One could be correct.
Boeing Suffers Problems To the Max
Boeing (NYSE:BA) is getting all disheveled over its continuing 737 MAX migraine. CEO Dennis Muilenburg warned investors yesterday that the company may need to go so far as to halt 737 Max production entirely. This makes sense, given that nobody is buying the plane because nobody is allowed to fly the thing, being that two crashes killed more than 300 people. Now it believes, or rather hopes, that it will get the green light to fly again sometime in the fourth quarter. The software fix for the MAX series, which aims to stop the plane from intentionally grounding itself, won’t be able to be presented to Federal Aviation Administration authorities until September, and a certification flight will only be possible by October at the earliest. If the 737 MAX can get back in the air by the end of the decade, it would be an accomplishment. Boeing suffered its largest loss ever last quarter because of the nightmare.
Bernie Wants a Break
Bernard “Bernie” Madoff, the mastermind of the largest Ponzi scheme in history not counting Social Security, Medicare, and the global sovereign debt bubble, is asking for clemency from President Donald Trump. His petition is pending. Something tells, well, everyone, that granting the request wouldn’t make Trump any more popular, so he probably won’t do it. Madoff is now 81, his son committed suicide 5 years ago from shame and depression, and his other son has since died of cancer. His wife doesn’t talk to him, but the good news is he only has about 140 years to go on his sentence before he’s released. If he exercises and stays mentally fit and figures out how to cryogenically freeze himself using whatever resources are available to him in his cell, he might just make it.
Tesla Loses More Than It Said It Would, Again
Tesla (NASDAQ:TSLA), the perennial money-losing electric car company that everyone hopes will eventually make money somehow, has pushed back its profit timeline again after missing targets this quarter. Its CTO, J.B. Straubel, is stepping down as well. This is all despite record deliveries, as deliveries do not mean profit, since the cars being delivered are already paid for. Shares were down 11.5% in after hours trading yesterday. Tesla had promised profitability by Q3 2018, and now expects profitability in Q4 2019. The chances that they’ll hit this goal could be close to the chances of a no-deal Brexit in Boris Johnson’s estimation.