What a depressing day.
Putin moves further towards isolationism in the face of Western pressures. Well perhaps it’s worse than that. He’s not anti-everyone, just the West as he’s planning to build further ties with the rest of the world. It has so many parallels to the Cold War it is depressing. Nationalism is pulling Russia together whilst, ironically, in Europe nationalism is pulling it apart. If it comes down to toughing it out I'll have my money on Russia. They have a hell of a track record in the face of adversity.
ECB - For people who enjoy correlations here’s a massively negative one for you - ECB days and my serotonin levels. So no QE but a commitment to the ABS program and a suggestion that they think it will work when it hasn't so far. No change. The German camp have effectively waved the rule book under Draghi's nose and he stated clearly that he will not break the law as there was no hint of a ECB two fingered salute to Germany. Consensus is solid, though no longer unanimous, and once again fails to produce action.
I do wonder if a solution to today’s problems would be to swap presidents. Make Draghi the President of Russia and Putin the President for the ECB! A bit of decisiveness in the ECB exchanged for a bit of consensus moderation in the Duma would be a great trade.
Was the market really looking for QE? Well since the announcement periphery bonds are off (having lost a potential QE bid) and European bank stocks have all slumped. So yes they were. Peripheral banks take a double whammy from local bonds falling and less likelihood of growth.
Having been long European stocks, especially growth stocks, since late October, adding today's events to concerns expressed two days ago about capitulation from equity bears I am going to change camps and move to the short side and see how it goes for the next couple of weeks. This could be enough to tip the US too.