Friday, 23 October 2015

Nobody expects any ECB action

One thing that we should have learned over the past few years is that that expecting central bank action is like expecting the Spanish Inquisition. No one should expect it.

With that in mind I give you the latest ECB press conference Monty Python Style  - No one expects any ECB action.

Market - Well I was just saying that there is a chance that Euro rates could drift lower, I wasn't saying I was expecting any ECB action.

Jarring chord. The door flies open and Cardinal Draghi of the ECB enters, flanked by two junior cardinals. Cardinal Vítor Constâncio and Cardinal errr the other one at the press conference who never says anything, Bonnici.

Draghi - Nobody expects any ECB action! Our chief weapon is surprise...surprise and fear...fear and surprise.... our two weapons are fear and surprise...and obscure communication.. Our three weapons are fear, surprise, and obscure communication...and an almost fanatical devotion to inflation targeting.... Our amongst our weapons.... amongst our weaponry...are such elements as fear, surprise.... I'll come in again. (exit and exeunt)

Market - I didn't expect any ECB action.

Jarring chord. They burst in.

Draghi Nobody expects any ECB action! Amongst our weaponry are such diverse elements as fear, surprise, obscure communication and an almost fanatical devotion to inflation targeting, and doing everything it takes, - oh damn! (to Constâncio)  I can't say it, you'll have to say it.

Constâncio - What?

Draghi - You'll have to say the bit about 'Our chief weapons are ...'

Constâncio - I couldn't do that...

Draghi bundles the cardinals outside.

Market - I didn't expect any ECB action .

They all enter.

Constâncio - Er....

Draghi - Expects.

Constâncio - Expects... Nobody expects…any ECB

Draghi - ACTION!.

Constâncio - I know...I know! Nobody expects any ECB action. In fact, those who do expect...

Draghi - Our chief weapons are...

Constâncio - Our chief weapons

Draghi - Surprise.

Constância - Surprise and...

Draghi - Stop. Stop there! Stop there. Whew! Our chief weapon is surprise, blah, blah, blah, blah. Bonnici, read the charges.

Bonnici - You are hereby charged that you did on diverse dates commit heresy against the Holy ECB. My old man said you didn't follow the curve.

Constâncio -That's enough. (to Markets) - Now, how do you plead?

Market - We're innocent.

Draghi - Ha! Ha! Ha! Ha! Ha!


Constâncio - We'll soon change your mind about that!


Draghi - Fear, surprise, and a most ruthless... (controls himself with a supreme effort) ooooh! Now, Constâncio, the expectations!

Constâncio produces a few charts that don't show much. Draghi looks at them and clenches his teeth in an effort not to lose control. He hums heavily to cover his anger.

Draghi - You....Right! Tie the market down. (the other ECB officials make a pathetic attempt to tie the market to ECB expectations) Right! How do you trade?

Market - Selling Bunds, staying long Eur/Usd and running short Dax.

Draghi - Ha! Right! Cardinal, give the expectations (oh dear) give the expectations a twist.

Constâncio stands their awkwardly and shrugs.

Constâncio - I....

Draghi -  (gritting his teeth) I know. I know you can't. I didn't want to say anything. I just wanted to try and ignore your crass mistake.

Constâncio - I...

Draghi - It makes it all seem so stupid.

Constâncio - Shall I, um...?

Draghi - Oh, go on, just pretend for God's sake

Constâncio makes a lot of random verbal gestures hinting at imminent monetary easing

The doorbell rings. Market detaches himself from ECB expectations and answers it. Outside there is a dapper Fed official with a suit, slightly detached from reality.

Fed Official - Ah, hello, you don't know me, but I'm from the Fed. We were wondering if you'd come across the pond and do a sketch over there, in that sort of direction... You wouldn't have to do anything - just look as though you don't expect any Fed action.

Market - Oh, well all right, yes.

Fed Official - Jolly good. Come this way.

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