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At the ECB Circus, Mr T has spoken…

|Includes: SPY, iShares 20+ Year Treasury Bond ETF (TLT)
As you may have noted in the early note, I am once again surprised by the reigning schizophrenia from Frankfurt. I am even surprised to find myself surprised again!
      It is harder to following the ECB's reasoning than to understand the itinerary of a spoilt child, much less in Esperanto.
 
 
So here are a few extracts from Mr T's comments :
 
 
TRICHET: WE DID NOT WANT TO CHANGE IN ANY RESPECT YIELD CURVE 
 
---> However, that is precisely the result of the LTRO decision, with a bear flattening, confirming that:
* December will be the last 12-month LTRO;
* it will be at a variable rate
* the 6-month LTRO in March will also be the last. 

If he did not want to trigger a change on the yield curve, what was he trying to gain by eliminating any visibility for banks on the euro-area?
 on 2010 (average of weekly refi rates)
 

In any case, I remain convinced that this will convert much quicker than people realise into bull flattening!
 
It waas perhaps difficult to admit that these measures were, in fact, meant to punish certain euro-area governments (Greece, Ireland, etc.) and banks load with carry trad (Greece, Landesbanks, among others)!

 
TRICHET: MONETARY ANALYSES BEEN GOOD GUIDE FOR RATE DECISIONS
 
What is the term for problems of muddled memory (interest rate hike in July 2008 and constant lag behind curve)?
 
 
TRICHET: TRUST SINCERITY OF TREASURY SEC, FED CHAIR ON DOLLAR
TRICHET SAYS HE `TRUSTS' SINCERITY OF U.S. COMMENT ON DOLLAR
 
You'd better hurry up Mr T, because if you wait too long to post your letter to Santa Claus, he'll be gone delivering his gifts to all the other nice boys and girls.

TRICHET: WE EXPRESSED OUR VIEWS VERY VERY CLEARLY ON CHINA TRIP
 
Well, that seems to have led from a very, very clear response from China:
Chinese Premier Wen Jiabao
“Some countries are now calling for Yuan appreciation while imposing trade protectionism on China, which is unfair”.
“A stable Yuan is helpful to development of the Chinese economy and the world' economic recovery."
 
And what about the outcome of the celebrated trip to China by the European troika:
Luxembourg Prime Minister Jean-Claude Juncker?
"I can't say that I'm more optimistic than I was before I came here,"
 
 
TRICHET: DECISION WE HAVE TAKEN ARE EXACTLY APPROPRIATE       
TRICHET: MEASURES WE TOOK TODAY EXACTLY RIGHT COMPROMISE   
 

Aside from the obnoxious and self-satisfying nature of this statement, which is a classic sign of lack of self-confidence, it would have surprised us if he had declared that their decisions and actions were exactly wrong….
 


Disclosure: Disclosure : Long 20 years OAT 0% Coupons, EDF Corp 5 Years 4.5%.