The markets are freaking out and traders do not know what to think of the ECB’s announcement of yet another round of monetary stimulus. The measures exceeded expectations yet also surprised by signaling an end to further stimulus measures. The Dow opened higher on the news following European stocks but then went lower by 150 before climbing back and closing down 5 at 16,995. Trading volume was higher on the day.
The European Central Bank, in its ongoing effort to fight deflation and support growth in the eurozone, went whole hog and announced a 30% jump in its bond buying program and lowered overnight interest rates to negative 0.4%. The ECB also lowered its 2016 growth estimate from 1.9% to 1.7%. Chief central banker Mario “I am not negative” Draghi said he expects rates to stay low for a very long time. The reaction to this news was one of confusion or as they used to say in Mississippi “he white eyed me”. It was an odd reaction as global markets and the euro were up then down then back up again.
WTI crude oil pulled back a bit as the planned March 20th “freeze” meeting betwixt OPEC and Russia might not happen thanks in part to reticence from Iran. WTI crude fell about 1% to $37.90 a barrel.
Gold resumed its upward track by gaining $14.60 an ounce to $1,272. Gold is benefitting from all the global money printing and negative interest rates which are creating a certain level of discomfort and confusion amongst the ranks of economists.