Thursday, December 8, 2011

Mario Draghi’s Speech in One Chart

Market traders are clearly concerned about the eurozone crisis. The market started to breakdown after European Central Bank president Mario Draghi spoke to the press after the ECB cut rates by 25 basis points to 1%. During the press conference, Draghi failed to inspire confidence that the ECB would step in to prop up debt of EZ governments.

It still remains hazy as to what Draghi is up to, traders might be over-reacting and misinterpreting the situation, since the ECB press release accompanying the rate cut stated that EZ banks could discount lower quality paper to the ECB. This may mean sovereign junk debt and thus a possible backdoor method to propping up EZ government debt. But if this isn't the case, or Draghi fails to make this case clear to traders, the EZ could collapse at any minute.

The below chart via Ezra Klein, clearly shows what traders think of Draghi's press conference performance.

1 comment:

  1. This graph looks like the Ben Bernanke/Gold chart, inverted.