MidnightWatcher – Prophecy in Motion

By Joe Weisenthal – “If you like your Wall Street analysis with a heavy dollop of rapture and Armageddon, today was the day for you.

Blame the weighty issues of the day (Europe, mostly), and yesterday’s big selloff for the spasm of bearishness.

It started off with Nomura’s Bob Janjuah. He said that any talk of the ECB saving Europe was a mere pipedream, and that if the ECB did go whole-hog buying up peripheral debt to suppress yields, then that would prompt a German departure from the the Eurozone.

Germany appears to be adamant that full political and fiscal integration over the next decade (nothing substantive will happen over the short term, in my view) is the only option, and ECB monetisation is no longer possible. I really think it is that clear and simple. And if I am wrong, and the ECB does a U-turn and agrees to unlimited monetisation, I will simply wait for the inevitable knee-jerk rally to fade before reloading my short risk positions. Even if Germany and the ECB somehow agree to unlimited monetisation I believe it will do nothing to fix the insolvency and lack of growth in the eurozone. It will just result in a major destruction of the ECB‟s balance sheet which will force an ECB recap. At that point, I think Germany and its northern partners would walk away. Markets always want short, sharp, simple solutions.

Okay, but that’s Janjuah. He’s always bearish so maybe that’s not even news.

But then there was Deutsche Bank’s Jim Reid, who is always sober, but not usually wildly negative. He offered up one of the most bearish lines in history in regards to German opposition to ECB debt monetization:

If you don’t think Merkel’s tone will change then our investment advice is to dig a hole in the ground and hide.

Oy.

But it got even wilder with the latest from SocGen’s Dylan Grice. Again, he’s always pretty negative, but he cranked it up a notch, comparing Germany’s policy today against the policies that enabled the rise of Hitler.” Read more.