Macro view and today’s POG move (and Billy Connolly). Overnight...

Macro view and today’s POG move (and Billy Connolly).

Overnight the ECB, despite Merkel’s attempts to stop it, announced an ‘Italian liquidity support program’ which includes EUR150 billion in government guarantees (bail out funds). Separate to, and on top of this, the Italian government plans to inject an additional EUR40 billion in fresh capital into its ailing slash insolvent banking sector.

As WSJ reports: “A person familiar with the Italian government’s plans said the cabinet of Prime Minister Matteo Renzi hoped to use a liquidity backstop to contain investor panic, which could result in a run on deposit and affect banks’ liquidity.”

There is no need to underline, italicize or otherwise emphasise any of the key words or operative phrases above – they are quite stark enough in their everyday workwear.

Despite the expected rally (ramp) in bank equities, which will most likely prove ephemeral, the bond markets and the POG amply reflect the broader markets’ overall dissatisfaction with the move.

For context, the bond market is around twice the size of the equity market. And the gold equities market, comparatively, is tiny.

So what will happen when even a fraction of 1% of global monies decide to seek out a proven safe haven?

This skit is called ‘Shouting at Wilderbeest’, but just for today, let’s call it “Ignorance, Denial, Herd Mentality, and the Fate of Those Left Behind”.

Ladies and gentlemen, I give you Mr Billy Connolly (starts around 1:35, but the preamble is worth the watch too):