Subterfuge, Even Europe Engages Us With Simpleton Accounting

Sure, Germany must keep some semblance of strength and convince the world and the credit rating agencies that the last GDP negative print was a one-off event. Industrial Production (Do you recall the drop in power consumption in Germany displayed on a chart over the last 3 years posted here last week? Apparently that chart is more truthful or straight forward than the economic releases) printed at .3% on consensus of .2%...A Beat! Not so fast... recalling that chart of energy consumption plunging in Germany my thoughts and words were, "The only thing that causes that kind of plunge is a slower manufacturing sector, strip away the adjustments and on a Y.O.Y basis, Germany's December Industrial Production dropped more than twice consensus at -1.1 vs -0.5, this is the 3rd largest quarterly decline for Germany on record and back to 2007 levels. French levels have Germany beat by a decade to 1997 levels.

Spain's Industrial Production came in right on target for a 16th consecutive monthly drop at -6.9%, but at least at consensus; an -8.5% Y.O.Y. reading.

While the subject of the day was the ECB's rate decision, the lesser rate decision coming from the Bank of England's (former Goldman Sachs) head, Carney, left rates and QE unchanged.

The main event of Central Bank Planning today was of course the ECB, albeit later in the European session; the Euro/USD tells the story...

All it took for the Euro to surge higher this morning at 3 a.m. EDT / 9 a.m. local, was the opening of the European markets as seen at "A". Note the 3C characteristic range common with distribution/selling at point "B" while the ECB's decision was awaited. At "C" (actually just before) another Goldmanite, Draghi did what I did not expect, although the move in the currency was expected:

"7 February 2013 - Monetary policy decisions

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.75%, 1.50% and 0.00% respectively."

At 8:30 the press conference you can see what happened to the Euro from there, going from the European market's opening range highs to a new low on the week, in fact back to January 25th so far as Draghi says he sees more weakness in early 2013, risks remain on the downside, but there is an upside, prices or inflation!!!

So while the ECB claimed yesterday not to be targeting currency values, what Draghi DID NOT do to the Euro with a rate cut, he DID DO TO THE EURO with a PRESS CONFERENCE that was decidedly DOWNBEAT. 

We got the move correct, just the way the move was created was incorrect, CLEARLY THE ECB IS TARGETING CURRECNY VALUATIONS, just through jaw-boning which is just as effective from a central bank head!

On what is virtually a side note, Initial Claims in the U.S. miss again (2-weeks now), but well within the adjustment range at 366k on consensus of 360k, after all, last week's 368k was revised up (which would seem bad) to 371k, but this was NOT BAD NEWS as the mainstream media calls this week's number a 5k beat-SUBTERFUGE . Next week the 366k will be revised up instead of down which you would think would be better, but since no one reads beyond the headlines, revising up allows the current week's miss to otherwise be labelled a beat. Just for flavor, un-adjusted Claims came in at 386k.

We're now through the first hour of limit orders, knee-jerk reactions and stops being run, now we get the next round of subterfuge in the market's price action and we get to see what the real underlying action is truly about.

I'll also be very interested to see how the Carry Trade Currencies settle.