So now the dust settles on global markets that were given quite a stir yesterday by the ECB’s proclamation “We are ready to act if needed.  We are open to a whole menu of monetary policy instruments.”

These things come on a nice, neat menu now?  As if they are codified, tried and true and simply ready for implementation?

Well, if the US – where they showed ’em how it’s done – is a good example then yes, it is as simple as that.  I used to write in reference to Samuel Jackson in Pulp Fiction, about Ben Bernanke’s big brain as he took policy innovation (interference?) to previously unheard of levels.  It was ‘Check out the big brain on Brad Ben’…

What it actually is is a global deflationary whirlpool sucking things toward the drain.  But the valiant fight is kept up by our policy heroes in a sometimes competitive, sometimes alternating fashion. Right now they are alternating.

For instance, rate hike Kabuki dance (i.e. stall, jawbone hawkish, delay, jawbone dovish and when all else fails, send in the clown car and do both at once!) aside, QE in the US has been set aside for now and policy makers are going to tighten any day now (oh wait, did Draghi just tighten for them again?)  BoJ stood down at its last meeting, as it sees a break in the deflation over there (Japan after all, was heading for the drain for many years while the rest of the world was having an inflation-fueled speculative party), China is wax on, wax off as the flagging economy demands and India, with bullets in its gun compliments of the ever rational Raghuram Rajan, is actually easing.

But the headlines today are for Mario Draghi and the ECB, and this brings up a trade from one year ago (Q4 2014) when NFTRH got bullish on (Euro hedged) European stocks thanks to an ECB QE jawbone that came amid a seemingly coordinated cluster of them (Bullard runs to a mic and jaws ‘QE 4’, China Central Planning eases, BoJ torpedoes the Yen).  The question now is, should Europe be taken as seriously as the US was post Op/Twist, post QE3?  The message of this chart is yes, for the short-term at least.