Sir, You Will Need to Pay Us $100 to Deposit that $100k In Our Bank! … WHAT?

Oh…and we are not going to pay you ANY interest …..  Are you Kidding?

Nope!

Draghi Announces First Ever Negative Interest Rate

In an unprecedented aggressive move to push loans into the market, European Union chief Mario Draghi announced banks holding excess reserves will PAY .10% on their reserves …. or earn a NEGATIVE (.10%.)

Here are a couple of other items included in his stimulus plan:

•  Sterilization/Forgiveness of bad loans
•  Lowering of their benchmark rate to .10%
•  And Lowering of their Marginal rate to .40%

Here is what a negative interest rate looks like, note the terrible mistaken INCREASE in 2011:

With fancy acronyms behind our names (CFA, CFP) we are students of fundamental investments and free markets. Such government interventions, including our own governments’ forcing of lower rates, has made it challenging to separate fundamentals from froth and induced increases in capital markets. (Long winded way of saying, fundamentals are not as important AT THE MOMENT.)

We have taken note of the EU’s actions and may begin to lean slightly more
towards our friends across the pond.

What a terrific time to have an international interview and a pending detailed article coming in the next Newsletter!!

Have a Great Monday! … I am still on the Road

John A. Kvale CFA, CFP