He's only gone and done it again.

When David Copperfield retires, Draghi should be a shoe-in for a spot in Vegas.

I said Draghi had to give something strong to stop the euro from bursting higher and he's done that in spades. We now need to sift the reality from the fiction.

What's real?

  • QE to the end of Dec 2017, at least

  • An extra ā‚¬540bn in purchases instead of the expected ā‚¬480bn that many were looking for

  • Inflation forecasts remaining below target

  • Inflation needs to be sustained

  • Bond scarcity fixed (not that he'll admit that)

What's the illusion?

  • Buying below the deposit rate

  • Jumping back to ā‚¬80bn in QE

  • The Dec 2017 end date

  • Inflation forecasts remaining below target

  • There is no bond tapering in sight

I'll eat my hat if the ECB buys one single bond below the deposit rate, unless things are more desperate than he's telling us. We're likely to have Greece and Cyprus coming back to market next year and the ECB is likely to throw more money their way.

He has had to recognise that the Eurozone has improved but highlighting risks that may appear or forecasts that may or may not come to fruition, or can be changed is complete waffle and empty threats. It's verbal insurance for him. It's going to take something big to sink the world or the Eurozone again, and there's nothing like that on the horizon. Cyclically, the Eurozone is still some way behind the rest of the world in recovering but when such balls start rolling, they roll for a long while, and all the signs are there that we're rolling. Going back to ā‚¬80bn QE? I'll need another hat to eat ;-)

The Dec end date is yet another line in the sand, and we know how the wind can blow those lines out of existence.

Unless we see the poo hit the fan again, the ECB are on the path of tapering. At any point between now and Dec 2017, the economy and inflation could improve measurably and even if we're still not closer to target but better than we are now, they can do exactly the same thing in Dec (or sooner) as they've done today. However, today is a one off and not even the master himself will be able to dress up a similar move in the same way next time.

Right in the here and now though, the market just sees a dovish Draghi leading into a hiking Fed. That's interest rate divergence at its simplest and therefore why the euro is falling.

This meeting has been purely about making the illusion look more meaning than the reality, and that's an illusion I'm going to be happy to buy the euro on.

A life in showbiz awaits