Views & Charts – MoreLiver’s
Just updated!
ECONOMY
A Graphical
Walk-Through Of An 'Un-Fixed' Europe – ZH
Via Alex Gloy of Lighthouse Investment Management
Eurozone data stinks
up again – MacroBusiness
The Cypriot drama is beginning to wane, but if you read the
MoU you’ll understand that this story is far from over…This week the Spanish
government also finally announced its downgrade of its economy, bringing it
somewhat in-line with its own central bank, as yet another political scandal
rocks the country…Overnight was also another round of manufacturing PMI data and there wasn’t any
good news in it.
If European policy makers
really want to save the euro, what they should be doing is pushing hard against
their system’s deflationary bias. Unfortunately, as far as I can tell they
aren’t even willing to acknowledge that the problem exists.
I had been surprised at how
long euro-area residents seemed content to suffer through the continent's
economic mess. But maybe I shouldn't have been; until recently, it wasn't
obvious that other large, rich economies could manage much better. Now it is,
and it will become more obvious every quarter.
The ECB is considering ways
to lower the interest rate burden for small-to-medium sized businesses in the
Eurozone's struggling periphery, German weekly Die Zeit reported Wednesday.
…the first best policy
response is a measure targeted directly at the market imperfection that
threatens fianncial stability, which in this case is the financial
intermediation channel in the periphery.
The question is then how best to create incentives for banks to lend to
these firms.
No
rate cut is expected today from the European Central Bank despite a somewhat
weaker patch of data in the last four weeks and quite aggressive Bank of Japan
announcements earlier today. It is likely, however, that Mario Draghi will
confirm at the press conference that a cut was discussed (again).
Unconventional measures to aid companies struggling for credit may be
announced.
Instead of a rate cut, we
expect Mario Draghi to present a new non-standard measure targeted at improving
credit conditions for small- and medium-sized companies. If Draghi comes up
with alternative measures such as a lending programme to SMEs, we believe it
should lead to an increase in longer term core bond yields and some EUR
strengthening
We expect no changes in key
policy rates and no new non-standard measures from the ECB at Thursday’s
meeting. Lots of questions about Cyprus, but Draghi will probably not give any answers. Market
reaction could be slightly negative again
ECB eclipsed by BOJ – MacroScope
/ Reuters
ECB Preview: Not
now, despite weak data and aggressive BoJ – TradingFloor
No rate cut is
expected today from the European Central Bank despite a somewhat weaker patch
of data in the last four weeks and quite aggressive Bank of Japan announcements
earlier today. It is likely, however, that Mario Draghi will confirm at the
press conference that a cut was discussed (again). Unconventional measures to
aid companies struggling for credit may be announced.
They range from an interest-rate cut to a new round of
long-term loans to banks, to a plan to encourage lending to companies, three
officials with knowledge of the deliberations said. They stressed that such
action may not be announced today.
ECB seen on hold,
markets look for signs of later cut – Reuters
The ECB is expected to keep interest rates unchanged on
Thursday but investors will be looking for any signs it is preparing for a cut
in coming months to help lift the euro zone out of recession.
Macro Digest: Central Bank bonanza! – TradingFloor
Steen Jakobsen: The BoJ delivered big time this morning and
risk assets put in a modest response. Now on to the ECB and BoE. In Brussels,
the ECB's Q&A should prove lively, but will London
see any drama in light of the BoJ QE bonanza?
ECB Preview: Unconventional easing? – TradingFloor
Juhani Huopainen:
While everyone is easing and Europe's
economy continues sinking, not much is expected from the European Central Bank.
But the ECB has a tendency to come out with guns blazing unexpectedly in times
of desperation.
SCHEDULE & LINKS
11:45 GMT
announcement of decisions
12:30 GMT press
conference: begins with statement,
live
webcast
From ECB:
TradingFloor's earlier coverage:
10-Jan ECB
afterthoughts: Dull
Elsewhere:
Draghi’s dashboard – Thomson
Reuters
Even Germany’s Bundesbank has done QE:
Quantitative easing:
older than you think – Money
Supply / The Financial Times
How The German
Bundesbank Flouted Its Own Rules And Did QE – Business Insider
John J. Hardy: Euro knee-jerks lower after ECB,
but ... – TradingFloor
Steen Jakobsen: Bad press but excellent
information – TradingFloor
Initial Take on Draghi: Dovish – Marc
to Market
Draghi is sounding a
dovish note and the euro has come off accordingly. He has indicated that fixed
rate, full allotment repo operations will continue as long as necessary.
Although he sticks an economic recovery in H2, he underscores the downside
risks.
Has anyone seen the ECB? – Free Exchange
/ The Economist
But the alternative is
an ECB no longer in the business of making monetary policy. Instead, the ECB's
main preoccupation has become the playing of chicken with governments. To the
periphery it offers a deal: adopt the policies we want and we won't allow your
financial systems to collapse. To everyone else it says: expect recession to
continue until institutional reform is revived.
More On Draghi – Marc to Market
Comments from ECB
President Draghi reiterating that the commitment to the euro is "vastly
under-estimated" has helped the euro claw back its earlier losses
ECB "ready to act" on rates as
economy languishes – Reuters
The ECB expects a
gradual economic recovery later this year but will monitor incoming data very
closely and is ready to cut interest rates if necessary, its president said on
Thursday.
Draghi Signals ECB Stands Ready to Ease Policy
If Needed – Bloomberg
Draghi said the bank
stands ready to cut interest rates if the economy deteriorates further, and
officials are considering additional measures to boost growth as the debt
crisis enters its fourth year.
Draghi more or less signals his toolbox is
almost empty – TradingFloor
Nick Beecroft : Firm
indication that an interest rate cut is in the works for the near future.
Draghi turns more dovish – Nordea
Draghi turned more
dovish at today’s ECB press conference. Another rate cut has become more
likely, but still depend on incoming data in the near term.
ECB afterthoughts: dull finger-pointing – TradingFloor
Juhani Huopainen: A
dull meeting with no new unconventional measures despite the economic
difficulties.
What does the ECB think it is doing? – mainly
macro
So something is very
wrong here. Even if you assume that the ECB are focused on hitting consumer
price inflation alone, and care nothing for activity, unemployment or other
inflation measures, they are doing nothing about future inflation falling well
below 2%. So however you write the job description, they are not doing their
job.