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Friday, August 29

29th Aug - Doubts about ECB rising

Quote of the day: Despite decent M1 growth, broader monetary aggregates in the EU have been very weak. As I’ve mentioned before, this is likely a result of the impaired banking system – something that the AQR (along with forced recapitalization programs) will hopefully fix. I think this is a problem that the ECB recognizes, and a reason why the TLRTO’s specifically target bank lending, as well as coinciding with the AQR. IMO, this is also a reason the ECB is reluctant to pursue QE outright. There are many views on how QE affects the economy, but one of the clearest effects is the growth in base money… that really isn’t the problem at this juncture. – Global Macro Trading

Previously on MoreLiver’s:

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Danish GDP Shock Has Economists Questioning Government NumbersBB
The chances of Denmark’s economic forecasts being supported by reality grew more remote this week after second-quarter data showed a surprise contraction that suggests the projected recovery has been derailed.

ECB will test Swiss resolve to prevent currency delugeTradingFloor
Max McKegg: Swiss National Bank has historically tried to keep EURCHF above 1.20 * Failure to hold level could bring on a “waterfall” effect * The Swiss can sell CHF but is that sustainable for the SNB’s balance sheet?

Financing Ukraine: Time for an Honest AssessmentCFR
The logic of the earlier, incremental approach—put modest sanctions in place, and let the threat of worse create a chilling effect on investment and trade—has reached a dead end.

Iceland Raises Aviation Alert to Red After Fissure EruptsBB
Iceland put airlines on the highest level of alert after authorities detected an eruption north of the Bardarbunga volcano.

ECB easing - will it work? No. 5: ECB's policy going forwardDanske Bank
Draghi’s speech has fuelled QE expectations as Draghi previously has coupled de-anchored inflation expectations with large scale asset purchases. However, we still believe the bar for QE is high at least in the near term and instead we expect more details on an ABS programme at the meeting.

How Draghi Seeking QE Trade-Off May Find Austerity TrapBB
Draghi called last week for a three-pronged approach of monetary and fiscal easing with structural reforms. French President Francois Hollande’s purge of an anti-austerity coup attempt this week and comments by German Finance Minister Wolfgang Schaeuble yesterday underscored how hard that will be, as Germany leads pressure to keep cutting deficits.

Draghi dials R for Reform. Line is busyReuters
Draghi extended a thinly veiled invitation to those countries with the room - such as Germany - to pursue a more expansionary fiscal policy as part of a three-pronged policy approach including ECB stimulus and structural reforms.

Putting Draghi in his box, and getting him back out againFT
More fundamentally, Draghi is trying to push policymakers (including the ECB) to take a step back and reevaluate whether they are doing enough to boost aggregate demand in a bigger picture sense.

Nowotny Hints at ECB Forecast Cut as Euro-Area Economy LagsBB

Schaeuble Sees Draghi’s Instruments for Growth ExhaustedBB
German Finance Minister Tells EU Leaders: Free Money Party's OverZH
The ECB has run out of ways to help the euro area, putting the burden on governments to spur growth without running excessive deficits, German Finance Minister Wolfgang Schaeuble said.

Euro area unemployment rate at 11.5% - Eurostat
Euro area annual inflation down to 0.3% - Eurostat
Euro area disinflation deepens; unemployment rate unchanged – TradingFloor
Next week's ECB hardly affected by this August CPI release – TradingFloor
Euro Inflation Slows as Draghi Hints at More ECB Stimulus – BB
Disappearing euro zone inflation set to heighten ECB concerns – Reuters
Lower headline inflation, but higher core inflation – Danske Bank

Visualizing GDP: A Look Inside the Q2 Second Estimate – dshort
The BEA's Q2 GDP Second Estimate: A Deeper Analysis – dshort
GDP reading shows Main Street USA is back in business – TradingFloor

Japan’s July Output Misses Estimates as Spending Slumps – BB
Economists React: Japan’s Economy Stagnates in July – WSJ

Daily Central BanksWSJ
Hilsenrath’s Take: Fed Job Index a Year Away From Normalcy * Fed Chair Yellen Still a Multimillionaire, Records Show * Fed to Consider Including Municipal Bonds in New Bank Safeguards * Euro-zone Inflation Cools Further in August, Putting Pressure on ECB * Japan’s Tax Increase is Putting Abenomics at Risk

Daily MacroWSJ
There’s not a lot of good macro news in Friday’s glut of releases. Setting aside the ratcheting-up of Russian-Ukraine tensions, which feel as though they could spill into outright and declared war at any moment, the economic releases aren’t a bucket of cheer either. Euro-zone inflation heads ever lower. Italy is the latest European economy to slip into deflation. Finland’s economy is struggling. German retail sales are down. And the news isn’t much better in Asia. Hong Kong is suffering from China’s anti-corruption drive while Japanese households and industry continue to feel the effects of April’s consumption tax rise. Of course there are a couple of spots of good news. The U.K. continues to boom, thanks to its rampant house prices. And Turkey’s big devaluation is fixing its poor trade position.

FK: Hallitus kaappasi 100 miljoonaa pankkien kriisivarojaIL

Länsi petti, Venäjä suuttuiTalouden Tulkki

Pääkirjoitus: Suomi joutui pakkopaitaanIL
Euro suunniteltiin tietoisesti väärin, sanoo Varman Risto Murto.

EU ja talouden näkymätBrysselin kone / YLE
Varman toimitusjohtaja Risto Murto puhuu EU:n ja Suomen talouden näkymistä.

Ruotsalainen neuvoo Suomea: “Parasta olisi palata omaan valuuttaan”US

Viikon linkit: Euroalue ja Suomi fokuksessa Roger Wessman

Suurten yritysten liikevaihto heinäkuussa -1,6% YoY – Tilastokeskus
KL: Puoluesihteeri Tujunen siirtyy yksityissektorille – Verkkouutiset