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Thursday, October 2

2nd Oct - ECB Preview

A collection of recent ECB-preview and related articles. Consensus does not expect "QE", but sees more aggressive ABS-implementation than several euro members would like to have.

Weaker euro buys time for Draghi’s ECBFT
Draghi is unlikely to talk much about the euro on Thursday when he sets out details of an asset-buying plan intended to deliver an adrenalin shot to Europe’s faltering economy.

Only a weak euro can save the ECB now’FT
It is practically impossible to bring the size of the ECB’s balance sheet back to 2012 levels without directly purchasing non-senior tranches of ABS and government bonds.

Draghi tries to keep show on the roadReuters
Traders on average expect the ECB to buy a total of 200 billion euros of ABS and covered bonds over a year.

ECB Sovereign Bond Purchases Remain UnlikelyPIIE
Only a new and unforeseen emergency is likely to persuade the ECB to launch sovereign bond purchases anytime soon.

Germany Throws Up Over Draghi Plan To Buy Greek JunkZH
The ECB’s executive board will propose that existing requirements on the quality of assets accepted by the bank are relaxed to allow the eurozone’s monetary guardian to buy the safer slices of Greek and Cypriot asset backed securities, or ABS, say people familiar with the matter.

No mystery: ECB has already announced quantitative easingTradingFloor
Details of the ECB's plan to buy private sector assets will be announced Thursday * The real intention is to lower the exchange rate * Indications point to a lack of ABS and covered bonds available to achieve goal

What is the ECB to Do?Marc to Market
The focus is on the details of the asset-backed securities and covered bond plan that was announced last month. There are three key issues related to this new initiative:  What instruments will be purchased,  how much will be bought, and how long will the purchase program last?

No mystery: ECB has already announced quantitative easingTradingFloor
Despite the ongoing speculation about whether the European Central Bank will announce a quantitative easing program, it's clear from Mario Draghi's comments earlier last month that it already has. However, Thursday's announcement will provide specific details regarding its asset purchase plan.

New ECB Steps Unlikely; ABS Buying Details SoughtWSJ

5 Details to Watch at the ECB’s October MeetingWSJ

ECB's Draghi repeats call for reforms, fiscal actionReuters
Draghi urged euro zone governments on Wednesday to do their part to boost economic growth through structural reforms, saying monetary policy alone was not enough to revive confidence and spur investment.

Draghi Says ECB Hopes to Get at Root of Eurozone’s Economic ProblemsWSJ

ECB Faces Inflation Expectations TestWSJ

ECB previewDanske Bank
Draghi will reveal details on ABS and covered bond programmes

Base Effects Give ECB More Food for ThoughtWSJ

Political reticence blunts ECB’s asset purchase planFT
ECB will this week unveil details of its plan to save the eurozone from economic stagnation by buying hundreds of billions of euros-worth of private-sector assets. But one of the most crucial questions surrounding the purchases of bundles of loans, known as asset-backed securities, looks set to remain unanswered for some time.

Draghi Devaluing Euro Cheers ECB as Inflation Seen FadingBB
Mario Draghi’s strategy for reviving the euro area looks like devaluation.

Could governments be blackmailed to commit to ECB's ABS programme?TradingFloor
The ECB is expected to announce details of its plans to purchase asset-backed securities. Without government guarantees for them, the ECB will be unable to meet its policy goals. If the ECB's plans would require such guarantees, the ECB would be effectively blackmailing the governments: "give the guarantees, or there will be government bond purchases, like it or not".

ECB preview: Buy what, how much and how fast?Nordea
From the ECB policy meeting next Thursday, we expect more details on the ABS and covered bond purchase programmes but no full clarity about size and time horizon. The door will be open to whatever further it takes, which will allow the market to continue to price in further easing. Sovereign QE is not our base case.

It’s Mario Draghi’s Next Big ShowWSJ
Next Thursday ECB’s Draghi gets his next big gig in the spotlight

Coene Says ECB Willing to Weigh More Stimulus If NeededBB

Draghi May Discover Weaker Euro Doesn’t Buy Enough RecoveryBB

ECB's Coeure sees stronger demand for TLTROs from DecemberReuters
ECB expects to see stronger demand for its new long-term loans once it has completed an unprecedented round of health checks on lenders, after which they should also be in a stronger position to lend, a top policymaker said on Friday.

ECB's Draghi says Russian downturn to affect European demandReuters
Draghi said the downturn of the Russian economy would affect Europe, although the impact was likely to be limited given the relatively small scope of Europe's trade with Russia.

Euro Shows Draghi Succeeding Where Loans Fall Short BB
Traders are showing confidence in Mario Draghi’s ability to weaken the euro and stave off deflation, even as the initial results of a key part of the European Central Bank president’s plan fell below estimates.

Germany's Schaeuble unhappy at debate on ECB buying ABS, bondsReuters

Former German top judge says ECB could face more legal challengesReuters
The ECB could face more legal challenges over the policy tools it has deployed to shore up confidence and boost growth in the euro zone, Udo di Fabio, a former judge of Germany's Constitutional Court, said on Wednesday.

ECB's test may not be final word on health of Europe's banksReuters
It has been billed as a make or break moment for Europe's banks: the publication of rigorous industry-wide health checks next month after three previous tests failed to spot problem lenders.

ECB's plans to revive bank lending leave economists unconvincedReuters
Bank lending to private euro zone businesses needs to grow at a 3 percent annual rate on a sustained basis in order to stir inflation, according a Reuters poll

Will German Weakness Pave the Way for QE?WSJ

Europe should fear German retreat: Ambrose Evans-PritchardTradingFloor
European hopes for central bank-led quantitative easing have retreated even further with the success of Germany's anti-euro Alternative für Deutschland party.

Who’s afraid of the AQR?Bruegel
Banks have incentives to recapitalize in socially undesirable ways and to hide losses on their balance sheets. Will the comprehensive assessment solve these issues by forcing significant European banks to recognize losses and to recapitalize by issuing new equity instead of deleveraging?

Even the ECB thinks Germany needs to start spending moreWaPo

Haushaltspolitik: Schickt endlich die Helikopter!Spiegel
Wolfgang Münchau: Der Bankenrettungsschirm ESM soll jetzt helfen, Unternehmen mit Krediten zu versorgen. Ein Vorschlag von beeindruckender Mutlosigkeit. Wesentlich wirksamer wäre es, das Geld per Hubschrauber über der Eurozone abzuwerfen.

Why Europe needs to give up on QETradingFloor
In our view, there are two factors behind the euro's continued weakness. Firstly, it is not really all that weak...the dollar is just on a tear. Secondly, markets have been pricing in expectations of an ECB-led QE programme for a long time, but this does not look ready to materialize. In light of all this, could the euro have finally hit bottom?

TLTRO effect is the ECB’s Waiting for GodotReuters

European QE is Not a Given — BlackRockWSJ