ECB's Comprehensive Assessment (updated)
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EUROPE
European
Commission: A fanfare-free departure for Barroso – voxeurop
These tests
were only the beginning of a complex process to build a banking union in the
European Union. Unlike the stress tests, the next steps in this project could
create more divisions in Europe because national parliaments will be involved at a time when
Euroskepticism is on the rise. More important, the stress tests will not have a
particular impact on Europe's main problem: tight credit conditions for households and businesses.
Without a substantial improvement in credit conditions, there cannot be a
substantial economic recovery, particularly in the eurozone periphery.
The
Stress Test Results Are In – And It’s Trebles All Round! – Alpha
Now
Our own
calculations suggest that equity-market pricing values bank assets at more than
a trillion less than their book value, an order of magnitude different from the
ECB’s estimates.
EUROPEAN CENTRAL BANK
ECB
preview: More to come, but not this time – Nordea
We expect
no new policy decisions from the ECB meeting next Thursday. Mario Draghi will
likely be confident on the measures taken so far and open towards more. In our
view, the ECB is much closer to buying corporate than sovereign bonds. A
decision to start corporate bond purchases could be taken as early as in
December, when the ECB will have to revise projections down again.
GS, MS
Warn European QE, While Fully Priced In, Is Neither Imminent Nor Likely – ZH
Fed
Launches First Currency War Salvo, Tells ECB Not To Push Too Far – ZH
Testing
the Eurozone’s Safety Net – Project
Syndicate
On October 14,
the European Court of Justice convened to begin assessing the German Constitutional Court’s ruling that the European Central
Bank's “outright monetary transactions” scheme is illegal. This is a dangerous
time for OMT – the eurozone’s most potent crisis-management tool – to be called
into question.
MACRO NUMBERS
Euro area
unemployment rate at 11.5% - Eurostat
Euro area
annual inflation up to 0.4% - Eurostat
Euro zone
inflation slightly higher in October – Reuters
Euro
inflation slightly higher but more pressure on the ECB – Danske
Bank
Deflation
Hit More Eurozone Products in October – WSJ
Goldman
Slashes Q4 GDP Estimate From 3.0% To 2.2% - ZH
October
Consumer Sentiment at 86.9, Chicago PMI increases to 66.2 – Calculated
Risk
UNITED STATES
PCE Price
Index: Headline and Core Virtually Unchanged, Remain Below Target – dshort
Personal
Income +0.2%, Core PCE prices +1.5% y-o-y – Calculated Risk
U.S.
Inflation Undershoots Fed’s 2% Target for 29th Consecutive Month – WSJ
US wage and salary growth inching up,
still very slowly – FT
Chicago PMI
jumps to 66.2 in October vs. 60 expected and 60.5 prior – TradingFloor
Chicago PMI Smashes Expectations, Jumps To 12-Month
High – ZH
Consumer Confidence Jumps To 7-Year
High – ZH
Michigan
Consumer Sentiment at a Seven-Year High – dshort
ASIA
Chinese
bank deposits dropped following a crackdown on lenders manipulating their
numbers and “illicit” means of attracting money, threatening to weigh on credit
growth and hinder efforts to reignite the economy.
JAPAN GOES QE
Japan's annual core consumer inflation
slowed for a second straight month in September, adding to evidence the Bank of
Japan will miss its 2 percent price goal even as it dismisses growing doubts
about the efficacy of its money-printing programme.
Your Abe
put [updated] – FT
The
Kuroda Bazooka Round Two – WSJ
Japan's
central bank shocks markets with more easing as inflation slows – Reuters
The Bank of
Japan shocked global financial markets on Friday by expanding its massive
stimulus spending in a stark admission that economic growth and inflation have
not picked up as much as expected after a sales tax hike in April.
BoJ
unexpectedly expands easing programme – FT
Japan central bank attributes move to
weak demand and lower oil price
BoJ's
desperate QE move could see USDJPY hit 125/135 – TradingFloor
BoJ
expands QE programme in surprise easing move – Danske
Bank
The target
for the annual expansion in the monetary base to JPY 80trn from JPY 60-70 trn previously
Bank of Japan Governor Haruhiko Kuroda led a
divided board to expand what was already an unprecedentedly large
monetary-stimulus program, boosting stocks and sending the yen tumbling.
Today’s
decision to expand Japan’s monetary stimulus may be regarded
as shock treatment in the central bank’s effort to affect confidence levels.
The Bank of
Japan on Friday unexpectedly announced additional stimulus measures, bolstering
its asset purchases for the first time in over a year and a half, as its 2%
inflation target looks increasingly difficult to reach. As a result, we change
our JPY forecast.
BoJ's
Halloween Surprise?
– Pension
Pulse
GS:
"We Highlight The Potential For Harsh Criticism Of Further Cost-Push
Inflation" – ZH
Boom
goes the dynamite –
Macro
Man
A
trillion here, a trillion there.. – The
Economist
If the
markets were suffering from withdrawal symptoms after the Fed's halting of QE
on Wednesday, they did not have to wait long for their next hit.
Your
extended Abe put – FT
The BoJ
Rally in Seven Charts
– WSJ
OTHER
Schlesinger’s
Take: Behind BOJ’s Halloween Treat, A Scary Slip Back Toward Deflation * Bank
of Japan Unexpectedly Eases Policy * Fed’s Yellen Says Economics Can Benefit
From More Diversity * Fed’s Williams Says Central Banks Should Refocus on
Inflation * Russia Raises Interest Rates
The Fed
might have stopped pumping liquidity into the system, and the ECB is
politically constrained by how much it can do, but the Bank of Japan is working
to ensure the global taps remain on full. A BOJ decision to boost its annual
asset-purchase program caught Asian and European markets off guard.
FX
Board: Yen implosion alters the FX landscape – TradingFloor
A massive
drop in the yen on the Bank of Japan's new easing sees all JPY pairs gunning
higher, with momentum likely to carry higher still if US data next week is positive.
Elsewhere, USD is generally at the top of the heap after mixed action earlier.
Three
Central Banks – CFR
“A key lesson from the crisis has been the
need to prevent overreliance on short-term, volatile sources of funding. The
NSFR does this by limiting the use of volatile short-term borrowings to fund
illiquid assets”. The NSFR will become a minimum standard by 1
January 2018.
FINNISH
Melkein miljardi mittareihin, jotka lentävät roskikseen
muutaman vuoden vuoden päästä – TE
Suomen päätös kiirehtiä investointeja näyttää jälleen kerran
osoittautuvan huonoksi. Nyt on kyse etäluettavista sähkömittareista.
EKP:n stressitesti valaisee mutta myös huolestuttaa –
Peter
Nyberg
EKP pelaa kaksinaamaista peliä – suuri riski koko Euroopalle
– TE
Korkman kaipaa elvytystä ja piikittelee tiukan kurin
vaatijoita – YLE
Eurooppa elvyttää, mutta ei riittävästi, huomauttaa
taloustieteen professori Sixten Korkman. Samalla hän piikittelee niitä
poliitikkoja, joiden talouskuripuheet vain pidentävät taantumaa.
Korkman tyrmää Ylellä vallitsevan talouslinjan: "Ei
siinä ainakaan ole järkeä" – TE
Onko parempi olla kouluttamaton kuin akateeminen työtön?
– Hannu
Visti