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Draghi

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World economy 3rd October 2014

Why Draghi failed to convince the markets?

MADRID | By JP Marin Arrese | The crash in stocks all over Europe vividly showed how bitterly Draghi’s asset-buying plan disclosed yesterday disappointed investors. Yet, his introductory statement was widely in line with expectations. He broadly delivered last month promise to cash ABS and covered bonds issued by banking institutions, so long as the assets met the standard collateral requirements for  ECB facilities. He even took a step forward by extending eligibility to lower than senior debt, the so-called mezzanine tranche. Furthermore, he provided firm assurances the plan would  be in place for two years. What turned so utterly wrong? Undoudtedly, the ensuing press conference unfolded into an unmitigated disaster.

Germany and the euro

Markets 26th September 2014

Euro’s depreciation gives Draghi a respite

MADRID | By Francisco López | The ECB’s measures since June have been oriented to fight the ghost of deflation, increasing the Eurozone’s economic activity and, in an indirect manner, managing the euro’s depreciation. For the moment Mr Draghi has failed in the first two goals, although he has succeeded in the third one. The euro is plummeting –which is good news.

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World economy 24th September 2014

US economy likely to stay buoyant despite corrections

Guest post by Jean-Sylvain Perrig, UPB Chief Investment Officer | The US economy is back on track. Its second-quarter bounce was sharper than previously thought and it is expected to stay on a reasonably good path of 3% in the coming quarters, thanks notably to a rebound in capex, a falling unemployment rate and a sharp improvement in the real estate sector. That will further boost consumer confidence, which has already reached its highest level in seven years.

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Markets 23rd September 2014

Europe needs tail wing- ECB willing to open windows

MADRID | By Jaime Santisteban | After successive quarters of economic expansion, increased demand and rises in industrial production which had triggered widespread optimism, the economic recovery has lost momentum in the Eurozone, halting abruptly in Q2. That was the main message conveyed on Monday by Mario Draghi at the European Parliament. Weak credit growth may prove an obstacle to recovery, and the continued lag in this sector is likely to persist for the rest of this year, with gradual increases in lending expected in 2015 and 2016.

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In Europe 5th September 2014

Draghi does the dirty job while Germany attacks

FRANKFURT | By Lidia Conde | What a relief! France is reinventing itself as it is Angela Merkel’s hope. However much Mr Draghi warns that the ECB will do whatever it takes to save the euro, all the fresh money in the bank will be useless unless “some members of the Eurozone” change their economic policy. This is Germany’s analysis of the Eurozone state.

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In Europe 5th September 2014

The ECB failing to convince needs to act

MADRID | By JP Marin Arrese | Ever since Alan Greenspan moved at will financial markets behaviour, simply by talking up or down either expectations or exchange rates, central bankers have tried to follow suit. For all his merits, Mario Draghi lacks Greenspan’s skills. Even if he commands enough fluency in English, his messages sometimes are utterly ill placed. Yesterday’s underperformance in his press conference showed it vividly.

ecb

Markets 4th September 2014

ECB will give banks money to spend and punish those who sit on their hands

MADRID | The Corner | Mario Draghi finally unveiled the European Central Bank’s betting on further stimulating the eurozone: benchmark main refinancing rate will be cut from 0.15 per cent to 0.05 per cent and marginal deposit facility risen 0.1 per cent to 0.2 per cent. Also a programme to purchase a “broad portfolio of transparent asset-backed securities” will be in place from October this year. Thus, the ECB becomes the first central bank to announce large-scale asset purchases and negative deposit rates. Reactions were quick: the euro fell below the key threshold of $1.3 to hit a low of $1.2995. 

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In Europe 28th August 2014

ECB stimulus speculations keep circulating

MADRID | The Corner | The expectation that the ECB will finally announce a QE program after Draghi’s words at Jackson Hole and the confirmation that the ECB would have hired Blackrock for advice on launching a ABS program continue to nurture the Eurozone bond rally and thereby the credit one. Yesterday many bond markets in Europe returned to record lows with improvements in 10 years of 3bp (Germany), 2.5bp (Spain) and 2bp (Italy).

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In Europe 27th August 2014

A QE would be key for Germany, France and Italy to overcome their current stagnation

MADRID | By Francisco López | Are there reasons for such optimism after Draghi’s words in Jackson Hole? Yes, but only if Draghi dares to execute a program of sovereign debt purchases immediately. It happens that not all experts are clear that it will be the case. Especially, because the package of measures adopted by the ECB in June has still not been implemented: two TLTROs auctions and the Asset-Backed Securities (ABS) program. Would it not be better to wait to check the effects of these measures?