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In Europe 3rd September 2014

ECB: We need a QE shot (not 17 of them, JPMorgan)

MADRID | The Corner | It’s speculation day before the European Central Bank’s tomorrow meeting. Will a QE plan finally be announced? Experts at Santander bank think that, if announced too early, it could damage TLTROs. JP Morgan economists believe there is a 30% chance we’ll get a QE shot in 2014, 50% next year. And they’ve come with a proposal we find erratic: 17 different bond buying plans, one for each state member. That is exactly the opposite direction the EU needs to be heading to.

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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?

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In Europe 15th August 2014

ECB under pressure, markets demand QE policy

MADRID | The Corner | The European weak economic growth increases the pressure on the ECB to take additional measures or the long-awaited QE to boost growth, beyond those already announced in June and of which the effects probably will not be seen until 2015. At the moment the ECB in its monthly report reemphasized that there is “a continued moderate and uneven recovery of the euro area economy”, with low inflation rates and a weak monetary and credit evolution. At the same time, inflation expectations for the euro area in the medium and long term remain firmly anchored in line with the ECB’s target of keeping the inflation rates at levels below but close to 2%.

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World economy 24th June 2014

Halting QE= Active monetary asphyxiation?

NEW YORK | By Benjamin Cole at Historinhas |  The recent historical and empirical record strongly suggests central bank quantitative easing (QE) works. The riddle is whether both the Japan and U.S. economies will slip into stagnation again without QE, as long as there is a global glut of capital holding down interest rates, and inflation is dead—or even if inflation is near 2 percent on the PCE deflator, the putative Fed target. The riddle might even be reframed: When central banks do not conduct QE, are they actively engaged in monetary asphyxiation?

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Markets 5th June 2014

ECB takes the reins in a historic move- but where’s the QE?

MADRID | By Julia Pastor | In a historic move, the ECB cut the benchmark rate to 0.15 percent from 0.25 percent, and reduced the deposit rate to minus 0.10 percent from zero, becoming the world’s first major central bank to use a negative rate and pushing entities to increase credit lending. Spanish Ibex35 reacted to the news with a 0,8% increase. 

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Markets 13th May 2014

Today’s market chatter: Bundesbank opening to QE and much more

MADRID | By Jaime Santisteban | After the WSJ reported that a Bundesbank source confirms the entity would support stimulus measures from the ECB in June, analysts breathed and started making their polls. How big will that support be?

Also, Madrid’s financial circles are debating on the decision of the government selling inflation-linked bonds next week for the first time. Inflation being at record low levels, the decision is not obviously opportunistic, experts commented. Spain wants to look for more public funding options, and this issuances that guarantee the purchasing power of  are usually carried out by France, Germany and Italy, as well as the US.

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Markets 24th April 2014

Draghi prepares ground for awaited QE

MADRID | By Ana Fuentes | How much is enough? Mario Draghi announced that the ECB’s Governing Council is unanimously committed to “using both unconventional and conventional instruments to deal effectively with the risks of a too-prolonged period of low inflation.” His most explicit comments came as EZ inflation slowed to 0.5 percent last month, the weakest pace in more than four years, whereas the central bank’s target inflation is at 2%. Excess liquidity in the 18-nation currency bloc financial system has dropped to 92.9 billion euros ($128 billion), the lowest level since December 2011. When will Mr Draghi feel real risks?

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Markets 24th April 2014

Waiting for QE (hope it’s not like Godot)

MADRID | By Ana Fuentes | ECB policy makers are increasingly open about an eventual QE. Executive Board Member Benoît Coeuré was recently interviewed by French newspaper Le Monde. He weighed in austerity measures taken, and how could the ECB influence the level of the euro. As the central bank seems to be actually leaning towards unconventional measures, bonds and equity markets have already anticipated any announcements by Mario Draghi. But some fear what would happen if it was only lip service. What happened with the “whatever it takes” to preserve the eurozone’s integrity? 

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Markets 23rd April 2014

If only Citi was right and QE came…

MADRID | By The Corner | When Autumn comes, so will QE. At least that’s what economists at Citigroup are predicting. “We believe that the chances of unsterilized large-scale asset purchases (LSAPs) of public and private assets being launched this year have (…) increased to more than 50:50,” they said in a note on Tuesday. How much of a stimulus shot are we talking about? To have any effect it should be of at least 1,000 billion euros ($1,381 billion), they note, which would lift the inflation rate toward the ECB’s “below, but close to 2% target”.  It could always be a decaffeinated step as some market makers are warning, but the truth is many on both sides of the Atlantic are hoping for Mr Draghi to make a move.