Memento: How QE will work
The Corner | March 5, 2015 | Whatever it takes, don’t miss the mechanics of the European Central Bank’s next purchase programme starting on Monday.
eurozone
Morning briefing: German and Spanish consumers showing confidence
The Corner | March 3, 2015 | Retail sales in Germany beat expectations in January: they rose by 5.3% instead of the forecast 3.0%, and up from the December’s upwardly revised 4.8% rise. Spanish and German consumers are seemingly much happier about the state of the economy.
Markets’ morning briefing
The Corner | February 24, 2015 | Figures published today will give an indication of the current state-of-play in the euro zone, with the release of inflation statistics and final GDP figures from the German economy for 2014.
“Austerity, not lack of liquidity, is what is causing the Eurozone depression”
MADRID | By Ana Fuentes | She believes that central banks should act coordinately, since competition between them can cause currency distortions. British economist and former banker Frances Coppola has been one of the main critics of the European Central Bank’s QE “because it supports asset prices, but that is all it does.” She spoke to The Corner about shadow banking and how financials should be accepting and managing risk on both sides of the Atlantic.
Eurozone prices continue to slump
MADRID | The Corner | January ends with bad news for the eurozone: consumer prices fell sharply (0.6% lower than in January 2014, having been down 0.2% on an annual basis in December). This is nothing strange given cheap oil prices, merely adding stress for policymakers. The European Central Bank hopes to stop this decline in prices -the largest since July 2009- with its new bond-buying program starting in March.
Lithuania’s central bank governor: “There’s no reason to doubt euro area future”
STRASBOURG | By Alexandre Mato | After adopting the single currency on 1 January 2015, the transition period of dual circulation has finished for Lithuania, the country thus becoming the 19th euro area member. Vitas Vasiliauskas, the Governor of The Bank of Lithuania, spoke to The Corner in an exclusive interview before the ECB’s crucial meeting on 22 January, when QE could be launched.
What if we were to see deflation?
ZURICH | UBS analysts | Our central case is that we will not have deflation in any country except for Spain in 2015. But we cannot rule out the possibility of deflation, so here we look at assets that may outperform during periods of deflation. Generally deflation is bad for equity which de-rates aggressively but the story is more nuanced because particular sectors and styles are affected quite differently.
ECJ: Green light to ECB’s bond purchase
LONDON | Barclays analysts | The European Court of Justice has already published its opinion about the Outright Monetary Transaction (OMT): the ECB’s anti-crisis plan was “necessary” and “in principle” is in line with EU law. This much awaited opinion will have important implications for any broad-based ECB government bond purchases (QE), which we think are likely to be announced next week.
Eurozone: Deflation and weak activity support QE
LONDON | Barclays analysts | We believe this week’s data on inflation and economic activity have provided more arguments to step up ECB’s asset purchase programmes by including EGBs on 22 January, which is our baseline scenario. Inflation entered negative territory in December and is likely to stay negative for a few months before a weaker euro improves the inflation and growth outlook.
EU: When taxation is tailor-made
BRUSSELS | By Jacobo de Regoyos | The previous five years of Jean-Claude Juncker’s reign were suddenly thrown into flux following the publication of hundreds of secret documents regarding agreements between the Grand Duchy of Luxemburg-during his premiership- and over 340 multinationals. In essence, this amounted to the facilitation of tailor-made fiscal schemes that allow the payment of a corporate tax close to 1% instead of the stipulated 29%.