Thursday , November 14 2019
Home / Tag Archives: ECB

Tag Archives: ECB

Fed’s Mid-Course Correction to be Challenged while ECB Resumes Bond Purchases

The week ahead will help shape the investment climate for the remainder of the year.  The highlights include three central bank meetings (Federal Reserve, Bank of Japan, and the Bank of Canada).  Among the high-frequency data, the US and the eurozone report the first estimates of Q3 GDP, and the US October jobs data and auto sales will be released.  Investors will also get the preliminary Oct CPI for EMU. A few hours before the FOMC meeting concludes on October 30, the US will...

Read More »

The Week Ahead Excluding Brexit

I feel a bit like the proverbial guy that asks, "Besides that, Mrs. Lincoln, how did you like the play?" in trying to discuss the week ahead without knowing the results of the UK Parliament's decision on the new deal negotiated between Prime Minister Johnson and the EU.   I will write a separate note about Brexit before the Asian open. However, there are several other developments next week that will help shape the investment climate.   Europe is front and center.  Three issues outside...

Read More »

Setback for the Greenback

Overview: Conflicting headlines about US-China trade whipsawed the markets in Asia, but when things settled down, perhaps, like the partial deal that has been hinted, net-net little has changed. Asian equities were mixed, with the Nikkei, China's indices, and HK gaining, while most of the others slipped lower. The 0.9% gain in the S&P 500 yesterday failed to lift European stocks, and the Dow Jones Stoxx 600 is near the week's lows. US shares also are trading softer. Benchmark...

Read More »

The Consequences Of ‘Transitory’

Europe’s QE, as noted this weekend, is off to a very rough start. In the bond market and in inflation expectations, the much-ballyhooed relaunch of “accommodation” is conspicuously absent. There was a minor back up in yields between when the ECB signaled its intentions back in August and the few weeks immediately following the actual announcement. Other than that, and that wasn’t much, you wouldn’t have known QE is already back on the table. It barely registered, the massive program...

Read More »

China Returns, ECB Record, Fed Minutes and the Week Ahead

Many high-income countries experienced little growth but strong price pressures in the 1970s.   Since the mainstream economics said the two were mutually exclusive, a new term had to be created, hence stagflation.  Fast forward almost half a century later, and mainstream economists are still having a problem deciphering the linkages between prices and economic activity, such as inflation and employment. Theory needs to accommodate the new facts. Theory is being challenged in another...

Read More »

29/9/19: Divided ECB

Divided they stand... Source: https://www.bloomberg.com/news/articles/2019-09-29/lagarde-inherits-ecb-tinged-by-bitterness-of-draghi-stimulusThe ECB is more divided than ever on the 'new' direction of QE policies announced earlier this month, as its severely restricted 'political mandate' comes hard against the reality of VUCA environment the euro area is facing, with: Reduced forward growth forecasts (net positive uncertainty factor for QE) Anaemic inflation expectations (net positive...

Read More »

Greenback Remains Firm

Overview: A compelling narrative for yesterday's disparate price action is lacking. A flight to safety, which is a leading interpretation, does not explain the weakness in the yen, gold, or US Treasuries. Month- and quarter-end portfolio and hedge adjustments may be at work, but the risk is that it is a black box: is difficult to verify and lends itself to misuse as a catch-all explanation.  Nevertheless, the rise in US equities yesterday helped lift most Asia Pacific shares today, with...

Read More »

Investors Looking for New Focus

Overview:  Central bank activity is still very much the flavor of the day, but investors are looking for the next focus.  The Bank of Japan and the Swiss National Bank stood pat, while Indonesia cut for the third consecutive time and the Hong Kong Monetary Authority and Saudi Arabia quickly followed the Fed. Brazil cut its Selic rate yesterday by 50 bp as widely expected.  Norway's Norges Bank hiked rates and signaled a near-term pause.  Decisions by the Bank of England and the South...

Read More »

Cool Video: Thoughts on ECB

A few hours after the ECB announced a new package of monetary accommodation, I joined a discussion on CNBC Asia with Nancy Hungerford and Sir Jegarajah.  Here is a clip of part of our discussion.   I make two points.  The first is about the euro's price action.  What impressed me about it was that the euro posted an outside up day, trading on both sides of the previous day's range and closing above its high.  When Sri and I were talking early in the Asian morning, there still had not...

Read More »

Bonds and the Dollar Remain Heavy Ahead of the Weekend

Overview:  The markets are digesting ECB's actions and an easing in US-Chinese rhetoric.  Next week features the FOMC meeting and three other major central banks (Japan, Switzerland, and Norway).  The US equity rally that saw the S&P 500 edge closer to the record high set in late July spilled over to lift Asian markets.  Chinese and Korean markets were closed for a mid-autumn holiday.  The Nikkei rose 1% to bring the week's gain to 3.7% on top of last week's 2.4% rally.  It is at...

Read More »