European stocks tumbled after Mario Draghi, head of the eurozone's central bank, failed to give a concrete sign that it would undertake sovereign quantitative easing following a highly-anticipated policy meeting. Spain’s IBEX index fell as much as 1.5pc, the FTSE MIB dropped as much as 1.6pc and both Germany’s DAX and London’s FTSE 100 slid 0.4pc after Mr Draghi said the European Central Bank (ECB) would reassess the impact of existing economic stimulus measures “early next year” . The euro also climbed on signs that Mr Draghi was in no hurry to inject further stimulus. It climbed as high as $1.24, having fleetingly touched a two-year low as the ECB President began to speak. He said: “Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council remains unanimous in its commitment to using additional unconventional instruments within its mandate.” At the same time, the ECB slashed its forecasts for Eurozone growth. The economy is now expected to grow by 0.8 pc this year, 1pc next year and 1.5pc in 2016. As expected, the bank did not cut rates, with the main refinancing rate staying at an all-time low of 0.05pc and the deposit rate at -0.2pc. ... In order to drag the Euro Zone out of the economic mire more than 5 billion Euros of QE is required. This is never, never, never going to happen! The most likely outcome for the Euro Zone is a prolonged period of disinflation\deflation. We are going to import Euro Zone deflation, it is already here, visit your local Lidl supermarket and check out the prices.... The press conference ended with Draghi slapping down the idea that a sovereign QE program would be illegal. "Not to pursue our mandate would be illegal, he replies." Hi Ho Hi Ho it's off to court we go! Further his comments that QE did not even need a majority vote will infuriate AFD and perhaps many more in Germany. Can't wait for the German court to rule on this after the ECJ return their answer to the German court's question. Maybe Draghi assumes that QE is ultra vires and is just 'talking the talk' to calm things down until the legal reality come known. After all, his dubious but famous 'do what ever it takes' comment, also awaits the same determination, but no one can deny the fact that his 'talk' saved the EU (or the €) at that time.... Mario has slashed growth predictions to almost to no growth - 0.8% in 2015. The revised down numbers for 2016, 2017 barely matter. I do not think Mario has any effective measures he can undertake. The till says 'NO SALE'. TLTRO uptake will be risible in a few days time and in those countries where it is just a giggle, the carry trade will be used to Botox bank balance sheets and not to lend to the private sector, so no consumer demand incentive there. ABS - is he sure there are any, or enough assets to act as collateral for the balance sheet the ECB has got to have to become a lender of last resort in a non-growth €Z. Sovereign bonds are almost a joke, especially as, if wrong will accept correction, he has to buy in some form of national proportionality. Germany first, France second, Italy third, Spain (perhaps not too bad) fourth. More currency. Well he'd better pick the right nations to do it to unless he wants intra-euro capital flows in the shoots of spring. Mario seems to have no means of exciting any consumer demand left so that export items can be bought or supply chain imports purchased to unblock this incestuous, nigh protectionist, 'single market' trading circle that all 18 highly divergent economies are monolithically, irrespectively and overly locked into because of the misshapen bairn hatched out of Brusstraslux. I suspect there is an acceptance of a long period of deflation and non-FDI, not that the imperial court in Brusstraslux could care and the only measures we will see are the arraignment of taxpayers savings, pensions and a whole plague of new taxes. 'Cypress' will be the new funding source. Hopefully the last gasp but it will be a very long one.
Access Investments-Building Awareness - European Union-ROMANIA
Monday, December 8, 2014
European stocks tumbled after Mario Draghi, head of the eurozone's central bank, failed to give a concrete sign that it would undertake sovereign quantitative easing following a highly-anticipated policy meeting. Spain’s IBEX index fell as much as 1.5pc, the FTSE MIB dropped as much as 1.6pc and both Germany’s DAX and London’s FTSE 100 slid 0.4pc after Mr Draghi said the European Central Bank (ECB) would reassess the impact of existing economic stimulus measures “early next year” . The euro also climbed on signs that Mr Draghi was in no hurry to inject further stimulus. It climbed as high as $1.24, having fleetingly touched a two-year low as the ECB President began to speak. He said: “Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council remains unanimous in its commitment to using additional unconventional instruments within its mandate.” At the same time, the ECB slashed its forecasts for Eurozone growth. The economy is now expected to grow by 0.8 pc this year, 1pc next year and 1.5pc in 2016. As expected, the bank did not cut rates, with the main refinancing rate staying at an all-time low of 0.05pc and the deposit rate at -0.2pc. ... In order to drag the Euro Zone out of the economic mire more than 5 billion Euros of QE is required. This is never, never, never going to happen! The most likely outcome for the Euro Zone is a prolonged period of disinflation\deflation. We are going to import Euro Zone deflation, it is already here, visit your local Lidl supermarket and check out the prices.... The press conference ended with Draghi slapping down the idea that a sovereign QE program would be illegal. "Not to pursue our mandate would be illegal, he replies." Hi Ho Hi Ho it's off to court we go! Further his comments that QE did not even need a majority vote will infuriate AFD and perhaps many more in Germany. Can't wait for the German court to rule on this after the ECJ return their answer to the German court's question. Maybe Draghi assumes that QE is ultra vires and is just 'talking the talk' to calm things down until the legal reality come known. After all, his dubious but famous 'do what ever it takes' comment, also awaits the same determination, but no one can deny the fact that his 'talk' saved the EU (or the €) at that time.... Mario has slashed growth predictions to almost to no growth - 0.8% in 2015. The revised down numbers for 2016, 2017 barely matter. I do not think Mario has any effective measures he can undertake. The till says 'NO SALE'. TLTRO uptake will be risible in a few days time and in those countries where it is just a giggle, the carry trade will be used to Botox bank balance sheets and not to lend to the private sector, so no consumer demand incentive there. ABS - is he sure there are any, or enough assets to act as collateral for the balance sheet the ECB has got to have to become a lender of last resort in a non-growth €Z. Sovereign bonds are almost a joke, especially as, if wrong will accept correction, he has to buy in some form of national proportionality. Germany first, France second, Italy third, Spain (perhaps not too bad) fourth. More currency. Well he'd better pick the right nations to do it to unless he wants intra-euro capital flows in the shoots of spring. Mario seems to have no means of exciting any consumer demand left so that export items can be bought or supply chain imports purchased to unblock this incestuous, nigh protectionist, 'single market' trading circle that all 18 highly divergent economies are monolithically, irrespectively and overly locked into because of the misshapen bairn hatched out of Brusstraslux. I suspect there is an acceptance of a long period of deflation and non-FDI, not that the imperial court in Brusstraslux could care and the only measures we will see are the arraignment of taxpayers savings, pensions and a whole plague of new taxes. 'Cypress' will be the new funding source. Hopefully the last gasp but it will be a very long one.
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