That’s a term we use over here for a very boring football match in which both sides show no effort to score. Exactly what we got from Draghi today.
He finished of the presser by saying that banks must transfer easy policy to the economy and that confidence is a precondition for both investment and borrowing but I’m not sure he’s fully aware of the reasons why demand is so weak. Confidence may be one reason but a total distrust of banks over the crisis has lead to many firms vastly reducing their liabilities and are trading under self imposed tighter conditions. They don’t want to get up to the eyeballs in debt to fuel their businesses and good on them. It means that decent European growth is still a long way off but it will be growth built on better foundations. It will also come without the useless, half hearted government efforts on structural reforms.
As for ABS’s and all the other crap? Will it work or will it just cost the ECB a lot of money and keeps banks gorging on cheap money and liquidity? I’m going for the latter for many of the reasons listed above.
QE wasn’t touched upon and the stock markets look like they are throwing a strop. Virtually every index is down on the lows of the day and by some margin.
“Where’s the QE???”
Stocks will have to wait as QE doesn’t look like it’s coming anytime soon.
The euro is now deciding if Draghi’s presser was good news or bad news. There’s nothing new coming and we’re in wait and see mode with how the ABS and next TLTRO fare.
At 1.2654 there’s still no reason to buy it, but maybe no real reason to sell it right now either. Trade the ranges and go with the level breaks but don’t get too tied up in trying to pick a direction.
