Passa ai contenuti principali

DUHEN TODAY

The ECB is prepared to support the European economy. Yesterday's ECB meeting was one of transition and did not give rise to a change in monetary policy. Mario Draghi nonetheless took a slightly more cautious tone on the economic context owing to the ongoing deterioration of the manufacturing sector. Although risks are still oriented to the downside on the scenario, the ECB still expects to see an improvement in growth during the year, while certain negative factors are starting to fade (automobile sector and 'yellow vests'). That said, were the economic situation or the transmission of monetary policy via the banking channel to deteriorate more than expected, Mario Draghi is prepared to take any measures that are needed. His action could require more favourable conditions for the TLTRO planned in September or new measures to offset the impact of negative rates on banks' ROE and thus their ability to finance the economy. While certain members of the ECB have discussed exempting some bank reserves from the -0.4% deposit rate, Mario Draghi affirmed yesterday that this option was not being considered. We do not believe that ECB would take such a step unless there is a deterioration of the economic environment, which is not our forecast for the next few months. On the contrary, a rebound of activity in H2-2019 should offer support for inflation and the withdrawal of the ECB, which we plan from summer 2020 (first increase in the deposit rate).

The Fed faces temporarily weak inflation. The minutes from the March meeting did not hold any surprises and confirmed Jerome Powell's comments during the conference and those from other members since then. The institution is concerned about the inflation trajectory which is not picking up despite pressure on costs (salaries and customs duties), which can be explained by the rebound in productivity as indicated in the press release and by the president. For the time being, the latest inflation figures (CPI for March published yesterday and PCE for January published on 29 March) confirm that prices will remain penalised in the first half of the year in the wake of the strong dollar, a rebound in productivity and wages that are struggling to rise. In the second half of the year, the gradual fading of the first two factors as well as an acceleration in wage increases should allow inflationary pressure to gain traction. Against this backdrop, the Fed, which is behind the curve, will prolong its pause throughout 2019, the time needed to observe several months of inflation beyond the target level of 2%, before carrying out new key rate hikes. US inflation will find additional support from the signing of a US-China trade agreement by the summer, reinforced by communication by both parties. Yesterday, US Treasury Secretary Steve Mnuchin announced that Washington and Beijing have practically validated the conditions for the enforcement mechanism regarding the application of a trade agreement, a subject that was the sticking point until now.  

Commenti

Posta un commento

Post popolari in questo blog

Fwd: The Looming Bank Collapse The U.S. financial system could be on the cusp of calamity. This time, we might not be able to save it.

After months  of living with the coronavirus pandemic, American citizens are well aware of the toll it has taken on the economy: broken supply chains, record unemployment, failing small businesses. All of these factors are serious and could mire the United States in a deep, prolonged recession. But there's another threat to the economy, too. It lurks on the balance sheets of the big banks, and it could be cataclysmic. Imagine if, in addition to all the uncertainty surrounding the pandemic, you woke up one morning to find that the financial sector had collapsed. You may think that such a crisis is unlikely, with memories of the 2008 crash still so fresh. But banks learned few lessons from that calamity, and new laws intended to keep them from taking on too much risk have failed to do so. As a result, we could be on the precipice of another crash, one different from 2008 less in kind than in degree. This one could be worse. John Lawrence: Inside the 2008 financial crash The financial
Posta un commento
Continua a leggere

3 Reasons Why Gold Will Outperform Equities And Bonds

3 Reasons Why Gold Will Outperform Equities And Bonds https://www.forbes.com/ 3 Reasons Why Gold Will Outperform Equities And Bonds For centuries, gold has played a major role in human history and has become interwoven into the financial fabric of society. Beyond its investment following, gold has become synonymous with wealth. Historically, gold's early use cases revolved around money – a form of "medium of exchange". After the second world war however, several countries and their respective currencies, started to shift away from the gold standard and migrated towards a fiat currency system. Today, gold remains largely a "Store of Value", and due to its unique properties and large number of use cases, it has managed to distance itself from other asset classes in terms of correlation, demand / supply drivers, and investment purpose. Gold's idiosyncrasies function as a double-edged sword, as it is challenging to predict
Posta un commento
Continua a leggere

What Will Stocks Do When “Consensual Hallucination” Ends?

The phenomenon works – until it doesn't. What's astonishing is how long it works. There is a phenomenon in stock markets, in bond markets, in housing markets, in cryptocurrency markets, and in other markets where people attempt to get rich. It's when everyone is pulling in the same direction, energetically hyping everything, willfully swallowing any propaganda or outright falsehood, and not just nibbling on it, but swallowing it hook, line, and sinker, and strenuously avoiding exposure to any fundamental reality. For only one reason: to make more money. People do it because it works. Trading algos are written to replicate it, because it works. It works on the simple principle: If everyone believes stocks will go up, no matter what the current price or the current situation, or current fundamental data, then stocks will go up. They will go up because there is a lot of buying pressure because everyone believes that everyone believes that prices will go up, and so they bid up
Posta un commento
Continua a leggere