I don’t think Mario Draghi panicked, but China is as good a scapegoat as any at the moment. The ECB’s intended adjustment in the PSPP (QE) is cosmetic, but then again QE itself is pretty much only that to begin with. It seems pretty obvious given the desperate lack of any positive impact from it so far, and the very [...]
The re-crash of oil prices during the recent “dollar” wave/run were hard on almost everyone involved, economically and otherwise, but perhaps not more so than the ECB and its QE proponents. Despite being attributed with every minor upward move that could plausibly be assigned, for all the hype there has been very little actual movement anywhere of significance. The virtuous [...]
Today was, apparently, the perfect storm of downbeat PMI’s. As usual, sentiment surveys have limited value except in cases of outliers or in unanimity. There was some of both across the world’s manufacturing updates. First, which was certainly most watched, China’s PMI fell to a three-year low below 50, further suggesting that there isn’t yet a bottom for how much [...]
European GDP disappointed for Q2, which was only surprising to those expected something out of QE. At +0.3% (Q/Q), the European economy is clearly stuck in the same mindless rut that has taken hold since the 2011 crisis re-flaring. While recent convention holds, in light of this year’s QE, that the ECB has been idle during this time that simply [...]
The simple narrative about QE is drawn from what is believed a simple process. The central bank buys bonds and by doing so it is simply assumed to be an “extra” bid on bond prices; therefore interest rates fall in whatever issue is being targeted by QE. Even in the US, QE has had trouble with that simple relationship. Instead [...]
In April 2008, Nassim Taleb was becoming a household name criticizing the quant dominance in finance. Bear Stearns had just failed and the entire edifice of mathematical order was still breaking down, as the last bastions of credit default swap “supply”, the monoline insurers, were still rumored to be heading for insolvency (while the nightly news focused on whether that [...]
The analysts streaming across my screen last week all had the same opinion - Greece will vote yes, accept Europe's terms and stay in the Euro. Well, as I write this, the early polls prove, if nothing else, that one should beware of experts bearing consensus opinions. According to the headlines at all the major newspapers the Greeks have voted [...]
There weren’t any surprises in the “final” GDP update for Q1. Going back to -0.2%, the same interpretations still apply, especially and including the inventory contribution. Economists and policymakers want to talk particularly about how Q1 is prone to “residual seasonality” but that is missing the bigger part of the problem. Whether Q1 was -0.2% or +2% doesn’t really matter, [...]
At his last news conference on June 3, ECB chief Mario Draghi issued his list of successes so far with QE in Europe. The program was only announced four and a half months ago, being operational only for two, but he was positive that it was already having its intended effects. "Our monetary policy measures have contributed to a broad-based [...]
The Agence France Trésor of the French government reported on May 7 that its bond auction of Obligations Assimilables du Trésor (OAT) across three maturities was lightly subscribed. That wasn’t their assessment, of course, as the government simply reports the figures and the credit market makes value judgments. The October 2023’s were bid-to-cover of only 1.58; the May 2025’s were [...]
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