Dentalfloss
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Trading with point and figure
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a bit out on dax rez...lol
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Whacked
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Should be in support now
Dentalfloss
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No buyrrs yet
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Now in our 25530 area
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25530 first rez
Dentalfloss
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S bit out on our 25530 support... Lol
Who cares
Who cares
Dentalfloss
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closer look
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Post ECB thoughts - "Draghi again manages to 'over deliver', but new 'stimulus' offers little reason for celebration" - ADM ISI
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Ostwald, Marc
15:10 (1 hour ago)
to Marc
Post ECB thoughts - Draghi again manages to "over deliver", but new 'stimulus' offers little reason for celebration
1) Statement - As a starting point this offered a lot more than most market participants had been anticipating by pushing the rate guidance back to the end of 2019, and announcing the broader parameters of a new TLTRO-III programme, the details of which will be fleshed out at a later date.
https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.mp190307~7d8a9d2665.en.html
However there is a problem with the start date of the new programme in September as opposed to June, above all given the fact that Draghi stressed that it is aimed at relieving 'congestion' for bank funding in the next couple of years. The problem lies with the post GFC regulations governing banks' "Net Stable Funding Ratios" (NSFR - see BIS definition https://www.bis.org/fsi/fsisummaries/nsfr.htm ). The current round of TLTROs move into the sub-1 year maturity basket of funding assets in June, and will in effect become more expensive to fund, and by extension impart the risk of a temporary ‘credit crunch’ in that gap period between June and September. The fact that the new TLTRO-III programme is set to run until March 2021really does emphasize just how much it is aimed at ensuring relatively stable bank NSFR. That said. it also implicitly suggests only modest improvements to bank balance sheets over that period. Given that the Eurozone's failure to force 'bank balance sheet reconciliation', as the US Treasury/Fed did via TARP/TALF, leaves the Euro area banks still labouring under far too large an NPL burden, the actual benefit of the TLTRO-III programme to the real economy looks likely to be very minimal. It also implies that there will be no real further progress made on 'banking union'. Ironically for all that this liquidity programme is being justified by the forecast cuts, its primary aim is in fact precisely what the ECB's hawks wanted to avoid, i.e. to prop up the banking sector. Obviously the new programme is not as favourable as the expiring measures, being just two years and indexed to the main Refi Rate, which can be raised in the meantime, but this was always going to be a 'sine qua non'.
2) Forecasts - There were not really many surprises with a hefty cut to the 2019 GDP forecast to 1.1% from 1.7%, with 2020 edge down to 1.6% from 1.7%, and 2021 held at 1.5%. The cuts to its headline inflation forecasts were perhaps more significant (2019 1.2% vs. prior 1.6%, 2020 1.6% from 1.7% and 2021 1.6% from 1.8%), thus implying no prospect of getting back to target. Core CPI forecasts were also cut, but still imply that the trend will be clearly higher 2019 seen at 1.2% from 1.4%, 2020 at 1.4% from 1.6% and 2021 1.6% from 1.8%. Scepticism seems an appropriate meme, given that core CPI has been in sideways trend around 1.0% since 2016, and this was probably also the prompt for maintaining the balance of risks to the outlook to the downside, despite the easing measures. A full summary of the forecasts can be found here: https://www.ecb.europa.eu/pub/pdf/other/ecb.projections201903_ecbstaff~14271a62b5.en.pdf
3) Policy Outlook - As for the guidance push back, Draghi noted that the choice was between end 2019, and the doves' proposal of Q1 2020; presumably end 2019 was opted for so as to avoid tying in the new ECB president into a preset course for too long. In all likelihood, even the end of Q1 2020 for an initial rate hike looks rather optimistic. Draghi and the council appear to be keen to suggest that the domestic headwinds to growth have been largely overcome, and trade tensions and weaker global growth prospects were the primary considerations in slashing forecasts for 2019. This is a rather tired line of argument, in so far as the ECB and indeed the Bundesbank misread and underestimated the 2018 "domestic" headwinds, in no small part probably because the council wanted to end its QE programme, though it will not actually admit this. Draghi's contention that today's decision was unanimous also looks to be rather disingenuous, given that under the ECB council voting ‘rotation’ rules, neither Weidmann nor Nowotny had a vote at today’s meeting! Nowotny will as ever be the first post-policy meeting speaker tomorrow.
On balance, Draghi has once again managed to 'over deliver' relative to market expectations. However the structural headwinds for the Eurozone remain the same as before, and per se will continue to ensure that as long as Euro area governments continue to 'under deliver' on reforms and in broader policy terms, the impact of ECB policy measures will continue to be heavily muted.
P.S. did anyone notice there was no real mention of 'Brexit'? (LOL)
..........................................................................
MARC OSTWALD
Global Strategist & Chief Economist
Inbox
x
Ostwald, Marc
15:10 (1 hour ago)
to Marc
Post ECB thoughts - Draghi again manages to "over deliver", but new 'stimulus' offers little reason for celebration
1) Statement - As a starting point this offered a lot more than most market participants had been anticipating by pushing the rate guidance back to the end of 2019, and announcing the broader parameters of a new TLTRO-III programme, the details of which will be fleshed out at a later date.
https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.mp190307~7d8a9d2665.en.html
However there is a problem with the start date of the new programme in September as opposed to June, above all given the fact that Draghi stressed that it is aimed at relieving 'congestion' for bank funding in the next couple of years. The problem lies with the post GFC regulations governing banks' "Net Stable Funding Ratios" (NSFR - see BIS definition https://www.bis.org/fsi/fsisummaries/nsfr.htm ). The current round of TLTROs move into the sub-1 year maturity basket of funding assets in June, and will in effect become more expensive to fund, and by extension impart the risk of a temporary ‘credit crunch’ in that gap period between June and September. The fact that the new TLTRO-III programme is set to run until March 2021really does emphasize just how much it is aimed at ensuring relatively stable bank NSFR. That said. it also implicitly suggests only modest improvements to bank balance sheets over that period. Given that the Eurozone's failure to force 'bank balance sheet reconciliation', as the US Treasury/Fed did via TARP/TALF, leaves the Euro area banks still labouring under far too large an NPL burden, the actual benefit of the TLTRO-III programme to the real economy looks likely to be very minimal. It also implies that there will be no real further progress made on 'banking union'. Ironically for all that this liquidity programme is being justified by the forecast cuts, its primary aim is in fact precisely what the ECB's hawks wanted to avoid, i.e. to prop up the banking sector. Obviously the new programme is not as favourable as the expiring measures, being just two years and indexed to the main Refi Rate, which can be raised in the meantime, but this was always going to be a 'sine qua non'.
2) Forecasts - There were not really many surprises with a hefty cut to the 2019 GDP forecast to 1.1% from 1.7%, with 2020 edge down to 1.6% from 1.7%, and 2021 held at 1.5%. The cuts to its headline inflation forecasts were perhaps more significant (2019 1.2% vs. prior 1.6%, 2020 1.6% from 1.7% and 2021 1.6% from 1.8%), thus implying no prospect of getting back to target. Core CPI forecasts were also cut, but still imply that the trend will be clearly higher 2019 seen at 1.2% from 1.4%, 2020 at 1.4% from 1.6% and 2021 1.6% from 1.8%. Scepticism seems an appropriate meme, given that core CPI has been in sideways trend around 1.0% since 2016, and this was probably also the prompt for maintaining the balance of risks to the outlook to the downside, despite the easing measures. A full summary of the forecasts can be found here: https://www.ecb.europa.eu/pub/pdf/other/ecb.projections201903_ecbstaff~14271a62b5.en.pdf
3) Policy Outlook - As for the guidance push back, Draghi noted that the choice was between end 2019, and the doves' proposal of Q1 2020; presumably end 2019 was opted for so as to avoid tying in the new ECB president into a preset course for too long. In all likelihood, even the end of Q1 2020 for an initial rate hike looks rather optimistic. Draghi and the council appear to be keen to suggest that the domestic headwinds to growth have been largely overcome, and trade tensions and weaker global growth prospects were the primary considerations in slashing forecasts for 2019. This is a rather tired line of argument, in so far as the ECB and indeed the Bundesbank misread and underestimated the 2018 "domestic" headwinds, in no small part probably because the council wanted to end its QE programme, though it will not actually admit this. Draghi's contention that today's decision was unanimous also looks to be rather disingenuous, given that under the ECB council voting ‘rotation’ rules, neither Weidmann nor Nowotny had a vote at today’s meeting! Nowotny will as ever be the first post-policy meeting speaker tomorrow.
On balance, Draghi has once again managed to 'over deliver' relative to market expectations. However the structural headwinds for the Eurozone remain the same as before, and per se will continue to ensure that as long as Euro area governments continue to 'under deliver' on reforms and in broader policy terms, the impact of ECB policy measures will continue to be heavily muted.
P.S. did anyone notice there was no real mention of 'Brexit'? (LOL)
..........................................................................
MARC OSTWALD
Global Strategist & Chief Economist
Dentalfloss
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lookin a tad oversold
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ditto
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buyers comin in...lets see if they have enough clout
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ditto
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not yet
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could be some bad NFP numbers
