27/12/18

The ECB’s Quantitative Easing Was a Failure, Here Is What It Actually Did

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The ECB's Quantitative Easing Was a Failure, Here Is What It Actually Did
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Submitted by Daniel Lacalle, via Mises.org

The main reason why the ECB quantitative easing program has failed is that it started from a wrong diagnosis of the eurozone's problem. That the European problem was a demand and liquidity issue, not due to years of excess.

The ECB had been receiving tremendous pressure from banks and governments to implement a similar program to the US' quantitative easing, forgetting that the eurozone had been under a chain of government stimuli since 2009 and that the problem of the euro-zone was not liquidity, but an interventionist model.

The day that the ECB launched its quantitative easing program, excess liquidity stood at 125 billion euro. Since then it has ballooned to 1.8 trillion euro.

"Only" after 2.6 trillion euro purchase program and ultra-low rates.

Eurozone PMIs are atrocious. The euro-zone index falls from 52.7 in November to 51.3 in December, well below the consensus forecast of 52.8. More importantly, France's PMI plummeted from 54.2 in November to a 34-month low of 49.3.

Unemployment in the euro-zone, at 8%, is double that of the US and comparable economies. Youth unemployment rate remains at 15%.

Economic surprise has plummeted as the ECB balance sheet reached 41% of GDP (vs 21% of the Fed).

More than 900 billion euro of non-performing loans remain in the banking system, which keeps a trillion euro timebomb in its balance sheets (read). A figure that represents 5.1% of total loans compared to 1.5% in the US or Japan.

Deficit spending is rising. Government debt to GDP has risen to 86.8%.

The number of zombie companies -those that cannot pay interest expenses with operating profits- has soared to more than 9% of all large quoted firms, according to the BIS.

Sovereign states have saved around one trillion euro in interest expenses, but have spent all those savings. Today, almost no eurozone country can absorb a modest rise in interest rates, and Italy, Spain, France, Portugal, Slovenia, and others are demanding more spending and more deficits.

There is no real secondary market demand for eurozone sovereign bonds at these yields. At the peak of its quantitative easing program, the Federal Reserve was never the sole buyer of Treasuries. There was always a relative secondary market. In the Eurozone, the ECB has been 7 seven times the net issuances of sovereigns. No investor is likely to buy eurozone sovereign bonds at these yields once the ECB steps down.

Eurozone growth and inflation estimates have been revised down again in December. Industrial production has fallen sharply.

Trichet, the ECB's predecessor to Mario Draghi, had lowered interest rates from 5% to 1%, injected billions into the economy, buying sovereign bonds in 2011.

What has the ECB been successful at?

  • Keeping the euro alive. Not a small success, by the way. The risk of break-up has been contained but not eliminated.
  • Maintaining government spending at low rates. However, at the expense of savers and salaries.
  • Generating a sense of euphoria in financial markets, with high yield and sovereign bonds soaring.
  • Wages in the euro-zone have increased below inflation since QE launched and into the third quarter of 2018. In fact, low inflation has been the biggest unintended success of the ECB. It could have been worse.
  • The biggest "success" of the ECB has been the massive bailout of governments at the expense of savers.

We also have to agree that Mario Draghi has .....

Certainty Is Fraying

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Certainty Is Fraying
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Authored by Charles Hugh Smith via OfTwoMinds blog,

As we look ahead to 2019, what can we be certain of? Maybe your list is long, but mine has only one item: certainty is fraying.

Confidence in financial policies intended to eliminate recessions is fraying, confidence in political processes that are supposed to actually solve problems rather than make them worse is fraying, confidence in the objectivity of the corporate media is fraying, and confidence in ....

"Something Is Wrong": Deutsche Bank Spots An Odd Market Divergence

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"Something Is Wrong": Deutsche Bank Spots An Odd Market Divergence
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One of the closest correlations between major asset classes has been that between stocks and bonds. But not anymore, because as Deutsche Bank's chief international economist notes in a Wednesday note, the historical relationship between stocks and bonds is breaking apart, prompting Slok to exclaim that "something is wrong", as it could portend danger for those investors holding Treasurys in the hope these would cushion the slide in stocks.

it is no secret that bond prices and stocks are inversely correlated, or at least have been in normal times, but all that changed this year as Treasury prices have largely failed to reflect the slump in stocks, as MarketWatch notes.

"What is safe to say is that there is something driving equities lower, which is not impacting rates. Or there is something keeping long rates high, which is not impacting equities," Slok wrote in a Wednesday note.

This correlation breakdown has undercut the bond market's status as a safe haven in a year in which few asset classes have eked out positive returns. This correlation "failure" was on full display yesterday when despite the record point surge in the Dow, Treasury yields posted a very modest move higher (one which has since been faded on Thursday). And, as MW notes, if traditional havens like U.S. government paper struggle to shield portfolios from a further selloff in equities it could mean investors will lack few reliable boltholes going forward.

To show this regime shift, Slok charts the movement of the 10-year Treasury yield against percentage changes in the S&P 500 over the last five years. It shows the two correlating closely until 2018, when they split.

Another indication of the failure of ...

Mish Shedlock: Yesterday's Historic 1,000+ Dow Point Gain "The Mother of All Sucker Rallies"

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Mish Shedlock: Yesterday's Historic 1,000+ Dow Point Gain "The Mother of All Sucker Rallies"
// GoldSilver.com RSS Feeds

"The next real bottom will not be in until everyone is totally disgusted with the stocks and gives up. Demographically-speaking it will come at the worst time for boomers."
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Borsa italiana sui minimi da fine 2016, in rosso anche le altre piazze europee

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Borsa italiana sui minimi da fine 2016, in rosso anche le altre piazze europee
// Trend Online

Borsa italiana sui minimi da fine 2016, FTSE MIB -1,18%.

Borsa italiana sui minimi da fine 2016, FTSE MIB -1,18%. In rosso anche le altre piazze europee, EURO STOXX 50 -1,49%.

(SF - www.ftaonline.com)


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Allarme Bce: 'Preoccupa deviazione Italia da Patto Stabilità'

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Allarme Bce: 'Preoccupa deviazione Italia da Patto Stabilità'
// RSS di Economia - ANSA.it

'Prospettive debito Eurozona peggiorano, pesa Italia'
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China Industrial Profits Collapse In November, Set To Worsen

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China Industrial Profits Collapse In November, Set To Worsen
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For the first time in almost three years, the profits of Chinese industrial companies tumbled in November, highlighting the effects of slowing economic growth, falling prices, and the trade war with the US.

"Slowdown in sales growth and factory gate inflation, combined with rising costs, led to the decline of industrial profits in November," the NBS said in the statement on its website.

Profits contracted 1.8% year-on-year in November, vs. an expansion of 3.6% yoy in October. This is the first year-over-year contraction in industrial profits since 2015. In month-on-month terms, profits fell meaningfully after seasonal adjustment by around 7.2% (non-annualized), vs. a contraction of 0.1% in October. In absolute level terms, profits in November were the lowest of the year.

Among major sectors, profit growth turned negative in computer manufacturing, ferrous metal smelting and pressing, and chemical product manufacturing, but improved in general equipment manufacturing, electrical machinery manufacturing and automobile manufacturing.

As Goldman Sachs notes, compared with November 2017, profit margins (total profits divided by revenues from principal business) were materially lower by ....

Avangard: arma assoluta?

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India falls into competitive populism with debt relief for farmers

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CBOE Put Call Ratio: IRRAZIONALITA’ e VOLATILITA’ a Wall Street

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CBOE Put Call Ratio: IRRAZIONALITA' e VOLATILITA' a Wall Street
// IntermarketAndMore

IRRAZIONALE. Quanto è accaduto nelle ultime settimane può essere riassunto, secondo me , solo con un termine. Irrazionale. E non potremo non abituarci a questo tipo di mercato. La motivazione è chiara. Negli ultimi anni come è noto, la massa … Continua a leggere
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Nino Galloni, Tra Le Mie Previsioni Vedo Una Spaventosa Crisi Nel 2019

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Nino Galloni, Tra Le Mie Previsioni Vedo Una Spaventosa Crisi Nel 2019
// Scenarieconomici.it

Nino Galloni, previsioni 2019 prefazione al libro di economia spiegata facile ISBN 9788895288901

Tra i vari scenari futuri che si potrebbero delineare già a partire dal 2019, ve ne è uno particolarmente complicato che potrebbe verificarsi osservando alcune delle condizioni che stanno maturando .
Questo scenario, anche se non è il più probabile, è certamente possibile e, altrettanto certamente, il più negativo per l'Italia.

Infatti, si può prevedere che nel 2019 vi sarà una crisi spaventosa.


Questo brano è ricavato dalla prefazione di Nino Galloni al libro L'economia spiegata facile isbn 9788895288901Articolo originale su economiaspiegatafacile.it


 

IL PROSSIMO CAMBIO DI GUARDIA ALLA GUIDA DELLA BCE

Le principali ragioni che ci possono portare a questa crisi sono palesi e ben note.
Con la conclusione del 2018 ...

2019, anno di ritorno alla realtà per i mercati

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2019, anno di ritorno alla realtà per i mercati
// Borsainside.com - Notizie

Stando a quanto affermano Joseph Little, Global Chief Strategist, Global Asset Management di HSBC, il 2019 sarà un anno di ritorno alla realtà per i mercati finanziari. Ma cosa significa? Quali sono le valutazioni della banca europea in tal proposito? Per l'analista, il 2018 va in archivio come un anno deludente per gli investitori. Di fatti, dopo i rendimenti eccezionali del 2017, il mercato si era probabilmente abituato ad un simile contesto che, però, si è gradualmente sgonfiato. Non tutto è però negativo: la buona notizia è che, nonostante il pessimismo, i ...

Guerra nucleare, Putin fa sul serio: la Russia testa una nuova arma ipersonica

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Guerra nucleare, Putin fa sul serio: la Russia testa una nuova arma ipersonica
// Money.it

Dalle parole Vladimir Putin sembrerebbe essere pronto a passare ai fatti. Durante la sua conferenza stampa di fine anno il presidente russo aveva parlato di "una possibile guerra nucleare con conseguente fine della civiltà", spaventando di fatto il mondo intero.

Alcuni giorni dopo ecco che la Russia ha reso noto il buon esito di un ...

Mercati alle prese con l'orso. Il peggio deve ancora venire?

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Mercati alle prese con l'orso. Il peggio deve ancora venire?
// Trend Online

Dopo il crollo di Wall Street registrato immediatamente prima di Natale, in molti credono che si tratti solo di un antipasto.

Dopo il crollo di Wall Street registrato immediatamente prima di Natale, in molti credono che si tratti solo di un antipasto. E che il peggio debba ancora arrivare.

Un mercat orso mondiale? 

Questa potrebbe essere l'opinione della maggior parte degli esperti riguardo al prossimo futuro. Stando a molte loro dichiarazioni, infatti, un ....

Bond oggi: può Trump fare un golpe alla Fed? Scenario da incubo

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Bond oggi: può Trump fare un golpe alla Fed? Scenario da incubo
// Trend Online

I mercati hanno interpretato molto male l'affermazione che il problema dell'economia Usa è la Fed. Cosa anticipa? Il licenziamento di Powell? Il Presidente non ha i poteri per farlo. 

Secondo il Presidente Usa l'unico ...

NOT A Correction: The Everything Bubble Has Burst And The Next Crisis Is Here, Now!

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NOT A Correction: The Everything Bubble Has Burst And The Next Crisis Is Here, Now!
// Silver Doctors

 Ignore anything the MSM says about this. We are seeing selling that is on par, if not worse, than the 2008 collapse. Here's what is really going on… by Graham �…�

The post NOT A Correction: The Everything Bubble Has Burst And The Next Crisis Is Here, Now! appeared first on Silver Doctors.


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All’inizio dell’anno prossimo brillerà l’oro

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U.S. Stocks Just Had Their Best Day Ever – And Here Is Why That Is A REALLY Bad Sign…

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U.S. Stocks Just Had Their Best Day Ever – And Here Is Why That Is A REALLY Bad Sign…
// The Economic Collapse

The Dow Jones Industrial Average just posted its biggest single day point gain ever.  On Wednesday, the Dow shot up 1,086 points, which shattered the old record by a staggering 150 points.  It truly was a remarkable day, and this is the sort of "Santa Claus rally" that investors had been hoping for.  Many are convinced that this rally is an indication that the crisis of the last three months is over, but as you will see below, this sort of extreme volatility is actually a really bad sign.  But for the moment, the mainstream media is pushing the narrative that everything is once again peachy keen in the financial world.  Just consider the following quote from CNN

"Investors went bargain shopping the ....

CHARLES NENNER: PREPARE FOR A 70% MARKET DROP! (It's Gonna Be Murder)

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CHARLES NENNER: PREPARE FOR A 70% MARKET DROP! (It's Gonna Be Murder)
// THE FINANCIAL ARMAGEDDON BLOG

There are long term trends developing. The problem is not a trading war or China. What worries me is that the FED also seems to be surprised by weakness - although our indicators showed that already in early 2018. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts ,...

[[ This is a content summary only. Visit http://www.figanews.com or http://FinanceArmageddon.blogspot.com or http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]
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Piazza Affari: FTSE MIB come al bowling, può fare strike

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Piazza Affari: FTSE MIB come al bowling, può fare strike
// Trend Online

Mercato azionario italiano si candida per apertura in luce verde. Wall Street da un eccesso all'altro. Rally Borsa USA grazie all'euforia sulle vendite di Natale.

Dopo tre giorni di chiusura natalizia, a Piazza Affari il FTSE MIB riapre i battenti oggi, giovedì 27 dicembre del 2018, per inaugurare una settimana corta, cortissima. L'ultima seduta dell'anno sarà infatti quella di domani, dopodiché la ...

WALL STREET: MARKET is CHEAP (needs a chip)

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WALL STREET: MARKET is CHEAP (needs a chip)
// IntermarketAndMore

Malgrado però una valutazione a livello di multipli (price earning forward 12m) registra l'incrocio della morte. Il Death Cross. Stupido gioco di parole per portare in evidenza un dato di fatto. La correzione ha ovviamente portato una valutazione del mercato … Continua a leggere
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Le chiavi per leggere economia e mercati nel 2019

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Le chiavi per leggere economia e mercati nel 2019L'ALIENO GENTILE Se guardiamo a un resoconto di un anno, dal punto di vista economico,https://www.finanzaelambrusco.it/articoli/articoli/finanza/le-chiavi-per-leggere-economia-e-mercati-nel-2019/

Three "Crazy Market Stats" After Today's Historic Day

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Three "Crazy Market Stats" After Today's Historic Day
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What has traditionally been the quietest week for markets is shaping up this year to be one of historic turmoil and triumph for traders.

One trading day after the S&P500 suffered its biggest Christmas Eve rout on record, the index enjoyed its biggest point surge on record (as did the Dow Jones), and the biggest percentage rebound since the financial crisis, with today's 4.96% jump only the largest since the 7% QE1-driven surge in March of 2009.

There were three other "crazy market statistics" as Bloomberg dubbed them, that defined today's market actions:

  1. All three major U.S. indexes gained at least 4% on Wednesday: That was the first time the market had such a widespread bounce since 2011. Additionally, both the Dow and the S&P came a just hair shy of topping 5% on the day.
  2. The Dow's performance perfectly mirrored its last trading day: on Monday, all 30 Dow ...

Ambasciatore russo a Pechino: le sanzioni USA complicano cooperazione con la Cina

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Ambasciatore russo a Pechino: le sanzioni USA complicano cooperazione con la Cina
// Sputnik Italia – Ultime Notizie, Fatti e Analisi: foto, video, infografica

Le sanzioni statunitensi complicano, in una certa misura, la cooperazione tra Russia e Cina, ma non ne influenzano il ritmo e il volume. Lo ha dichiarato oggi l'ambasciatore russo in Cina Andrei Denisov.
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Collapse In US Home Sales Confirms ‘Peak Unaffordability’

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Collapse In US Home Sales Confirms 'Peak Unaffordability'
// Silver Doctors

Signs of softness are beginning to emerge in the US housing market as home sales slump while unaffordability peaks. Here are the details… from Zero Hedge Though some signs of softness �…�

The post Collapse In US Home Sales Confirms 'Peak Unaffordability' appeared first on Silver Doctors.


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