Leta i den här bloggen

2020-03-29

Germany's refusal to embrace 'coronabonds' amid the crisis could threaten the European Union's very survival


EU project in ‘mortal danger’ if Italy and Spain are abandoned 

Jacques Delors, former Commission chief and euro godfather, who stepped back into the fray this weekend, denouncing Europe's paralysed response to the greatest crisis since the Second World War as a “mortal danger” to the European project.

Delors launched monetary union in the early 1990s on the implicit assumption that it would be the federalysing catalyst, leading – by means of crises – to full fiscal and political union. 

Ambrose Evans-Pritchard, Telegraph  29 March 2020



2020-03-27

Macron warned that the political reaction after this crisis could kill the European project

Angela Merkel agreed with the bleak assessment of the situation, she resisted calls for mutualizing debt, warning against unrealistic expectations. 

Merkel’s tone was more categorical than before

After Bailing Out Euro Area, Lagarde Tackles Merkel on Debt

Bloomberg 26 March 2020


Germany’s top court has already warned that eurobonds would require a change in the country’s Basic Law



The most heavyweight endorsement of a move towards true fiscal union 

The constellation — call them the “No Limits Nine” — have written to European Council president Charles Michel calling for the creation of a common debt instrument to fight the devastating impact the coronavirus crisis is threatening to wreak on Europe’s economy.

Among the signatories are usual suspects such as France, Italy and Spain and relatively new adherents such as Ireland, Slovenia and Luxembourg. 

 The statement is perhaps the most heavyweight endorsement of a move towards true fiscal union in the history of the single currency area. But for now, that call will go unheeded.


2020-03-26

Dow rallies more than 1,300 points, biggest 3-day surge since 1931

Om vi skulle göra som Trump och Jacob Wallenberg vill

Säga att nu är det fritt fram att åka pendeltåg och tunnelbana, gå på bio, äta på restaurang och göra båtfärder på kryssningsfartyg, hur många skulle göra det då?

Det blir inte som vanligt förrän medborgarna känner att risken att bli smittad är låg.


https://www.nytimes.com/interactive/2020/03/25/opinion/coronavirus-trump-reopen-america.html

Allmänhetens hållning är fullt begriplig och i många fall även rimlig. Den grundar sig på uppfattningen att coronasmittan ännu inte är under kontroll.
Därför går det inte att slå in på helt annan väg innan så länge som hotet hänger över oss: svenskarna har visat att vill vara försiktiga. 
En tidsgräns av den typ som har föreslagits av Tredje AP-fondschefen Kerstin Hessius skulle inte fungera.

ECB has given itself an unprecedented level of flexibility in its plan to buy €750bn in additional bonds

Almost all constraints that applied to the ECB’s previous asset-purchase programmes have been removed or significantly loosened

FT 26 March 2020



2020-03-25

Germany’s top court has already warned that eurobonds would require a change in the country’s Basic Law

As always in EU politics, ideologues are pursuing their own Monnet agenda: exploiting Covid-19 to advance federalist integration by means of crisis without clear democratic consent. 

“They are making the same serious category error as they did in the Greek crisis in 2010. They are treating an insolvency crisis as if it were a liquidity crisis,” said Yanis Varoufakis, the former Greek finance minister.

Acting as a lender-of-last resort for the country - though vital - does not conjure away the deeper issue that Italy requires a huge devaluation and a debt restructuring to break out of the contractionary spiral and restore lost viability.

“How much of Italy’s debt is the ECB going to keep buying. A quarter? Half? Three quarters? At some point the system cracks,” Mody said.

Ambrose Evans-Pritchard, Telegraph  25 March 2020


Corporate bonds have become very illiquid

Holders of the ETF have stampeded to the exits and, just as the ETF critics consistently predicted, 

this liquidity mismatch has wreaked havoc with the market.

IEAC’s market capitalisation has fallen from over €13bn to €10bn in about a month.


FT 25 March 2020




Companies draw $124bn from credit lines

Back when the world was awash with liquidity, lenders would offer low-cost revolving credit facilities — akin to a credit card — as a perk to win other business. 

The banks believed that most would never be used in full; such was the stigma of large companies drawing them. 






Tegnell höjer ett varningens finger för USA

– Där händer väldigt mycket och det händer väldigt fort, och det kan bli problematiskt. 

Redan nu ser man väldigt många dödsfall och fall inom intensivvården, vilket talar starkt för att man har en rätt omfattande spridning i landet redan, som man kanske är lite för sent ute för att ta hand om på många ställen, säger han.

– Men vi får se, säger Tegnell.

SvT 25 mars 2020


Finance Minister Olaf Scholz urged lawmakers to set aside constitutional debt limits

to combat a crisis that threatens modern life. 

New borrowing of 156 billion euros ($169 billion), equivalent to half of the country’s normal annual spending, will be used to fund social benefits and direct aid to virus-hit companies.

Bloomberg 25 March 2020




Anders Tegnells fem coronaråd

Undvik barnbarn, butiker och bussar,

men gå gärna ut och träffa andra – på behörigt avstånd.

Ta reda på vilken hjälp du kan få i vardagen.

Använd ditt eget sunda förnuft.

Det är några av statsepidemilog Anders Tegnells råd till dig som är äldre.

Coronavirus in N.Y.: ‘Astronomical’ Surge Leads to Quarantine Warning

“We haven’t flattened the curve, and the curve is actually increasing,” Mr. Cuomo said. 

NYT 24 March 2020


Mr Trump’s suggestion that the US might simply abandon efforts to stop the pandemic spreading -  in order to revive the US economy- would almost certainly be self-defeating. 

California, New York, and Illinois, among others, are in lockdown and would ignore the White House. 

The result would be a half-baked containment policy that leaks badly and achieves neither one objective or the other.

2020-03-24

The ECB must abandon the constraints on how many bonds it can buy from each of its members.

Europe needs unconstrained QE to save the euro.

In May  a German court is due to rule on the constitutionality of QE. 

Many expect the judges to vote that it’s unconstitutional. 

European governments would then be faced with a possible choice of abandoning the euro or coming up with real reform that takes the monetary union a step further, say through the issuance of a Eurobond.

Again, a crisis that threatens the euro’s very existence would lead to a reform that secures its future.

Melvyn Krauss Bloomberg 24 mars 2020





This pandemic is an ethical challenge

Long before government-imposed lockdowns, many people stopped travelling or going to restaurants, cinemas or shops. 

Decisive action to suppress the virus and follow up with testing and tracking of new infections could well end the inevitable economic slump even sooner than otherwise.

Martin Wolf 24 March 2020


Hope about Covid-19

If the Western democracies get a grip on Covid-19 with an immediate and total lockdown – which several are not yet doing – they can essentially overcome the pandemic within eight weeks.

An economic sudden stop for two months does not fundamentally matter – any more than a national holiday fundamentally matters – provided that the state acts as a shock absorber and keeps the productive system whole, avoiding mass bankruptcies and hysteresis.

 Ambrose Evans-Pritchard, Telegraph  24 March 2020



The pain of a much stronger dollar can be particularly acute in emerging markets, where businesses and households have ramped up borrowing via dollar loans.

The dollar’s surge echoes a similar jump during the most acute stage of the financial crisis. 

Firms around the world have dumped assets in a bid to raise cash. 

Outside the U.S., firms are in desperate need of the currency to serve a rising tide of dollar loans just as dollar revenues dry up.

MarketWatch 23 March 2020


Consider OTC derivatives We're Looking at a System-Wide Margin Call

The worst scramble for cash is happening in an opaque corner of the market that the Fed can’t control.

Consider OTC derivatives, which are mostly betting slips on the future movements of interest rates and currencies.

More than a decade ago, the scramble for cash wiped out as much as $36 trillion, or more than half of the market value of global equities. 

So far, the coronavirus has cost global stocks about $26 trillion, or roughly 30% of their market value, from their late-February peak. 

So you could argue there’s a long way to go.

Bloomberg 24 March 2020

Goldman Sachs spends $1.9bn to shore up two money market funds

2020-03-23

En sak som måste undvikas – till varje pris: Att hushållen tvingas sälja sina hem.

Det är inte svårt att se 90-talskrisen framför sig. 

Skillnaden nu är att lånen är oerhört mycket större och räntekänsligheten högre.

Situationen är komplicerad eftersom hushållens bolån till stor del är finansierade genom bankernas säkerställda obligationer, ofta kallade bostadsobligationer.

Riksbanken accepterar numera också att banker lämnar in inte bara andras, utan också sina egna, bostadsobligationer som pant hos centralbanken för att låna pengar.

Louise Andrén Meiton SvD 23 mars 2020


Ingves upprepade sin varning om att utländska investerare kan tappa tålamodet med Sverige.

Och betonade att 81 procent av utlåningen från de svenska affärsbankerna har fastigheter och bostäder som säkerhet.


The Federal Reserve on Monday announced it would purchase an unlimited amount of Treasurys and mortgage-backed securities

in order to support the financial market. 

The Fed said it would buy assets "in the amounts needed" to support smooth market functioning and effective transmission of monetary policy. 

The Fed had previous set a $700 billion limit for asset purchases.

MarkerWatch 23 March 2020



Carry-Trade Losses Smash Records Amid Mad Dash Into Dollars

Returns on trades in which investors borrow in dollars to invest in developing-nation currencies have slumped 13% so far this year, the most since at least 1999

Bloomberg 23 March 2020



Carry Trade at IntCom

Swedbank Misstänkta insättningar för cirka 180 miljarder kronor. Och misstänkta kundutbetalningar för cirka 190 miljarder kronor.

Det är två viktiga inslag i den advokatrapport som publiceras idag från Swedbank. Kritiken innebär att risken för ytterligare miljardböter ökar. 

Swedbanks ordförande Göran Persson är besviken.

SvD 23 mars 2020


Even after eight years of the New Deal, the economy was still not out of depression by 1940

as critics of Roosevelt never tire of pointing out. 

Unemployment was still over 14 percent when World War II broke out.

It was the war, and the astonishing mobilization for war, that finally cured the Great Depression. 

Robert Kuttner NYT March 22, 2020


”Det som satte stopp för trettiotalsdepressionen i USA var ett massivt underskottfinansierat program för offentliga arbeten som kallas andra världskriget”.




As in 2007 and 2008, the problem of dollar liquidity will be at the heart of the crisis

This time, small guys should get the bailouts

In the previous crisis, Washington bailed out banks. Today, it’s about to bail out big business.

The corporate sector looks a lot like the financial sector did pre-2008: debt-laden, with some sectors highly leveraged, and most of them reliant on financial engineering to create the illusion of growth and innovation.

Rana Foroohar, Associate Editor at the Financial Times, 22 March 2020




2020-03-22

Today’s financial fragility far predates the COVID-19 “black swan.”

Given the massive accumulation of debt in both developed and developing countries since the 2008 financial crisis, it has long been clear that even a minor event – some “known unknown” – could have far-reaching destabilizing effects. 

Yet, until recently, rising asset prices – owing to a long period of extraordinarily loose monetary policies in advanced economies – disguised mounting debt levels. 

As the recent scare in global equity markets indicates, asset bubbles cannot last forever. 

By contrast, in the absence of active public pressure or state intervention to facilitate their resolution, debts do not deflate on their own.

Javuati Goshi Ptoject Syndicate  16 March 2020 



En person förde smittan till Italien

Smittans förlopp har rekonstruerats noga av Italiens största morgontidning Corriere della Sera.

I centrum står en 38-årig man som troligen är den första smittade. 

Massimo Galli är infektionsläkare på sjukhuset Luigo Sacco i Milano. Han säger i en intervju i Corriere della Sera att epidemin startade utanför sjukhuset, men att den växte och fick fart inne på sjukhuset.

– Det är synd att vi inte förstod vilken sjukdom den förste patienten hade.



Carnegie Fonder in Sweden gated 12 funds on Friday, mostly in corporate bonds

Danske Invest, the asset management arm of Denmark’s biggest lender, had 15 Danish funds suspended on Friday, most of them in high-yield bonds. 

Carnegie Fonder in Sweden gated 12 funds on Friday, mostly in corporate bonds, while Forte Kreditt, a Norwegian high-yield fund, was suspended all of last week.

Other fund managers such as Spiltan, Cicero and Danske in Sweden and Jyske in Denmark all suspended funds last week.

FT 22 March 2020



BNY Mellon stepped in to support one of its money market funds



SEB var en av flera fondförvaltare som i slutet av förra veckan valde att stänga för handel i vissa räntefonder, vid sidan av bland annat Carnegie och Spiltan. Den smått unika åtgärden innebar att fondsparare som ville plocka ut sina fondandelar eller byta fondinnehav plötsligt inte kunde det.

https://www.svd.se/coronastopp-pa-fondmarknaden-borjar-slappa

Bilder i tunnel på Lidingö Larsberg

På min dagliga vandring genom skogen längs Lidingös södra strand passerar jag en gångtunnel.



Den har inte varit så rolig. Gångtunnlar brukar inte vara det.

Men nu är den utsmyckad.





Här kan man läsa vad den den föreställer.



Här flera bilder.







Under andra världskriget spelade Elfvik Gård en särskild roll. Här knäckte matematikprofessorn Arne Beurling den tyska chifferkoden, vilket gav den svenska försvarsstaben möjlighet att läsa ca 300 000 tyska meddelanden, ovärderligt i Sveriges roll för att hålla sig neutrala.








Svaret på hur man räddar ekonomin är just nu lika svårfunnet som boten mot covid-19.

2020-03-21

Borrowing costs for companies around the world are rising dramatically despite central bank interest rate cuts

as rating agencies warn that the economic impact of the coronavirus will lead to a surge of corporate downgrades and defaults.

The average yield for investment-grade corporate debt has risen from 2.26 per cent two weeks ago to almost 4.5 per cent

FT 21 March 2020


Hidden within the $16 trillion corporate debt market are many potential troublemakers, including the zombies. 


BNY Mellon stepped in to support one of its money market funds

amid sharp outflows from parts of the sector this week, buying $1.2bn of the fund’s assets so it had cash to help cover redemptions.

The US bank made the liquidity injection as investors withdrew $6bn from the Dreyfus Cash Management fund in the week ending Thursday, around half of its assets,

FT 20 March 2020

Dreyfus Corporation

Varför min sida om Finanskrisen heter hedgefunds.htm


Finanskrisen och därmed eurokrisen tog sin början i Frankrike, när tre hedgefonder tillhöriga Frankrikes största bank, BNP Paribas, inställde betalningarna i augusti 2007.

Den dåvarande chefen för ECB, Jean-Paul Trichet,  pumpade raskt in 200 miljarder euro för att rädda bankerna.


Helikoptrarna närmar sig

A series of policy ideas which were once the province of a small number of mavericks and limited to purely theoretical discussions are taking centre stage.

The most important of those unorthodox approaches is the “helicopter drop” 

“We have to be willing to accept fiscal deficits on the scale of 2009,” says Adair Turner, the former head of the UK’s Financial Services Authority.

Martin Sandbu 20 March 2020



New World Order Is Coming, Maybe in Helicopters



Helicopter Money -- The Fed's Final Tool

The Atlantis Report 19 November 2019

What to do if stagnation threatens when interest rates are already close to zero?




2020-03-19

ECB moves to stop a financial firestorm – and save Italy

This time it is tearing up the rule book entirely, announcing that it will not be bound by “self-imposed limits”. It will intervene in the sovereign debt markets wherever needed most – meaning that it can deploy its vast arsenal to defend Italy or Portugal – without strict conditions or ifs and buts.

 It has vastly expanded the range of assets on the menu. It will do “as much as necessary and for as long as needed”.

While Frankfurt needs the fig-leaf of stating that the €750bn blitz is to ensure “the  smooth transmission of its monetary policy in all jurisdictions of the euro area”, it is clear that the ECB is in reality acting to prevent the collapse of Italy's sovereign debt, which in turn would set off a Club Med chain-reaction within hours and blow up monetary union. 

It took 20 years but the eurozone finally has its own version of the US Federal Reserve. Or as founding father Jean Monnet famously put it, “Europe is forged in crises”.

Ambrose Evans-Pritchard, Telegraph 19 March 2020


The European Central Bank can’t stop the euro-area from sliding into recession but it may be able to prevent another devastating debt crisis.

Italy has said it’ll spend 25 billion euros on direct stimulus, and more is likely to follow. 

France has pledged to guarantee up to 300 billion euros of bank loans to companies, 

while Spain has unveiled a 117 billion euro plan to help keep companies afloat.

Bloomberg 20 March 2020


Krisen kan fördjupa EU-samarbetet trots att ingen egentligen är ute efter det

Annika Ström Melin DN 18 mars 2020





The manual for handling plagues dates at least to Marcus Aurelius, the Roman emperor who was eventually killed by an epidemic.

While wealthy Romans fled to their villas, Aurelius stayed in the capital and led by example.

Aurelius took advice and empowered qualified people to lead.

The Roman emperor spread the burden of fighting the pestilence among classes. He raised taxes on Rome’s aristocracy, sold his own imperial luxuries and paid for the funerals of ordinary people.

 “Never will so many ask so much of so few,” Mr Varadkar said. Hospital staff battling an invisible enemy are the equivalent of the second world war pilots fighting the Luftwaffe. 

Which role will Mr Trump play? At the moment he is hovering between Marshal Philippe Pétain and General Charles de Gaulle. Let us hope he knows enough history to choose.

Edward Luce FT 19 March 2020


The Fate of Rome is the first book to examine the catastrophic role that climate change and infectious diseases played in the collapse of Rome's power--a story of nature's triumph over human ambition.







Bond and equity slump leaves investors with ‘nowhere to hide’

Why the virus-driven rush out of haven assets is a worrying sign for the system

FT 19 March 2020


U.S. airline companies spent most of their free cash flow over the past 10 years on share buybacks, propping up their quarterly earnings-per-share results.

Now, large U.S. airlines and Boeing have requested massive aid from the federal government.

MarketWatch 18 March 2020


a run into dollar cash — bearing all the hallmarks of a massive margin call on the whole financial-asset market rally since 2010,”

Traders and economists said the dollar surge reflects global demand for dollars among investors around the world as they exit down leveraged positions across financial markets.

MarketWatch 18 March 2020


The European Central Bank launched an extra emergency bond-buying program worth 750 billion euros ($820 billion)

The decision in an unscheduled meeting on Wednesday night

ECB President Christine Lagarde reinforced the message that policy makers will do all they can, saying there are “no limits to our commitment to the euro.”

Program will cover all assets eligible under current quantitative-easing program, and will be extended to commercial papers of sufficient credit quality

Greek government debt will be included

Collateral standards will be eased

Bloomberg 19 March 2020




The eurozone’s “whatever it takes” moment has arrived

https://www.ft.com/content/be7e37b0-697b-11ea-a3c9-1fe6fedcca75

Eurozone stability is under threat again



2020-03-18

risk of a rush of downgrades overwhelming the $1.2tn junk bond market and intensifying a sell-off.


About $300bn of bonds rated triple B trade with junk-like yields above 6 per cent

FT 16 March 2020

If Bailouts Don’t Save the Economy, It’s Game Over.

The Lehman Echoes Are Getting Steadily Louder

The coronavirus saga is starting to follow the outlines of the 2008 credit crisis. 

Let’s start with the day’s most remarkable market event, which was a rise of 34 basis points in the 10-year Treasury yield, probably the world’s most important financial benchmark. 

That was its biggest daily move since the summer of 1987 (when the yield started as high as 8%). This was a historic move out of bonds.

On Tuesday, the Federal Reserve said it was reactivating a 2008-era program to support commercial paper issued by companies — essentially to ensure that scarcity of short-term funding doesn’t force some large company to fail to meet its payroll, and take the crisis to another level. 

John Authers Bloomberg 18 mars 2020 


Lehman Brothers






The tremendous bull bond market run from 1981 is probably now ending.

When it comes to bonds, deflationary economic trends are misleading.

The Fed and other major central banks are already pumping large but with diminishing or perhaps eventually even counterproductive results.

Seeking Alpha 16 March 2020


European government obligations including bunds tumbled at the same time as stocks in the region. 

Treasuries fluctuated, threatening to extend their decline a day after the biggest yield jump for 10-year U.S. bonds since 1982.


Bloomberg 18 March 2020





As borrowers and spenders of last resort, governments must act now to avert a depression

At a possible mortality rate of 1 per cent, that could mean 60m additional deaths, equivalent to the second world war.

Doubt about the health of the financial system will re-emerge. There is a risk of a collapse in demand and economic activity that goes far beyond the direct impact of the health emergency.

No event better demonstrates why a quality administrative state, led by people able to differentiate experts from charlatans, is so vital to the public.

Martin Wolf FT 17 March 2020

2020-03-17

My view of MMT – essentially, the idea that the state’s only “budget constraint” is inflation –

is that it is technically correct, but can’t be sold politically, because it violates the ancient constitutional principle that the state should spend money only with taxpayer consent.

A second misconception – which New Keynesian economists have perpetuated – is that the only obstacle to continuous full employment is “sticky” prices and wages. 

Those who believe this have bought into the neo-classical view that economic agents always have rational expectations (based on complete information) about future prices and events.

Robert Skidelsky Project Syndicate 17 March 2020




The world’s central banks have exhausted almost all their usable ammunition under existing rules

yet still failed to calm markets or to unfreeze critical parts of the global financial system. 

Either the rules are changed fast or we risk uncontrolled global liquidation. 

The US Federal Reserve must be unshackled to act as a buyer-of-last-resort for the corporate debt markets, for great swaths of the credit system, and for Wall Street equity indexes.

The European Central Bank must acquire powers to act as a genuine lender-of-last resort for eurozone sovereign states.

It must do exactly what Christine Lagarde refused to do when she blurted out last week that “the ECB is not here to close bond spreads”

Ambrose Evans-Pritchard, Telegraph 17 March 2020



The value of additional tier 1 (AT1) bonds issued by major banks declined dramatically

One of the sharpest fallers was Deutsche Bank, whose $1.25bn AT1 bond dropped more than 10 cents to 61 cents on the dollar. 

It had been sold to investors at face value a little over a month ago.

FT 17 March 2020

New accounting rules pose threat to banks amid virus outbreak

IFRS 9 requires banks to take earlier provisions for loans going bad, especially when they cross key thresholds such as a “material change in circumstances”.

Meanwhile, US banks have been operating under a new standard, dubbed ‘current expected credit losses’, since the start of the year. This requires them to book lifetime loan losses as soon as there is reason to believe a loan will not be repaid in full.

FT 17 March 2020

2020-03-16

The largest and most risky pools of debt have shifted — from households and banks in the United States to corporations all over the world.

The level of debt in America’s corporate sector amounts to 75 percent of the country’s gross domestic product, breaking the previous record set in 2008. 

Among large American companies, debt burdens are precariously high in the auto, hospitality and transportation sectors — industries taking a direct hit from the coronavirus.


Hidden within the $16 trillion corporate debt market are many potential troublemakers, including the zombies. 

They are the natural spawn of a long period of record low interest rates, which has sent investors on a restless hunt for debt products that offer higher reward, with higher risk. 



World’s three biggest fund houses shed $2.8tn of assets

BlackRock, Vanguard and State Street Global Advisors have all seen their assets under management fall sharply

FT 15 March 2020


Ikonisk bild bin Laden Obama situiation room

The pandemic is dealing a crushing blow to the euro-area services industry,



which makes up three quarters of its economy and whose resilience was crucial to offset a manufacturing slump last year. 
With the outbreak forcing airlines to cancel flights, governments to suspend schools and impose nationwide lockdowns, the first recession since 2013 appears all but inevitable.
EU finance ministers meet in Brussels on Monday
“We want to ensure that we are able to preserve our companies, able to preserve jobs as much as possible so we avoid more lasting damage to the economy,” Commission Vice President Valdis Dombrovskis told Bloomberg Friday.

‘Bearmageddon’ for stocks appears to be upon us, strategist says

“All of us have just witnessed a central bank expend all of its conventional and unconventional tools to support an equity market that is less than a month from all time highs.”

— Mike O’Rourke, chief market strategist at JonesTrading.

MarketWatch 15 March 2020

2020-03-15

Eurozone stability is under threat again

The risks are different from those in the last crisis. The eurozone will not fail because of a collapsing bank. But the eurozone is now at greater risk of failing politically than it was then.

Ms Lagarde’s statement was not your average rookie mistake. A former managing director of the IMF, she is an experienced crisis manager.

The former ECB president’s intervention saved the eurozone, but also raised deep questions about governance. He may have inadvertently given EU leaders an excuse to do nothing about fiscal union. 

Without ECB support, more Italians, not just on the extreme right, will ask whether they should leave the  and regain control over their exchange and inflation rate.

Wolfgang Münchau FT 15 March 2020



Since their peak almost a month ago, European banks indices have plunged 40 per cen

All major European banks trading at steep discounts to their book value. 

On average, they are now worth at about 0.4 times their net assets, half of the 0.8 ratio for the top six US banks. 




2020-03-13

Ever since 2016, the Federal Reserve has tried to wean the markets off its quantitative easing measures and ultra-low rates.

But whenever markets have wobbled — as they did last year in the repurchase sector — the Fed always returned with a new monetary fix. 

That has helped to sustain a startling bull market in equities and bonds.

Investors may be starting to contemplate a world in which financial morphine no longer functions. 

After all, another startling detail about Thursday’s drama 
was that the yield on 10-year bonds rose

Gillian Tett FT 13 March 2020


2020-03-12

Traders See ‘Flock of Black Swans’ on Worst Day for European Stocks

The big economic risk that could move the world rapidly in the Great Depression direction: the collapse of the Italian banking system.

Eurobanks would almost certainly be engulfed. They are generally undercapitalized. 

Yves Smith 12 March 2020



“We are not here to close spreads,” Markets had hoped that today would be Christine Lagarde’s “Whatever it takes” moment.

Those hopes have proven misplaced. 

In a nervy performance, Mario Draghi’s successor as European Central Bank president made a stumble that threatened to undo much of what he achieved during his eight years in charge – including the sentiment that underpinned those famous three words. 

FT Alphaville 12 March 2020



ECB's plan to support eurozone banks is underwhelming

Christine Lagarde delivered a disappointing set of measures to mitigate against coronavirus


The Guardian 12 March 2020