eco TV Week
ECB meeting preview: QE again?   9/6/2019

Is there a risk of over-promising and under-delivering? Since the start of the summer, ECB communication has created elevated expectations about a comprehensive package of measures to be announced at its meeting of 12 September.

Eurozone: An uncertain economic climate and fresh monetary stimulus   7/26/2019
Continued deterioration in manufacturing could end up dragging the services down, given the significant linkages between both sectors. The ECB is ready to intervene in response to the current economic slowdown and any sign of a drop in inflation expectations.
Emerging countries : a not so surprising recovery in portfolio investments   7/19/2019
Growth slowdown in emerging economies seems at odds with the strong rebound in portfolio investments observed since Q42018. How can we analyze this seeming conundrum ?
US: much reason to celebrate?   7/5/2019
This week saw two reasons to celebrate in the US. First, it’s 4th of July week and, second, we have started the 121th month of economic expansion, the longest in US history.
The new crypto-currency "Libra" project   6/28/2019
The new cryptocurrency project – Libra – which Facebook plans to launch in 2020 raises several questions and requires an appropriate response from the regulator.
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On the Same Theme

ECB: Mario Draghi passes the baton 9/13/2019
Market expectations were elevated but the Governing Council did not disappoint. The comprehensive nature of the package, with the introduction of state-dependent forward guidance, take away the need to envisage additional measures in the foreseeable future. ECB watching has been narrowed to monitoring the gap between inflation and the ECB target. Given certain negative side effects of the current monetary mix, which are acknowledged by the Governing Council, fiscal policy, where leeway is available, is now requested to step up to the plate, so as to foster growth and speed up convergence of inflation to target. The policy baton has been passed.
ECB, its target must be reached 9/13/2019
The ECB delivered a strong message. The eurozone monetary authorities announced the implementation of a new series of monetary easing measures that went beyond expectations. The Frankfurt-based central bank largely wielded its policy tools by strengthening forward guidance, lowering the deposit rate, easing long-term lending conditions for banks and reactivating net securities purchases. Although the effectiveness of such measures remains uncertain, the ECB’s proactive approach was welcomed. Aware that certain policies could have some perverse effects, the central bankers are now demanding that governments use fiscal policy to pick up the slack for quite some time to come.
Is there fiscal space in the euro area? 9/9/2019
Recent economic data confirm that global and European growth is slowing, with fears of a recession in Germany. The ECB stands ready to do more if necessary, but one may also wonder if there is enough leeway for fiscal support.
Fragile economic equilibrium between manufacturing and services sectors 9/6/2019
The latest economic indicators still send a mixed signal. The months pass but nothing seems to change. While GDP growth is declining (+0.2% q/q in Q2 2019 after +0.4% in Q1), activity in manufacturing remains subdued and the Purchasing Managers Index (PMI) of this sector is well below its long-term average. Conversely, the services sector resists and the PMI is globally in line with expectations. In this environment, headline inflation remains pretty far from the 2% target, and surprised to the downside. The core component of the CPI keeps oscillating around only 1% (+0.9% in July).
Eurozone: Employment and private consumption growth 9/4/2019
Private consumption is the biggest component of eurozone GDP: 54% in 2018. It is also more resilient to shocks than GDP. This characteristic is particularly important when activity is slowing. A key driver of household spending is real disposable income, which in turn very much depends on employment growth (wages also play a role obviously). Employment growth has been declining since the second half of 2017, which more or less corresponds to the peak of the eurozone growth. Judging by the employment component of the IHS Markit composite PMI, which is highly correlated with growth in employment, growth of the latter should continue to go down and hence weigh on consumer spending growth.  
ECB: committed to ease in September, but how much? 7/26/2019
The Governing Council has tasked Eurosystem committees to examine its monetary policy options. Given the insistence on its determination to act, Thursday’s meeting outcome was basically a pre-announcement of easing in September. Being aware of the importance of maintaining the ECB’s inflation targeting credibility, Mario Draghi was very explicit in expressing his dissatisfaction with current inflation and its outlook, adding that a highly accomodative monetary policy is here to stay for a long period of time.
Eurozone: An uncertain economic climate and fresh monetary stimulus 7/26/2019
Continued deterioration in manufacturing could end up dragging the services down, given the significant linkages between both sectors. The ECB is ready to intervene in response to the current economic slowdown and any sign of a drop in inflation expectations.
Pockets of inflation in a low inflation world 7/19/2019
Despite an increase in June, core inflation in the eurozone remains stubbornly low. The dispersion is significant between countries and between the expenditure components of the price index. Inflation is low for clothing and footwear, furnishings and household equipment, transport and communications. It is higher for housing-related items, restaurants and hotels, miscellaneous goods and services and recreation and culture Non-energy industrial goods price inflation is very low. Should this continue, it would imply that the acceleration of inflation which is the ECB is pursuing by renewed policy easing, has to come from services. However, research shows that it takes more time for services prices to respond to monetary policy and economic activity. Monetary accomodation is here to stay. 
Margin erosion in the eurozone: how low can they go? 7/17/2019
Since the 3rd quarter of 2017, a year of strong economic growth, non-financial corporations’ margin rate* in the euro area has fallen steadily. In the 1st quarter of 2019 they hit their lowest point since early 2014, at less than 40% of value added. This trend echoes the increase in unit labour costs, which has resulted both from increasing wage growth and slowing labour productivity. Forming part of a wider pattern of slowing growth in the euro area over a number of quarters and with high level of uncertainty, this narrowing of margins reflects the difficulties companies are experiencing in passing higher costs through to prices. Underlying inflation remains particularly inert. If it continues, this narrowing of margins could affect trends in investment. * Calculated here as the ratio: (Gross operating surplus + Mixed income) / Value added, Seasonally and calendar adjusted
Credit pulse 7/12/2019
The credit impulse picked up very slightly in May 2019 in the euro area for households whereas it declined for non-financial corporations. The annual growth of loans to private non-financial sector stabilized at around 3.3%. Demand for credit is expected to rise in the third quarter of 2019 across all loan categories, stimulated by the easing of financing conditions, except for home loans, for which lending conditions are expected to tighten slightly.

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