Quote of the day: Despite decent M1 growth, broader monetary aggregates in the EU have been very weak. As I’ve mentioned before, this is likely a result of the impaired banking system – something that the AQR (along with forced recapitalization programs) will hopefully fix. I think this is a problem that the ECB recognizes, and a reason why the TLRTO’s specifically target bank lending, as well as coinciding with the AQR. IMO, this is also a reason the ECB is reluctant to pursue QE outright. There are many views on how QE affects the economy, but one of the clearest effects is the growth in base money… that really isn’t the problem at this juncture. – Global Macro Trading
Previously
on MoreLiver’s:
W/E: Weekly Support (updated)
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EUROPE
Danish
GDP Shock Has Economists Questioning Government Numbers – BB
The chances
of Denmark’s economic forecasts being supported by
reality grew more remote this week after second-quarter data showed a surprise
contraction that suggests the projected recovery has been derailed.
ECB will
test Swiss resolve to prevent currency deluge – TradingFloor
Max McKegg:
Swiss National Bank has historically tried to keep EURCHF above 1.20 * Failure
to hold level could bring on a “waterfall” effect * The Swiss can sell CHF but
is that sustainable for the SNB’s balance sheet?
UKRAINE / RUSSIA
The logic
of the earlier, incremental approach—put modest sanctions in place, and let the
threat of worse create a chilling effect on investment and trade—has reached a
dead end.
Iceland put airlines on the highest level
of alert after authorities detected an eruption north of the Bardarbunga
volcano.
EUROPEAN CENTRAL BANK
ECB
easing - will it work? No. 5: ECB's policy going forward – Danske
Bank
Draghi’s speech
has fuelled QE expectations as Draghi previously has coupled de-anchored
inflation expectations with large scale asset purchases. However, we still
believe the bar for QE is high at least in the near term and instead we expect more
details on an ABS programme at the meeting.
How
Draghi Seeking QE Trade-Off May Find Austerity Trap – BB
Draghi
called last week for a three-pronged approach of monetary and fiscal easing
with structural reforms. French President Francois Hollande’s purge of an anti-austerity
coup attempt this week and comments by German Finance Minister Wolfgang Schaeuble
yesterday underscored how hard that will be, as Germany leads pressure to keep
cutting deficits.
Draghi
dials R for Reform. Line is busy – Reuters
Draghi
extended a thinly veiled invitation to those countries with the room - such as Germany - to pursue a more expansionary
fiscal policy as part of a three-pronged policy approach including ECB stimulus
and structural reforms.
Putting
Draghi in his box, and getting him back out again – FT
More
fundamentally, Draghi is trying to push policymakers (including the ECB) to
take a step back and reevaluate whether they are doing enough to boost
aggregate demand in a bigger picture sense.
Nowotny
Hints at ECB Forecast Cut as Euro-Area Economy Lags – BB
Schaeuble
Sees Draghi’s Instruments for Growth Exhausted – BB
German
Finance Minister Tells EU Leaders: Free Money Party's Over – ZH
The ECB has
run out of ways to help the euro area, putting the burden on governments to
spur growth without running excessive deficits, German Finance Minister
Wolfgang Schaeuble said.
MACRO NUMBERS
Euro area
unemployment rate at 11.5% - Eurostat
Euro area
annual inflation down to 0.3% - Eurostat
Euro area
disinflation deepens; unemployment rate unchanged – TradingFloor
Next week's
ECB hardly affected by this August CPI release – TradingFloor
Euro
Inflation Slows as Draghi Hints at More ECB Stimulus – BB
Disappearing
euro zone inflation set to heighten ECB concerns – Reuters
Lower
headline inflation, but higher core inflation – Danske
Bank
UNITED STATES
Visualizing GDP:
A Look Inside the Q2 Second Estimate – dshort
The BEA's Q2
GDP Second Estimate: A Deeper Analysis – dshort
GDP reading
shows Main Street USA is back in business – TradingFloor
ASIA
Japan’s July Output Misses Estimates as
Spending Slumps – BB
OTHER
Daily Central Banks – WSJ
Hilsenrath’s
Take: Fed Job Index a Year Away From Normalcy * Fed Chair Yellen Still a
Multimillionaire, Records Show * Fed to Consider Including Municipal Bonds in
New Bank Safeguards * Euro-zone Inflation Cools Further in August, Putting
Pressure on ECB * Japan’s Tax Increase is Putting Abenomics
at Risk
Daily
Macro – WSJ
There’s not
a lot of good macro news in Friday’s glut of releases. Setting aside the
ratcheting-up of Russian-Ukraine tensions, which feel as though they could
spill into outright and declared war at any moment, the economic releases aren’t
a bucket of cheer either. Euro-zone inflation heads ever lower. Italy is the latest European economy to
slip into deflation. Finland’s economy is struggling. German
retail sales are down. And the news isn’t much better in Asia. Hong Kong is suffering from China’s anti-corruption drive while
Japanese households and industry continue to feel the effects of April’s
consumption tax rise. Of course there are a couple of spots of good news. The U.K. continues to boom, thanks to its
rampant house prices. And Turkey’s big devaluation is fixing its
poor trade position.
FINNISH
FK: Hallitus kaappasi 100 miljoonaa pankkien kriisivaroja
– IL
Länsi petti, Venäjä suuttui – Talouden
Tulkki
Pääkirjoitus: Suomi joutui pakkopaitaan – IL
Euro suunniteltiin tietoisesti väärin, sanoo Varman Risto
Murto.
EU ja talouden näkymät – Brysselin
kone / YLE
Varman toimitusjohtaja Risto Murto puhuu EU:n ja Suomen
talouden näkymistä.
Ruotsalainen neuvoo Suomea: “Parasta olisi palata omaan
valuuttaan” – US
Viikon linkit: Euroalue ja Suomi fokuksessa – Roger
Wessman
Suurten yritysten liikevaihto heinäkuussa -1,6% YoY – Tilastokeskus
KL: Puoluesihteeri Tujunen siirtyy yksityissektorille – Verkkouutiset