It’s the fault of the words spoken (or maybe those unspoken) from the number one if the ECB yesterday, European stocks have burned in a matter of minutes over 220 billion euro worth? The operators say yes.
Mario Draghi spoke of “new risks”, he rattled off a few more details on the purchase of asset-backed securities (Abs) and said he is ready to take the field, and still more. But it is not the one on which pointed investors. What had been expected more courage on the numbers and timing of the purchase of Abs. Above all it is not the magic word (Quantitative easing) or lacked a hint intention to buy sovereign bonds at a press conference in Naples. So, to hear the market, they would have bothered mass in the hedge funds, in order to sink the scales, and in particular the Milan Stock Exchange Milan Thursday rituffata has lost 3.9% below the quota while Madrid has 20 000 yielded 2.5%. But the “caution” and “the wait” transmitted by the Dragons are not even liked in Paris (-2.8%), Frankfurt (-1.9%) and London (-1.6%).
ROADMAP cautious
The ECB, however, there is: the stock market crash can not be loaded on the backs of dragons. Because “the fall of the scales began even before the press conference of ECB President, also triggered by the statements of the French and Italian governments on the policies of austerity in Europe,” sources have indicated the central bank yesterday afternoon. Moreover, they added, in the encounter with the press Draghi reiterated that the ECB “stands ready to further action, if necessary.” As for the Abs, despite not provided exact figures on the covered bond purchase program, the objectives outlined by President Eurotower are “much higher” than in the past.
It will be even so, that ‘s ultimate intention of Dragons was to convey uncertainty to markets, since he himself also with the dialectic in recent years has been able to important injections of confidence in the markets. But yesterday, obviously it went.
EXECUTIVE SPLIT
After the modest results of the auctions Tltro and new signs of weakness in the economy eurropea, the markets did not appreciate an ECB “evasive”, according to operators, amount of purchase of Abs and objectives that they should have in terms of boost to the budget of the ECB to the levels of 2012 (markets aim at a pressure of about 1 trillion euro accounts Frankfurt). Not only that. The market was expecting more concrete signs of willingness to proceed with a plan for the purchase of public securities, the Fed model, after listening for months Draghi’s commitment to “intervene with non-conventional measures, if necessary.”
But, yesterday the number one Eurotower merely say that the potential universe “of trading is equal to EUR 1,000 billion,” pointing out, however, that does not mean that there will be shopping in that measure but that interventions will have a ‘significant impact’. Also constrained the budget of the ECB: the size “are important,” but are not essential: “What really matters is to bring inflation close to the target of 2%.” Just enough to try, market participants have concluded that the Bundesbank continues to have a great weight and that the ECB Executive is still split on the road to take. Above all, it seems clear that there are still doubts about the effectiveness of the measures announced to expand the budget. So we should not tie their hands talking about specific goals. The problem for the ECB, according to Azad Zangana, an economist at Schroeders, “is that the market of asset purchases on which tip is too small to have a big impact on the economy.” The stock of available Abs is around $ 250 billion and that of covered bonds is 650 billion.
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