Euro Zone

Precision is ECB’s enemy when picking compass

18 Feb 2021

President Christine Lagarde has stressed the need for favourable borrowing conditions to justify her 1.85 trillion euro crisis response. Rate-setters will in March discuss how to measure this concept. Being too specific may backfire and limit the central bank’s wiggle room.

Forces lowering euro zone inflation aren’t all bad

7 Jan 2021

Euro zone consumer prices fell 0.3% in December from a year ago. Several factors, especially a weak economy, are to blame. Still, a long-term trend that also chips away at inflation is cheaper tech. That’s not something even ECB chief Christine Lagarde would want to see reversed.

Corona Capital: Icahn, Productivity, Natixis

4 Jan 2021

Concise views on the pandemic’s corporate and financial fallout: Carl Icahn sells half his Herbalife Nutrition stake; an ECB survey suggests Covid-19 will make big firms more productive, but that may not be all good news; and Natixis fast-tracks its overhaul.

ECB fiat anoints unlikely bank dividend heroes

16 Dec 2020

The regulator capped payouts as a proportion of earnings and assets. Well-capitalised lenders with richer valuations, like Nordea and KBC, now offer tiny yields compared with minnows like Liberbank. The risk is that a slow recovery causes restrictions to last beyond September.

Christine Lagarde’s baby bazooka needs backup

10 Dec 2020

The ECB boss will deploy emergency stimulus measures, such as asset buying and ultra-cheap loans to banks, for longer but came up with no new tricks to boost Europe’s economy. Central bankers have been innovative in the crisis. It’s now governments’ turn to do more of the work.

Chatty ECB has a communications problem

2 Dec 2020

Chief Economist Philip Lane has since March spoken with a series of financiers after policy meetings, his diary shows. A perception that a select few have privileged access is best avoided. The even bigger issue is why the central bank has to work so hard to land its message.

European Union will be bond market’s new behemoth

7 Oct 2020

The need to fund pandemic aid schemes worth nearly 1 trillion euros will make the EU one of the region’s largest issuers. ECB bond buying and investors’ hunger for safe assets mean that is no problem. And the scale of issuance will make its debt more liquid, a prized quality.

Christine Lagarde has a real rates problem

2 Oct 2020

Euro zone prices fell 0.3% in September from a year ago, a bigger drop than in August. This boosts the inflation-adjusted, or real, policy rate. That phenomenon is most marked on the ECB boss’s turf and may lift the euro. A rising currency would hasten further monetary easing.

How to build a European JPMorgan

25 Sep 2020

An EU bank of the U.S. behemoth’s size could help ensure reliable corporate funding and more tech investment. Fragmented liquidity, capital and bankruptcy rules make the necessary mega-deals hard. Though the ECB is helping, it’s really up to national regulators and politicians.

Euro moves a step closer to becoming a safe haven

22 Jul 2020

The EU’s 750 bln euro fund makes the bloc more resilient and creates easily traded common bonds, boosting the single currency’s appeal. Yet political splits are only patched up. It may take new crises to fix them. Only then will the euro stand a chance of supplanting the dollar.

EU has fairness vs. speed dilemma on pandemic cash

17 Jul 2020

Brussels wants to use backwards-facing metrics like past jobless rates to assign 310 bln euros of Covid-19 grants. Basing handouts on EU states’ actual hits to GDP would be fairer, and may win richer countries’ support. For needier peers, that risks slowing down the recovery.

Corona Capital: Mets star bidders, Robot slayers

10 Jul 2020

Concise views on the pandemic’s corporate and financial fallout: Power couple J. Lo and A-Rod are giving hedge fund manager Steve Cohen competition for the New York Mets baseball team; Covid-19 is accelerating automation of the meat industry.

Italy gives sovereign debt revolution a nudge

12 Jun 2020

The country will sell bonds whose payout is linked to how GDP evolves. It’s a first step that only targets domestic savers. But cultivating an international market for such securities could help countries, particularly ones locked into the euro, to better weather economic shocks.

Corona Capital: Goldman, Vroom, Deutsche Bank

9 Jun 2020

Concise views on the pandemic’s corporate and financial fallout: Goldman does too well in Britain; shares in online used-car sales outfit Vroom double on their market debut; and Deutsche Bank gets another shot at redemption in the U.S. market.

Christine Lagarde is having a good crisis

4 Jun 2020

The ECB boss will buy more assets and for longer than initially planned. She is as decisive as her predecessor, Mario Draghi, but luckier. Politicians are splurging to revive economies. Growth will recover faster because fiscal and monetary policies are pulling the same way.

Corona Capital: ZoomInfo IPO, U.S. trade

4 Jun 2020

Concise views on the pandemic’s corporate and financial fallout: ZoomInfo goes public with a big pop despite Covid-19; and America’s goods-trade deficit with Europe will test Washington’s mood.

Corona Capital: Tech diversity, CNN’s middle age

1 Jun 2020

Concise views on the pandemic’s corporate and financial fallout: As big U.S. technology companies’ CEOs speak out about racial inequality, working from home trends could give them a chance to make a real difference; and 24/7 news network CNN feasts on Covid-19 as it turns 40.

Europe’s bond taboo finally broken by pandemic

27 May 2020

Brussels wants to raise 750 bln euros to help EU members recover from Covid-19. Hard-hit Italy and Spain would get the lion’s share, chiefly in grants rather than loans. Though obstacles remain, the health crisis may have helped the EU overcome its aversion to joint deficits.

Review: Eurocrat’s unity dream faces virus reality

15 May 2020

In “Walking the Highwire” former EU Commissioner Olli Rehn reflects on the euro zone crisis and concludes the single currency needs more cooperation. The pandemic is an opportunity to do so. But a familiar reluctance to share financial burdens suggests the vision remains far off.

ECB’s low inflation problem is worse than it looks

30 Apr 2020

Depressed energy costs meant euro zone consumer prices rose 0.4% in April from a year ago. But President Christine Lagarde may in reality be even further away from her just-below 2% goal. Statisticians’ efforts to fill data gaps during lockdown risk overstating price pressures.