Recap 2014-12-04


It seems that markets expectations for ECB QE have been pushed back to March rather than January next year. This is when the next quarterly forecasts are published, so it would make sense. Nevertheless, it is a clear disappointment and EU risk assets suffered.

One reason the strong relationship between EU monetary policy and asset prices exist is because the growth backdrop remains quite anemic. Model outputs suggest weak MSCI EMU (ex UK) EPS growth over the next few months, corresponding to late cycle levels.

Also, via @NautilusCap, strategists remain skeptical on equities:


  • ECB kept policy unchanged as exp, and they took down forecasts sharply:
  1. 2015 real GDP to 1.0 from 1.6. Capex forecast was down especially sharply
  2. 2015 Headline HICP down to 0.7 vs 1.1 prev.
  3. 2015 HICP ex energy, food, and changes in indirect taxes, down to 1.0 vs 1.2 prev.
  4. 2016 Headline HICP down to 1.3 vs 1.4 prev

Excerpts of Draghi’s comments:

  1. early next year the Governing Council will reassess the monetary stimulus achieved, the expansion of the balance sheet and the outlook for price developments. We will also evaluate the broader impact of recent oil price developments on medium-term inflation trends in the euro area. Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council remains unanimous in its commitment to using additional unconventional instruments within its mandate. This would imply altering early next year the size, pace and composition of our measures
  2. QE has been shown to be effective in the US and in the UK, in Japan it’s more complicated

BoE kept policy unchanged as exp

US Jobless Claims declined to 297k vs 195k exp and 313k prev

Australia Retail Sales rose 0.4% MoM vs 0.1% exp

Saudi Aramco Cuts Oil Price for Asia to at Least 14-Year Low – BBG

Blackstone’s CEO Schwarzman thinks the M&A cycle is only in its 5th inning.

BOJ’s Sato delivers “strikingly direct and pointed” criticisms of Kuroda’s policies; his comments may “add to suspicions that it will be difficult for Kuroda to rally the board to further loosen policy unless the economy weakens considerable.” WSJ


  • Fri : EU 3Q GDP, US Employment, Canada Employment,
  • Mon: Japan Current Account, China Trade Balance, Japan Eco Watchers Survey, Canada Housing Starts, Australia NAB Business Confidence
  • Tue: US NFIB, Australia Home Loans, China CPI
  • Wed: RBNZ, Japan Machine Orders, UK RICS House Price Balance, AU Employment
  • Thu: US Retail Sales, Jobless Claims, New Zealand PMI