Draghi moet zijn praatjes wel waarmaken als hij de plannen van de ECB gaat vertolken in de eerst komende speech voor de openbaarheid.
Zelfs als Draghi Spanje gaat steunen, dan zal dit (net als niet steunen) negatief uitpakken voor Spanje.
Het is de tussentijd tussen twee negatieven in, waarin de beurs kinderen weer hoop hebben en ballonnen opblazen. Ze mogen weer wat schuiven met schulden en getallen en verhoudingen en halen daar weer winst uit, zonder dat het economisch iets wezenlijks bijdraagt.
Een nieuwe LTRO werkt averechts leert de ervaring, want de zwakkere banken ontmaskeren zichzelf.
Het opkopen van Spaanse staatsobligaties is nadelig voor de Spaans houders van obligaties, want die komen niet op de eerste rij als het misgaat.
Een Duivelse spagaat.
Draghi In A Box
The jawboning party has come and gone, leading to a nearly 100 bps move tighter in Spanish spreads (from all time records of 7.6% just three days earlier), and now the hangover is here. Or, as Bloomberg puts it, Draghi is now in a box. “European Central Bank President Mario Draghi has boxed himself into a corner. Spanish and Italian bond markets rallied yesterday as investors cheered Draghi’s signal that the ECB is prepared to intervene to reduce soaring yields. Now he has to deliver, or face deep disappointment on financial markets, analysts said. The risk in doing so is alienating key policy makers on the ECB council, such as Bundesbank President Jens Weidmann. The Bundesbank reiterated its opposition to bond purchases today.” If this seems like a Catch 22 in which the ECB loses regardless of the outcome, that’s because it is. Luckily, no matter which path Draghi chooses, the time for talk is over, and now he has to act. Because with every day the ECB does nothing, the more credibility it loses.
“Draghi is damned if he does and damned if he doesn’t,” said Carsten Brzeski, senior economist at ING Group in Brussels. “He maneuvered himself into an extremely difficult situation. Expectations are very high.”
“I don’t believe you will see government bond purchases yet,” said Jacques Cailloux, chief European economist at Nomura International Plc in London. “But there are other things they can do that will help, such as lowering the haircut on sovereign bonds they accept as collateral or buying private sector securities.”
And repeating what we said yesterday morning following day#2 two of hollow promises (following Nowotny’s bluster about the ESM getting a banking license which will not happen)…
“It will be difficult to hold these gains without any actual action,” said Christoph Kind, head of asset allocation at Frankfurt Trust, which manages about $20 billion. “There’s still pressure on the spreads of the peripheral countries and I fear this is only a temporary narrowing.”
Also, as reported earlier, the Bundesbank has finally stepped into the fray in Angela’s absence:
The Bundesbank said restarting ECB bond purchases is not the best way to address the debt crisis.
“The Bundesbank has repeatedly expressed in the past that it views bond purchases critically because they blur the line between monetary and fiscal policy,” a spokesman said.
Finally, the ECB’s bazooka will once again be a dud:
“We still don’t think policy makers have done enough to make the market sit up and take note,” said Richard Urwin, head of investments at BlackRock Inc.’s Fiduciary Mandate Investment Team in London. That has left bond yields in weaker countries “too high to be sustainable,” he said.
“The ECB appears to be running out of conventional ammunition,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “What is left, however, is the ‘bazooka’,” he said, referring to large-scale interventions in troubled bond markets.
But whether or not the ECB has run out of money, or Europe’s politicians have run out of empty promises is, at the end of the day irrelevant: what matters is whether Europe has any actual money good assets. The answer is a resounding no.