Market update: Draghi tries to deliver but investors don’t celebrate, Chinese exports collapse

8 Mar

by Mihály Tatár


Good Morning!


  • And Draghi indeed tried to deliver: The ECB announced that there will be no rate hikes this year, that it will offer fresh two-year cheap loans to banks, and downgraded its 2019 Eurozone growth forecast from 1.7% to 1.1%. As a result, the EURUSD dropped to 1.12 and Eurozone bond yields plunged (German 10Y yield 0.06%!), but the ungrateful market was less than happy: The ECB seemed to confirm that the Eurozone’s Japanification (zombie economy and forever central bank easing) is now fully underway. (Banks dropped 3.5% – lending won’t make you rich in this environment. What will the ECB do if growth slows further? The interest rate is already -0.40%. Germans will need to save even more and spend less to prepare for pension years. How long will Trump tolerate that Europeans try skip structural reforms by weakening the Euro and making US exports brutally expensive?) This, together with the news – only not shocking for regular readers – that Chinese exports crashed by 21% in February Y/Y (ups!, altough holidays distorted the data a bit), made investors accelerate taking profits (SPX -0.81%, Nasdaq -1.13%, DAX -0.60%, Nikkei -2.06%, Shanghai -3.26%, Copper -1%, EURHUF 316.30, EURPLN 4.313).


  • Just as France – after several years of tough talking – unveiled a 3% digital- services tax on big tech companies (expected to raise around eur 500 million a year – the big tech must really feel crushed now!), Facebook went full in on the ’Facebook coin’, a potential global currency that can be used in transactions anywhere in the world by Facebook, WhatsUp and Instragram users. (The inspiration, of course, comes from China’s AliPay, where users already pay for example utility bills to official government accounts. Looking from this angle, Zuckerberg’s promise that they will from now focus on user privacy and not on stealing users’ data, is just self-serving.)



Have a nice day,



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