ECB quantitative easing: Question everything

first_imgAmazingly, it has taken us more than four years to get here. Perhaps even more amazingly, the QE has arrived long after the apparent crisis point for the euro-zone has passed – the hair-raising weeks of 2012 when Greece looked to be on its way out of the single currency and peripheral bond yields were rocketing skywards. Today, Spain’s 10-year bonds barely yield 1.5%, and the euro has weakened enough to generate a healthy current account balance.The ultimate and most politically controversial of emergency monetary measures comes not in response to impending crisis but in pursuit of the central bank’s core mandate of price stability. Some have said today’s decision is the logical conclusion of current president Mario Draghi’s promise, at the height of the crisis, to do “whatever it takes” to preserve the single currency’s integrity. But, in fact, it is simply the logical and possibly the only way the ECB can pursue its core mandate as deflation takes hold and its interest rates bump up against the zero bound. (While the Swiss National Bank has recently shown a possible way forward into the strange world of deeply negative rates, it is notable the ECB kept all of its rates unchanged today).Does deflation represent a threat to the integrity of the single currency? Given the indebtedness of some members, it certainly could, if left to fester, Japan-like, for a long time. Does the market anticipate such an outcome? Looking at the way it has been pricing things over recent weeks, one would have to conclude that it does.Not only have bond yields and inflation breakevens been plummeting – while the oil price has halved, gold has been getting a bid for the first time in ages, which suggests investors have started thinking about it as a currency without a counterparty again, rather than just another commodity, and are no longer turned off by the thought of holding an asset that generates zero income.This is why the way markets responded to today’s news is so important. The central bank came out with a slightly stronger package than expected, and all of the pro-QE plays that had been selling-off over the last couple of days caught a bid: yields were back down, slightly, and the euro sold off modestly. Gold headed back through $1,300/oz. It was looking like we would get a classic case of buying the rumour and selling the news – which, by the way, is precisely what we saw around the QE decisions from the Bank of England and the US Federal Reserve. That would have been a comforting sign that a lot of the positioning taken up over the past month or so has been technically rather than fundamentally driven: speculators on the margins making sure they caught the up-draught into the increasingly inevitable ECB QE decision, rather than hunkering down for a long haul of falling consumer prices and stagnating growth.Should we revisit that thesis in the light of today’s moves? Not necessarily. The modestness of those moves suggests they are not reflective of market disappointment but rather of appreciation that the central bank really is serious this time. The open-ended nature of the programme Draghi described in the press conference was notable, for example. The response of stock markets back this interpretation up.It’s early days, but if this more optimistic take on things sticks over the next days and weeks, we could be seeing the beginnings of what could be a powerful bull market in European risk assets – but perhaps not the long-overdue and much-needed correction in safe-haven rates. IPE’s Martin Steward analyses today’s long-awaited European Central Bank announcement“We are not running money printing presses,” said the president of the ECB.That was in the early summer of 2010, the man in charge was Jean-Claude Trichet, and he was reassuring French radio listeners that the recent decision to begin sterilised secondary-market purchases of private and government bonds was not the prelude to US and UK-style QE. He needed to do so because the central bank was running desperately low on credibility. Days earlier, Trichet had insisted this big step had not even been discussed; and the ECB had previously broken its promise that “no state can expect special treatment” on collateral eligibility requirements in order to try and get on top of the worsening Greek debt crisis.In my opinion column for IPE at the time, I made the fairly unsophisticated argument that the losses of the financial crisis were in the process of being socialised through the ECB, and that this would happen either through defaults on debts that were now held at the ECB, or through the soft default of “runaway inflation” as the euro was trashed with a massive programme of all-out QE.last_img read more

The next big QLD building trend

first_img FOLLOW US ON FACEBOOK Metricon created a special arm to help homeowners navigate council approvals for multiple occupancy homes.Mr Ryan warned not all lots were suited to dual occupancy and navigating council zoning and town planning requirements could be tedious.“There are precincts where dual occupancy is appropriate and others where it is not,” he said. “DualOcc by Metricon is designed to assist people through that journey.” Sydney and Melbourne had led the trend out, he said, particularly off extended families and investors. Home designs have changed to take into account bigger households again.More from newsParks and wildlife the new lust-haves post coronavirus11 hours agoNoosa’s best beachfront penthouse is about to hit the market11 hours agoIn Queensland interest was likely to increase as land supply dwindled and councils looked to alternatives for high-rise apartments, he said.“Councils need to be looking or other options to bring more density because not everyone wants to live in a tower and not everyone wishes to live in a townhouse.”Mr Ryan said major benefits of dual occupancy included additional density, and potential extra income at a time when house prices in Brisbane were increasing. “A growing group now want to explore what development is possible on their existing land.“One of the major advantages of dual occupancy homes is the potential to make more income from a single land title.”Dual occupancy developments were classed as two or more homes on a single block of land.The developments could be multi-dwellings with one behind the other, a duplex, side-by-side attached dwellings, or a combination of all those. Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:58Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:58 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD432p432p216p216p180p180pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenHow much do I need to retire?00:58 MORE: Robin Bailey lists Brisbane home Creating homes that accommodate multiple generations or families will become more important for Queenslanders, according to Metricon.“Often it’s people whose blocks are zoned for dual occupancy or who might be looking to maximise the yield of their lot.“In other cases, people might have owned a lot for a while and the zoning has now changed.“In many instances people are looking to stay in one part of the dual occupancy property and rent or sell the other.”center_img Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 1:11Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -1:11 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD540p540p360p360p270p270pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreen5 tips to style your home for sale01:12 Home building company Metricon is betting the next major trend in Queensland’s southeast corner will be dual occupancy homes.The next major home trend is being driven by house price rises, dwindling land supply, and buyers trying to make the most of their investment, according to a Queensland mega builder.Home building company Metricon is betting that dual occupancy homes will see the biggest demand going forward especially in South East Queensland. Sale of the century Wake up to ocean views Metricon’s Queensland general manager Peter Ryan said DualOcc — a specialist duplex and dual occupancy service — was created to simplify the approval and building process for property owners in Queensland and northern New South Wales.“We’ve seen a lot of requests for dual occupancy, particularly in areas like the Gold Coast and pockets of Moreton Shire,” he said.last_img read more