Posts Tagged ‘ sarkozy ’

ECB Cuts Rates 25 Basis Points to 1% – Hawkish Press Conference Q&A Squashes Hopes of Sovereign Debt Purchases in Larger Amounts

December 8, 2011
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ECB Cuts Rates 25 Basis Points to 1% – Hawkish Press Conference Q&A Squashes Hopes of Sovereign Debt Purchases in Larger Amounts

The ECB issued a terse press release detailing an interest rate cut for the main refinancing operations of the Eurosystem (from 1.25% to 1.0%) commencing on December 14th. In addition, the ECB cut rates on the marginal lending facility and deposit facility by 25 basis points. This move was widely expected and had a limited impact on the euro or equity markets. The press conference and Q&A (45 minutes later) with financial reporters was where the real action took place. The only market friendly outcome was the announcement to extend lending to European banks from a one-year to a three-year term. The collateral requirements for these loans are also being loosened. The press conference was predominantly hawkish. When asked about hints earlier in the week that the ECB could...

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Europe’s Eleventh Hour Fix

October 27, 2011
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Europe’s Eleventh Hour Fix

After keeping the world on edge and pushing up against the brink of a European recession, details of the European fix are trickling out. It is sure to be a headline filled Thursday, Friday, and weekend. I won’t focus on the specific details because many of them still aren’t known and the ones that have been announced are likely to evolve regardless. Europe has recognized the enormity of its financial crisis. The European financial system couldn’t fund itself, sovereign interest rates started to spiral out of control, and the Euro experienced a rapid and unhealthy correction. It seems absurd to highlight that Europe recognized that this was collectively a very big problem but at times, even right up until the end, European leaders at any moment could seem either...

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A Commitment to Recapitalize European Banks is Bullish for US Financials

October 10, 2011
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A Commitment to Recapitalize European Banks is Bullish for US Financials

The Euro rallied 2% today against the USD causing a sharp reversal of crisis-fearing “risk off” trades which have been working against all financial markets around the world. The Euro rallied based on indications that France and Germany are going to work seriously towards recapitalization of the European banking sector. This has been one of the two necessary conditions for the confidence to return to Europe: 1) Sovereign debt crisis needs to be contained by capping interest rates for countries like Italy, Belgium, and Spain. This was the easy part because for now the ECB has the authority to buy the debt to cap rates. Eventually the EFSF will be expanded and debt will be purchased through this vehicle. 2) The financial system in Europe needs to be able...

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