The European Central Bank (ECB) will find itself the only game in town soon. It is the only major central bank still buying bonds hand over first, and therefore it is dictating the pace for private investors.
This is going to be a crucial year for the European Union. There are more and more voices predicting its disintegration. With the political events that are ahead, it’s not a possibility that should be taken lightly.
Politics are back in play in most of Europe, and this doesn’t bode well for central bankers. Even the almighty European Central Bank had a moment of weakness last week, when it broadcast a message so complicated to markets that it should not be surprised it fell wide of the mark.
Stock markets swooned again last Friday, when the US jobs report showed the number of jobs created in January was well below expectations, at 151,000 compared with the 190,000 forecast by analysts.
Investors can no longer find comfort in turning bad news into good news, as they once did because any piece of bad economic news meant the Federal Reserve held interest rates rather than hike them.
With the recent stock market collapse and bear market, the critics of capitalism are out in force again; shouts that capitalism is dead or that capitalism is what caused this mess are growing louder.
Investors are extremely bearish for the short term, just before a crucial decision by the Federal Reserve on whether it would raise interest rates or not later this week.
Exchange traded fund (ETF) traders have been positioning “aggressively” for a Santa Claus rally, but contrarian investors would say this is a negative thing for the short-term market outlook, according to analysts at TrimTabs Investment Research.
Easy credit has led to all sorts of distortions in the markets, and an obvious one has been the surge in share buybacks, which have kept stock prices elevated and have boosted earnings per share.
This week is one of the most important ever for central banks around the world – they just don’t realise it yet. Or maybe they do.
Ahead of the November meeting of the European Central Bank’s Governing Council, investors believe the ECB will end up having to buy sovereign bonds, a survey revealed.