Euro closer to printing money
Overnight German business confidence dropped for a 5th straight month and more than analysts predicted as the Euro’s supposed engine room and largest economy struggles with the effects of sanctions and consistently high unemployment. Germany’s economy contracted in the 2nd quarter of this year and the Eurozone has stalled prompting the ECB to ramp up its stimulus.
But the first round of near zero interest loans to banks was not taken up to the extent they hoped ($81b compared to $150b) meaning outright QE style sovereign bond buying now looks definite especially given the largest protestor of this was Germany who may now see that it is their only option to prevent deflation. Predictably the ECB last night alluding to exactly that contributed to the S&P500 rallying as the ECB steps in on the money printing the Fed is tapering out of. The free money party continues and the can gets kicked further down the round…