A new round of quantitative easing may be on Mario Draghi's mind but how much and when is far from clear. Reuters
A new round of quantitative easing may be on Mario Draghi's mind but how much and when is far from clear. Reuters

ECB's move to cut quantitative easing should raise concerns



If governments, companies and markets needed any further reminders that their operating environment is changing, they got it last week.

Despite weakening economic momentum and volatile financial markets, a second systemically important central bank, the European Central Bank, reiterated its intention to stop using large liquidity injections to support economic activity and asset prices. The change in this “global factor” is translating into a volatility “regime change” in markets, requires an evolution in investment strategies, and calls for compensating pro-growth policy measures on the part of many individual countries.

The ECB's October 25 announcement that its governing council still intends to stop large-scale asset purchases, known as quantitative easing or QE, at the end of the year occurred in the context of what central bankers acknowledge is an increasing list of threats to their economies. At a news conference after the central bank's policy meeting, ECB president Mario Draghi said the risks include an uncertain trade regime, pressures in emerging markets, politics and the budgetary confrontation between Italy and the European Union. And by stating that the “ECB mandate does not involve financing government’s deficit,” Mr Draghi emphasised the implicit message that neither governments nor markets can continue to rely on regular, large and predictable liquidity injections to offset their own problems.

The ECB’s signals reinforce those that the Federal Reserve has been sending for a while now. Despite weakness in housing, a historical indicator of cyclical trends for the US economy, and notwithstanding complaints by US President Donald Trump, top Fed officials continue to leave no doubt of their intention to further hike interest rates while reducing the bank’s balance sheet. Moreover, this Fed team, unlike its predecessors, is less inclined to resort to soothing words to calm unsettled markets.

The increase in market instability should come as no surprise. It was clear from early in this (now-ending gradually) exceptional monetary-policy phase that central banks' "unconventional policies" were aimed at repressing volatility as a means of promoting economic activity. Also, central banks have been consistent and clear about their intentions to exit this phase as economic conditions allow.

The resulting journey away from the prolonged implementation of unconventional policies inherently involves more financial and economic volatility. This is especially true given how much market participants have downplayed liquidity risk in certain segments and how many governments have been slow in implementing pro-growth structural reforms. What the destination will look like remains an open question, however. The outcome essentially depends on the orderliness and comprehensiveness of the hand-off to better economic and corporate fundamentals, as well as the reset of market technicals.

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Read more:

Euro zone growth runs out of steam as Italy fears grow

European Central Bank cannot rescue Italy without EU bailout, sources say

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As I have argued, this transition is made more uncertain by the divergent economic performances within the advanced world, as well uncertainty about trade policy. It will also be tested by two elements: pockets of excessive risk-taking that emerged during the prior period of ample liquidity (from the excessive reach for yields, including through off-benchmark investor exposures, to the spread of products that implicitly promise immediate liquidity at reasonable bid-off spreads notwithstanding the inherently structural illiquid nature of the underlying assets); and the extent to which certain governments and corporates used the period of unusually low interest rates to pile on too much debt and allow excessive currency mismatches to emerge.

The message to governments, corporates and market participants is clear: central banks are dead serious about getting out of the business of suppressing volatility and the process could be approaching critical mass. Much like what happens to you when you take off those fancy noise cancellation headphones in mid-flight on a plane and notice all sorts of noises around the cabin, markets and economies are becoming more sensitive as QE and guidance on low rates decay.

Economic actors and market participants need to get ready for greater environmental instability as monetary policy transitions away from unusual and experimental measures to historically more recognisable ones. This change has the potential to place both the global economy and markets on a more solid fundamentally-based foundation over the longer-term. But it also requires timely adaptations in both or the possibility of the better could give way to the agony of the worse.

Bloomberg

Vidaamuyarchi

Director: Magizh Thirumeni

Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra

Rating: 4/5

 

Game Changer

Director: Shankar 

Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram

Rating: 2/5

The biog

Favourite car: Ferrari

Likes the colour: Black

Best movie: Avatar

Academic qualifications: Bachelor’s degree in media production from the Higher Colleges of Technology and diploma in production from the New York Film Academy

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Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
  • Stay invested: Time in the market, not timing the market, is critical to long-term gains.
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Paatal Lok season two

Directors: Avinash Arun, Prosit Roy 

Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong

Rating: 4.5/5

No Shame

Lily Allen

(Parlophone)

German intelligence warnings
  • 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
  • 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
  • 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250 

Source: Federal Office for the Protection of the Constitution

COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
At a glance

- 20,000 new jobs for Emiratis over three years

- Dh300 million set aside to train 18,000 jobseekers in new skills

- Managerial jobs in government restricted to Emiratis

- Emiratis to get priority for 160 types of job in private sector

- Portion of VAT revenues will fund more graduate programmes

- 8,000 Emirati graduates to do 6-12 month replacements in public or private sector on a Dh10,000 monthly wage - 40 per cent of which will be paid by government

How green is the expo nursery?

Some 400,000 shrubs and 13,000 trees in the on-site nursery

An additional 450,000 shrubs and 4,000 trees to be delivered in the months leading up to the expo

Ghaf, date palm, acacia arabica, acacia tortilis, vitex or sage, techoma and the salvadora are just some heat tolerant native plants in the nursery

Approximately 340 species of shrubs and trees selected for diverse landscape

The nursery team works exclusively with organic fertilisers and pesticides

All shrubs and trees supplied by Dubai Municipality

Most sourced from farms, nurseries across the country

Plants and trees are re-potted when they arrive at nursery to give them room to grow

Some mature trees are in open areas or planted within the expo site

Green waste is recycled as compost

Treated sewage effluent supplied by Dubai Municipality is used to meet the majority of the nursery’s irrigation needs

Construction workforce peaked at 40,000 workers

About 65,000 people have signed up to volunteer

Main themes of expo is  ‘Connecting Minds, Creating the Future’ and three subthemes of opportunity, mobility and sustainability.

Expo 2020 Dubai to open in October 2020 and run for six months

COMPANY%20PROFILE%20
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3EAlmouneer%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202017%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Dr%20Noha%20Khater%20and%20Rania%20Kadry%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EEgypt%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%20%3C%2Fstrong%3E120%3Cbr%3E%3Cstrong%3EInvestment%3A%20%3C%2Fstrong%3EBootstrapped%2C%20with%20support%20from%20Insead%20and%20Egyptian%20government%2C%20seed%20round%20of%20%3Cbr%3E%243.6%20million%20led%20by%20Global%20Ventures%3Cbr%3E%3C%2Fp%3E%0A
Cryopreservation: A timeline
  1. Keyhole surgery under general anaesthetic
  2. Ovarian tissue surgically removed
  3. Tissue processed in a high-tech facility
  4. Tissue re-implanted at a time of the patient’s choosing
  5. Full hormone production regained within 4-6 months
How to help

Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200

COMPANY%20PROFILE
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The Sand Castle

Director: Matty Brown

Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea

Rating: 2.5/5

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Engine: 3-litre twin-turbo V6

Power: 400hp

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Transmission: 9-speed automatic

Price: From Dh215,900

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