Central bankers send subliminal message

Central bankers send subliminal message

April 29, 2020

This week we have three major central bank meetings—the Fed, the BoJ and the ECB. In the absence of a Covid-19 bond in Europe, it's hard to see what the ECB can say that would be new or even interesting. It will presumably increase QE. The same thing is true for the Fed, which has been hyper-active and while not getting praise about being behind the curve. The BoJ's announcement that it will buy corporate bonds (and commercial paper) is highly favourable in more than one way—it shows the BoJ is open minded to making a change.

The question remains if these central bankers are talking to one another. Normally they do but with Trump the main centre of attention and causing a disturbance within the G7 its hard to really know what is being said.

In addition to the Fed, we get 34% of the S&P companies reporting Q1 earnings which makes for a very big week in stocks. Tech have started the week followed by the anticipated vulnerable sectors such as retail. Even though its not Q1 that counts but rather the outlook and guidance for Q2, companies and investors will be on edge as the forecasts may show at the end of the year that Q1 was the best of the year.

The GDP  result was better than expected and the bright side is that almost 85% in the survey see Q3 recovering, which has to be wishful thinking since we simply do not know what shape the pandemic will take us into over July-Sept, never mind the fall when experts warn to expect a resurgence.

More fiscal stimulus on the way? I think so...


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