{"id":955,"date":"2012-03-30T14:00:00","date_gmt":"2012-03-30T14:00:00","guid":{"rendered":"http:\/\/starthostunlimiteddmffassi-ss.stackstaging.com\/bondworld.ch\/home\/sites\/20b\/7\/760c69a11c\/public_html\/investmentworld.ch\/index.php\/2012\/03\/30\/viewpoint-the-april-meeting-of-the-ecb-should-prove-rather-interlocutory\/"},"modified":"2012-03-30T14:00:00","modified_gmt":"2012-03-30T14:00:00","slug":"viewpoint-the-april-meeting-of-the-ecb-should-prove-rather-interlocutory","status":"publish","type":"post","link":"https:\/\/www.investmentworld.eu\/ch\/viewpoint-the-april-meeting-of-the-ecb-should-prove-rather-interlocutory\/","title":{"rendered":"Viewpoint: The April meeting of the ECB should prove rather interlocutory"},"content":{"rendered":"

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The April meeting of the ECB should prove rather interlocutory. The central bank will confirm that<\/div>\n

no further 36-month LTROs are on the cards,…. <\/strong> <\/p>\n

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For professional investors and advisers only<\/strong><\/p>\n

given the improvement in market conditions and the stabilisation of the scenario. Debate over the removal of extraordinary measures is legitimate, butchances of this happening are still remote, as the underlying economic situation remains fragile. <\/p>\n
–  The April meeting of the ECB should prove rather interlocutory. Already on occasion of its  March meeting, the ECB had signalled it is waiting to verify the effects of its 36-month LTROs on market conditions and the credit trend. In recent weeks the ECB has confirmed this stance. Therefore, we continue to expect an extended pause in monetary policy actions, and no particular news should come from Frankfurt next week. In our view the ECB will not announce further 36-month auctions unless a catastrophic turn of events materialises. Indications in this direction have come from several members of the ECB\u2019s Governing Council, the latest being Makusch (27\/03\/2012) of the Bank of Slovakia, who said that \u201cthe ECB considers what it has done to date sufficient, and is not planning a new round of three-year auctions.\u201d Governor Draghi, in a recent speech on occasion of the annual meeting between the ECB and German banks (26\/03\/2012), reasserted that the ECB considers the overall picture to be clearly improving:  \u201cthere are signs of stabilisation in both financial markets and overall economic activity, albeit still at low levels\u201d.<\/div>\n
– We share the ECB\u2019s position on the improvement of the balance of risks allowed by the auctions, and we believe that as uncertainty eases, the economy will stabilise, albeit at modest levels. We continue to forecast a moderate  recession in the euro area this year, and see a gradual return to positive growth only in 2013  (see below). However, the picture is a highly fragmented one, as growth is being driven by France, Germany and Northern European countries, whereas we expect severe recessions in Italy, Spain, Portugal and Greece. Risks to our estimates remain skewed to the downside, although they have eased significantly compared to three months ago.  In a context of below-trend growth, and with inflation in 2013 lower than 2%, with downside risks to growth and balanced risks for what concerns medium-term inflation, an interest rate hike does not seem to be on the cards before well into 2013. At the ECB\u2019s latest press conference, emphasis was placed on the trend of consumer prices, but we believe the rhetoric was aimed at indicating that the ECB has not sidelined its price stability objective, despite the generous actions put in place to fight the systemic effects of the crisis. On this topic, in the speech mentioned above Draghi said that \u201cwe would expect an impact on inflation and asset prices only following a sustained and strong increase in money and credit \u2013 not following an increase in central bank liquidity per se\u201d. And this is certainly not the case. The ECB has \u201ca range of tools at its disposal to absorb excess liquidity\u201d, if necessary.<\/div>\n
– We do not think the April press conference will provide indications on the exit strategy from extraordinary measures, despite concerns in Germany for the increasing risks the ECB is facing as a result of its LTROs and the new rules on collateral. We believe Mr. Draghi will instead say that it is early days yet to think of an exit. The underlying picture remains fragile.  Full allotment will stay in place at least until July, and probably until the end of 2013 on ordinary operations. A step back on the new rules on collateral is unlikely, as Draghi himself stressed that  \u201cthe Eurosystem is being very careful to manage any risks: [\u2026] on the additional collateral presented so far, the average haircut is 53%\u201d. It must be said that the decision taken by the ECB\u2019s Governing  Council on 21 March that national central banks are not obliged to accept in repos bank bonds guaranteed by states that are involved in a EU-IMF assistance programme, should not be viewed as a restriction on collateral. We believe the decision relieves the NCBs of other euro area countries from the obligation, but does not limit the use of this instrument by domestic banks to access ECB funds.<\/div>\n

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Appendix
<\/strong> <\/p>\n

Analyst Certification<\/strong>
The financial analysts who prepared this report, and whose names and roles appear on the first page, certify that: (1) The views expressed on companies mentioned herein accurately reflect independent, fair and balanced personal views; (2) No direct or indirect compensation has been or will be received in exchange for any views expressed. Specific disclosures: The analysts who prepared this report do not receive bonuses, salaries, or any other form of compensation that is based upon specific investment banking transactions.<\/p>\n

Important Disclosures<\/strong>
This research has been prepared by Intesa Sanpaolo S.p.A. and distributed by Banca IMI S.p.A. Milan, Banca IMI SpA-London Branch (a member of the London Stock Exchange) and Banca IMI Securities Corp (a member of the NYSE and NASD). Intesa Sanpaolo S.p.A. accepts full responsibility for the contents of this report. Please also note that Intesa Sanpaolo S.p.A. reserves the right to issue this document to its own clients. Banca IMI S.p.A. and Intesa Sanpaolo S.p.A. are both part of the Gruppo Intesa Sanpaolo. Intesa Sanpaolo S.p.A. and Banca IMI S.p.A. are both authorised by the Banca d’Italia, are both regulated by the Financial Services Authority in the conduct of designated investment business in the UK and by the SEC for the conduct of US business.
Opinions and estimates in this research are as at the date of this material and are subject to change without notice to the recipient. Information and opinions have been obtained from sources believed to be reliable, but no representation or warranty is made as to their accuracy or correctness. Past performance is not a guarantee of future results. The investments and strategies discussed in this research may not be suitable for all investors. If you are in any doubt you should consult your investment advisor.
This report has been prepared solely for information purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any financial products. It should not be regarded as a substitute for the exercise of the recipient\u2019s own judgement.
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Intesa Sanpaolo S.p.A. has formalised a set of principles and procedures for dealing with conflicts of interest (\u201cResearch Policy\u201d). The Research Policy is clearly explained in the relevant section of Banca IMI\u2019s web site (www.bancaimi.com).
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Valuation Methodology<\/strong>
Trading Ideas are based on the market\u2019s expectations, investors\u2019 positioning and technical, quantitative or qualitative aspects. They take into account the key macro and market events and to what extent they have already been discounted in yields and\/or market spreads. They are also based on events which are expected to affect the market trend in terms of yields and\/or spreads in the short-medium term. The Trading Ideas may refer to both cash and derivative instruments and indicate a precise target or yield range or a yield spread between different market curves or different maturities on the same curve. The relative valuations may be in terms of yield, asset swap spreads or benchmark spreads.

Coverage Policy And Frequency Of Research Reports<\/strong>
Intesa Sanpaolo S.p.A. trading ideas are made in both a very short time horizon (the current day or subsequent days) or in a horizon ranging from one week to three months, in conjunction with any exceptional event that affects the issuer\u2019s operations. In the case of a short note, we advise investors to refer to the most recent report published by Intesa Sanpaolo S.p.A\u2019s Research Department for a full analysis of valuation methodology, earnings assumptions and risks. Research is available on IMI\u2019s web site (www.bancaimi.com) or by contacting your sales representative.<\/p>\n

Source: BONDWorld – Intesa Sanpaolo \u2013 Research Department<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

The April meeting of the ECB should prove rather interlocutory. The central bank will confirm that no further 36-month LTROs are on the cards,….<\/p>\n","protected":false},"author":2,"featured_media":3455,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"telegram_tosend":false,"telegram_tosend_message":"","telegram_tosend_target":0,"footnotes":"","_wpscp_schedule_draft_date":"","_wpscp_schedule_republish_date":"","_wpscppro_advance_schedule":false,"_wpscppro_advance_schedule_date":"","_wpscppro_dont_share_socialmedia":false,"_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_google_business_share_type":"","_selected_social_profile":[],"_wpsp_enable_custom_social_template":false,"_wpsp_social_scheduling":{"enabled":false,"datetime":null,"platforms":[],"status":"template_only","dateOption":"today","timeOption":"now","customDays":"","customHours":"","customDate":"","customTime":"","schedulingType":"absolute"},"_wpsp_active_default_template":true},"categories":[50],"tags":[],"class_list":["post-955","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-weekly-analysis"],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":6}},"_links":{"self":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/955","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/comments?post=955"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/955\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media\/3455"}],"wp:attachment":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media?parent=955"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=955"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=955"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}