BOFA ML sees further strength in the Swedish Krona
Bank of America Merrill Lynch’s global research expects the Swedish krona to gradually gather further traction and the Riksbank to refrain from easing further in the medium term. Some key quotes are:
"As we move into 2016, however, we see less urgency for the Riksbank to maintain the level of aggressive policy response that has characterised this past year"
"With the Swedish economy performing well, supported by accommodative policy and also benefiting from a pickup in the Eurozone - Sweden’s main trading partner - it will become prudent to reduce the intensity of accommodation"
"Tightening remains well in the future, but a less proactive policy stance should allow SEK to appreciate gradually vs EUR, in line with our forecasts and consistent with the RIksbank’s own expectations
Draghi fails to offer further clues
Speaking at the Bank of England’s Open Forum this afternoon, ECB President Mario Draghi discussed completing banking union in the Eurozone, but failed to mention anything regarding monetary policy.
Draghi said that the union is a fully equipped single resolution mechanism and a uniform deposit insurance scheme whilst adding that cross border markets need governance to be truly free. An example of good governance given by the Italian was the ECB-BOE initiative on Asset Backed Securities (ABS).
Merkel advisers urge ECB to phase out easing earlier
The European Central Bank should scale back or stop quantitative easing sooner than planned because governments alone can’t counter the side effects of its monetary poicy, according to German Chancellor Angela Merkel’s council of economic advisers.
The panel of five leading economists said in an annual report that "low interest rates pose risks for financial stability and erode the business models of banks and insurers over the medium term".
The German economy, Europe’s biggest, is forecast by the panel to expand by 1.7 percent this year and 1.6 percent in 2016. While a record influx of refugees will increase public spending by as much as 22.6 billion euros ($24 billion) in the two years, the federal government will be able to maintain a budget surplus, the report said.
Carlsberg set to cut 2000 jobs; time to drown their sorrows after a slowdown in demand from China and Russia.
After the happy ending for the SABMiller and Ab InBev merger, the same could not be said about Carlsberg’s earnings out today. After Carlsberg missed earnings estimates; the Danish brewer said it would cut 2000 jobs or around 15% of it its work force in order to save costs. Carlsberg posted a $650 million loss in the third quarter due to poor performance in Russia and in the Asian market. CEO Cees’t Hart said Carlsberg acknowledges "that the profit development of recent years has not been satisfactory."