What the ECB's Historic Move Means for the Euro

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June 5 (Bloomberg) -- Brean Capital's Peter Tchir and Societe Generale's Kit Juckes discuss ECB's targeted long-term liquidity plan and what it means for the European economy on Bloomberg Television's "Street Smart." (Source: Bloomberg)


I will start with you.

What do you think?

-0.1. is this going to help or too little too late question mark i think it is probably too little too late.

-- i think it is probably too little too late.

There were interesting parts where they talked about this abs program.

This is not the first time they have said they are not going to sterilize some of these purchases.

I think longer term that is a new tool.

It is not like europe is that many months behind the u.s. you think about it.

We went through our crisis.

Then they went through their crisis.

What, two years later.

We went through our quantitative easing program and low, low rates.

They are trained to do something similar.

The ecb for a long time has try to keep pressure on these countries, spain, italy, to reform.

It gives to the point where in inflation -- you have to do something about it.

Good to see you, buddy.

I am looking at euro/dollar right now.

We went south and then we went north again.

My question is, do these measures just encourage more eurozone investor flow?

What is your take?

They do encourage people to buy european stocks and peripheral european bonds performed well today.

Two interest rates are marginally flat on the day.

I do not think that this does much to get the euro lower until janet comes to help.

They will try to find new ways to ease monetary policy when the fed finally gets around to the second round of tightening and the second half of next year.

That is a different event.

We have taken some of these peripheral bonuses down and a more -- enormous instance.

2007 is half a lifetime ago in my career.

It is not in an ms -- an enormous amount.

What is important, people have assaulted the euro umpteen times.

The minute it does not keep going, the sellers back off pretty quickly.

I do not think we will get below$1.30 this year.


I want to go to mike mckee here.

We are watching an environment where we do not have a lot of strictures in the system, and yet the market manages to climb a little bit better day by day.

You see something like this, and investors get excited.

Actually we do have a lot.

Yeah, yeah, yeah.

Paper -- what about the tape or question marks above the taper is adding less.

-- what about the taper?

The taper is adding less.

The amount that the treasury is buying his last.

The treasury is selling fewer.

But the idea is janet yellen is trying to unwind this.

Not yet.

She will be.

The ecb, the question with the ecb is, how much stimulus are they actually going to be putting into the system?

The long-term lt ro -- ltro, is there a lot of take up for that?

Do banks really want to buy?

We have the same exact problem here, right, peter?

This reminds me of 2007. 2007. they cam out with the term option facility.

They thought the reason the banks were not buying more mortgages was because they could not afford them.

That was not the problem.

They did not want to because the people they were lending to were bad.

They are trying to create cheap money.

But that is not why the banks are not lending.

The banks are not lending because they do not like the risk.

The fed pushed money into the economy i buying securities.

So far, the european central bank is not pushing money -- is that strategy better in some way?

It does not appear to be better, but it shows us the limits of what monetary policy -- the ecb cannot just buy securities the way the fed can.


That is the inherent problem they have.

It is not supply of credit.

It is demand for credit.

Unless people want to start borrowing, it doesn't really matter.

There was a policy initiative.

There was another plan.

Kit juckes, we are used to hearing about plans from mario draghi and his magic tricks.

We do not see those come into effect.

Is this another one of those plans?

Well, the ltro --that is more money that will get to financial assets and boost those a little bit higher.

Adding the sugar, in mike's terms.

It is something.

He has a plan to boost the securities market, and getting help without the help of thanks to companies that need it.

That is a project that will take years and will not help with the immediate problem.

People are not very keen on bar wearing because they are start by the crisis.

Banks are not keen on lending because they have been criticized about making bad loans.

Europe's problems with unemployment are much harder than you up at any point in the united states.

There is not much mario draghi can do about that.

Hang on, kit.

We did not start until qe 1. everything there talking about is still lending, not taking risk.

Someone has to take risk.

Where does this lead?

Where does this leave equity investors?


would you buy into europe right now based on the -- i do want to see where we come out tomorrow on our nonfarm -- are we talking about buying u.s. equities or european equities?

European, but i want to see, because we are having a pullback in our economy.

What are you thinking tomorrow?

175. you are bearish.

215? to 15. the last four years, we have seen march, april, may at the peak and then employment come down.

I think there are questions with the numbers that have never been

This text has been automatically generated. It may not be 100% accurate.


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