What A Larger Than Expected ECB QE Bond Purchase Program Means

What A Larger Than Expected ECB QE Bond Purchase Program Means
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The following are the comments from Henderson Rowe’s Artur Baluszynski and Kingswood’s Rupert Thompson, discussing the recovery of the EU economy, the worst contraction in employment and ECB’s QE Bond Purchase Program.

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Q1 2020 hedge fund letters, conferences and more

The Differing Indicators With Regards To The Recovery Of The EU Economy

Commenting on differing indicators with regards to the recovery of the EU economy, Artur Baluszynski, Head of Research at Henderson Rowe, said: “Lagging indicators such as the unemployment rate are showing a really bad state of affairs for the EU economy while leading indicators such as PMI are showing signs of recovery. The speed at which EU governments will choose to exit lockdowns and barriers to international travel will dictate the pace of the recovery from here. There might be a chance that Southern Europe can salvage what’s left of the Summer season, a prime time for seasonal hiring”.

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The Worst Contraction In Employment Since The Great Depression

Commenting on the worst contraction in employment since the great depression, Artur Baluszynski, Head of Research at Henderson Rowe, said: "Recent data shows that over 40 million Americans have filed for unemployment but the pace is decelerating which means that people are slowly starting to return to work. However, this figure means that we are looking at an unemployment rate of approximately 25% in the US. If one considers that it took only three months to achieve such a high figure, this must be the worst contraction in employment since the great depression".

ECB's QE Bond Purchase Program

Commenting on a larger than expected ECB QE bond purchase program, Rupert Thompson, Chief Investment Officer at Kingswood, said: The ECB has boosted the size of its covid-related QE bond purchase program by €600bn from €750bn to €1350bn and extended its operation until at least June 2021. The increase was somewhat larger than expected and follows recent moves by Germany and the EU more generally to step up their fiscal stimulus. The ECB move came despite the German Constitutional Court’s move a few weeks ago to stymie the ECB’s bond buying. These moves mean the EU, which has lagged considerably behind the US in terms of its policy stimulus, has now caught up some ground. Here in the UK, the MPC is also likely to step up its QE program, possibly at its next meeting on 18 June.”

About Henderson Rowe

Henderson Rowe is UK boutique wealth management firm that provides private clients with institutional-quality investment strategies and asset allocation solutions. Outside the private client space, Henderson Rowe’s affiliated companies serve global institutional investors both directly and through partnerships with some of the world’s largest asset managers.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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