Posted by sharktank > 2016-03-10 20:32 | Report Abuse

ouch...got me. : )

Posted by Icon8888 > 2016-03-10 20:48 | Report Abuse

now is your turn to dig out my sheet

show me how I was rude to good people

Posted by PlsGiveBonus > 2016-03-10 20:48 | Report Abuse

Markets are gearing up for an expected rate cut from the European Central Bank on Thursday, but stock investors shouldn’t get too excited about the prospects of lower interest rates, according to some analysts.

Looser monetary policy—such as rate reductions—usually spark a rally in the stock markets, but when it means yanking the deposit rate further into negative territory, the easing could end up doing the opposite, according to J.P. Morgan Chase JPM, +0.58% analysts.


In a report out earlier this week, the bank outlined how major economies with rates below zero, such as the eurozone, Japan and Switzerland, all have suffered stock-market losses since negative interest-rates policies (NIRP) were introduced. Eurozone equities are down 4.6%, Swiss stocks have lost 9%, while in Japan stocks have dropped 6.7%, as laid out in the chart below, published on Monday.



“NIRP has been counterproductive for equities so far where it was put in place, in Japan, the eurozone, Sweden, and Switzerland. We are a bit concerned about how NIRP is negatively impacting the banks and we think the banks should rather be helped to lead to better economic growth going forward,” said Emmanuel Cau, equity strategist at J.P. Morgan.

“It’s hard to see the eurozone economy growing materially, if banks do not lend more,” he added.

Read: Will Portugal be next flashpoint in eurozone debt crisis?

Lower interest rates are aimed at boosting a flagging economy by making lending cheaper and encouraging investing and fueling purchases. The ECB deposit rate currently sits at minus 0.3%, but is expected to be cut to minus 0.4% on Thursday in an effort to lift inflation, which currently stands at negative 0.2%. That is far below the ECB’s target of near, but just below 2%.

Read: 5 things to watch for at Thursday’s key ECB meeting

Several economists have spoken out against the use of negative interest rates, arguing it hurts bank’s profitability and effectively works as a tax on the financial system. With the banks in poor shape, there are fears NIRP could derail the economic recovery and continue to keep a lid on inflation and growth.

These concerns have weighed hard on the banking sector. In Europe, the Stoxx Europe 600 banks index FX7, +0.54% is down 16% year-to-date, compared with a 7.2% loss for the broader Stoxx Europe 600 SXXP, +0.62% This is less an issue in Denmark, where negative rates also are in play, because banks aren't as heavily weighted in its main benchmark OMXC20, +0.23%

“Banks constrained by negative rates may seek to recoup some of their lost profit by increasing rates on new loans and thus tighten financial conditions, which major central banks would likely view as a counterproductive response to their easing,” analysts at Bank of America Merrill Lynch BAC, +0.61% said in a note.

So what is the ECB to do at its meeting this Thursday? J.P. Morgan’s Cau said another cut to the deposit rate is unlikely to help sentiment. He said Draghi & Co. instead should instead come up with a way to fight low inflation without hobbling the banking sector’s profitability. This could happen through another round of cheap, long-term loans and a tiered-deposit system where some of the excess liquidity from banks would be placed at the ECB at a rate above the deposit rate.

Read: Here’s what a ‘radical’ European Central Bank would do

“I think the markets are becoming more and more skeptical about the endgame. Will these policies be successful, or are they just a reflection of policy makers being desperate to find the right tools to combat low inflation?,” Cau said.

“The endgame is whether inflation expectations will go up, if the ECB succeeds, in boosting inflation expectations, whichever tool they use, that will be a very good development for the market,” he added.

Read: Disappointment reigns as ECB’s QE celebrates anniversary

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Posted by Icon8888 > 2016-03-10 21:04 | Report Abuse

I only scold rude people like paperplane, optimus, coldrisks, Desa. They all deserve it (never scold sharktank also, even though I think he is negative)

show me how I use vulgar words to scold nice people and I will apologise

otherwise you just shut up

Posted by PlsGiveBonus > 2016-03-10 21:33 | Report Abuse

Fed reduce interest but tighten up loan requirement and they hope the market to react positively
Too bad the fed only can save the market by printing more money.

Posted by Icon8888 > 2016-03-10 21:34 | Report Abuse

I scolded you not because of your religion discussion in NSOP thread, moron

I scolded you because you joined paperplane to scold me even though it is none of your business. I have never offended you before, why you so busybody ? Paperplane is well known to be a bad guy. I think I have a reason to scold him. Why on earth you want to sinkalan and put a leg in to defense him ? that is why i taruh you loh, moron

Posted by Coldrisks > Mar 10, 2016 09:14 PM | Report Abuse

I hardly scold anybody, you come and scold me the other day in NSOP that I was stupid, who was rude. Scold yourself for being rude to me.

Posted by Icon8888 > 2016-03-10 21:42 | Report Abuse

shut up lah

Posted by popcorn > 2016-03-10 22:37 | Report Abuse

lets scold away bad luck and welcome good luck la~

Posted by paperplane2016 > 2017-06-13 07:20 | Report Abuse

Icon. Your ego growing too big thinking you are the best. Your karma will come one day. Good luck to you.

Posted by paperplane2016 > 2017-06-13 07:24 | Report Abuse

No one own this forum. It is free and this country is Democratic. When people said something you don't like you said ppl rude. Then where got different between you and an orang utan staying inside cave. Grow up and be mature icon. Don't be surprised some living in 80,90 of age still behave like a kid