Reuters Insider - Is Mario Draghi losing his magic touch?

Baader Bank AG

04/12/2015 15:23

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        Markets head for a despondent end to the week as  
                     disappointment sets in over Mario Draghi's policy 
                     moves. Does the ECB chief have any more tricks up 
                     his sleeve?                                       
 
 
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Transcript (May be auto-generated)

                 It all seemed so promising. Supermario one minute, the Grinch the next. So where
did it all go wrong for Mario Draghi? Baader Bank's Robert Halver. He 
disappointed markets. He also disappointed himself because he previously 
suggested totally different things: he suggested that deposit rates would be cut
further to minus 0.4, now we have minus 0.3. That and an extension to the ECB's 
bond buying program were supposed to help drive down the euro. But instead had 
the opposite 

effect. The failure to increase the size of the stimulus sending the single 
currency to its biggest one-day surge in seven years while shares continue to 
tumble. Germany's DAX set for a weekly fall of almost 5%. BGC's Mike Ingram. The
problem with having a reputation of always over-delivering is that sooner or 
later you are inevitably going to under-deliver because markets, of course, 
recalibrate, expectations continue to ratchet up and at some point you run out 
of road. The funny things is, the road ahead actually appears quite smooth. 

German industrial orders rose by 1.8% in October, with growth forecasts for 
Europe's largest economy held at 1.7%. Bundesbank President Jens Weidmann 
suggesting Draghi's needn't have done anything at all. But it's not quite that 
simple, says Halver. We can clearly see that the dependence on cheap money is 
enormous. Fundamental factors no longer play a role. That's very worrying. 
Draghi has defended his moves, saying the market just needed time to understand 
them. They say a magician should never reveal his tricks, but in this case, he 
might have to