Feb 7, 2019

The European money printing press returns

Illustration: Aïda Amer/Axios

Analysts at Goldman Sachs say they expect the European Central Bank to announce it is restarting a long-term financing stimulus program as soon as March, despite having just called off its bond-buying program in December.

The backdrop: Renewed stimulus for the faltering euro zone economy, which has looked weaker with each new data release, has been expected, but Goldman's incorporation of fresh ECB stimulus as part of its market outlook could mark a watershed moment for central banks and the global economy.

What it means: The ECB's stimulus program was created to hold up failing markets in the aftermath of the European crisis that followed the 2008 U.S. financial crisis. The goal was to remove it as soon as the economy could stand on its own.

  • Like the Federal Reserve's quantitative easing, the ECB's targeted longer-term refinancing operations (TLTRO) program, started in 2014, was considered an emergency, unconventional and temporary fix. It was never imagined as a program that would stay in place for 5 years or more.

Remember: For most of last year, policymakers had been preparing asset managers and markets for 2019 to be the year things finally returned to normal. Central bankers said that this year:

  • The Federal Reserve would raise U.S. interest rates 3 times and continue to reduce its $4 trillion balance sheet by $50 billion a month. (Prior to 2008, the value of the Fed's balance sheet was less than 10% of U.S. GDP going back to 1956. It's currently around 20%.)
  • The ECB would end its TLTRO program of buying $17 billion of bonds a month and raise its interest rates from -0.4% to above zero, where they haven't been since 2011.
  • The Bank of Japan would slow or stop its nearly $4 billion a month asset purchasing program, which has taken the central bank's balance sheet holdings to an amount greater than Japan's entire GDP.

There's now significant doubt any of those things will happen.

Go deeper: The end of quantitative tightening

Editor's note: The first sentence of this story has been corrected to show the ECB is restarting a financing program, not restarting its bond-buying program.

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World coronavirus updates: World Bank warns economic pain unavoidable

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

The novel coronavirus has caused a "global shock" and significant economic pain "seems unavoidable in all countries," the World Bank said in an economic update for
East Asia and the Pacific on Monday.

The big picture: COVID-19 cases surged past 786,000 and the death toll exceeded 37,800 early Tuesday, per Johns Hopkins data. Italy reported more than 11,500 total deaths.

Go deeperArrowUpdated 32 mins ago - Health

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 2 a.m. ET: 786,228 — Total deaths: 37,820 — Total recoveries: 166,041.
  2. U.S.: Leads the world in confirmed cases. Total confirmed cases as of 2 a.m. ET: 164,603 — Total deaths: 3,170— Total recoveries: 5,896.
  3. Federal government latest: The White House will extend its social distancing guidelines until April 30.
  4. State updates: Rural-state governors say testing is still inadequate, contradicting Trump — Virginia, Maryland and D.C. issue stay-at-home orders to residents, joining 28 other states.
  5. Business latest: Ford and General Electric aim to make 50,000 ventilators in 100 days.
  6. In photos: Navy hospital ship arrives in Manhattan.
  7. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

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U.S. coronavirus updates: Death toll tops 3,000

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

The U.S. death toll from the novel coronavirus has now surpassed 3,000, per Johns Hopkins data.

The state of play: The U.S. had by Monday night recorded more than 163,000 positive cases — more than any other country in the world, per Johns Hopkins. The COVID-19 death toll stood at 3,008. The number of recoveries had risen to more than 5,800.

Go deeperArrowUpdated 5 hours ago - Health