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Illustration: Aïda Amer/Axios
The European Central Bank is leading the charge in the next wave of central bank stimulus measures, but experts and former central bankers argue it will be insufficient to deal with the looming global downturn.
What's happening: ECB governing board member Olli Rehn said the central bank will announce a fresh package of “impactful and significant” stimulus at its September meeting that's expected to include “substantial" bond purchases as well as cuts to the ECB’s already-negative interest rate, WSJ reported.
Why it matters: The eurozone already has negative interest rates and the ECB already has spent trillions buying bonds in an attempt to stimulate the economy. In spite of these efforts, major European economies have been unable to generate inflation or growth that's even close to their targets for years.
The big picture: Central banks see that the global economy is in trouble and they are stepping in to act, but are responding to new problems with old solutions.
What they're saying: "Unprecedented policies will be needed to respond to the next economic downturn," a report released Thursday from the BlackRock Investment Institute argues.
The intrigue: The paper urges the introduction of "helicopter money," or “going direct” with "an explicit and permanent monetary financing of a fiscal expansion" otherwise known as central banks giving money directly to the public.
The bottom line: Central banks are gearing up to stave off a recession and highly respected former central bank leaders now see quantitative easing and negative interest rates — both considered extraordinarily and controversially powerful when they were first discussed — as insufficient to deal with the world's problems.
The big picture: As a result of the retail sales data, the Atlanta Fed raised its GDPNow forecast to 2.2% for the third quarter.
Public companies are slowing their stock buybacks in 2019 from 2018's record pace, and the slowdown in the tech sector shows the trade war is beginning to hit the economy in unexpected ways.
What's happening: After starting the year as the top sector for buybacks, tech companies have dramatically slowed their pace as the trade war has escalated, data provided to Axios by Catalyst Funds COO Michael Schoonover shows.
Be smart: The lack of confidence is evidenced by the significant drop in buybacks starting in May after President Trump escalated the trade war by raising tariffs on $200 billion worth of Chinese imports.
Why it matters: "Given the state of the economy, what this really means is that companies are probably likely more concerned now than they were last year that conditions could get far worse and therefore aren’t too excited to start large buyback programs," Schoonover tells Axios in an email.
On the other hand: The data shows that the 4 tech companies that bought back large amounts of their stock saw significant outperformance versus the market.
Illustration: Aïda Amer/Axios
There was joy in toyland this week — albeit muted — after the Trump administration said it would postpone tariffs on toys made in China until after the holiday rush, Axios managing editor Jennifer Kingson writes.
Why it matters: The industry, still recovering from the demise of Toys “R” Us, had feared a 10% tariff would force it to raise prices, hurting consumers and killing profits. But a sudden reprieve will let toy companies focus instead — for now — on big holiday trends, like unicorns, collectible dolls, scented slime and electronic finger-puppets.
The big picture: While toy sales have slumped, the second half of 2019 is expected to bring “a complete reversal of the negative trends,” according to Juli Lennett of the NPD Group, who tracks the sector.
Walmart, Amazon and Target have picked up some slack from the liquidation of Toys “R” Us last year, which cost 33,000 retail jobs.
But: While 75% of sales volume from Toys “R” Us has migrated to other channels, 25% “has been lost,” Pasierb says.
What’s next: The Trump administration’s tariff reprieve is set to expire Dec. 15, after which all bets are off.