January 14, 2015

Doug Kass on Europe and QE

ECB Economist Peter Praet has warned in an interview with BoersenZeitung that the decline in oil prices is "de-anchoring" expectations for European inflation to drop below zero "for a longer period in 2015," and has suggested that ECB QE is growing more likely.

So let me get this straight.

Draghi has jawboned interest rates in the EU to well below where anyone had expected in 2014, and that is still not enough, as the European economies are flatlining at best.

Italy's 10-year yield is less than 1.90% (compared to 2.18% in the U.S.) and German Bunds are yielding 0.60%.

What possibly will ever-lower rates do to help the European economies, given their ridiculously and artifically low interest rates today? 

I remain a market bear, particularly in light of the magnitude of the recovery since the mid October lows. At best, we have "borrowed" from 2015 returns