Article / 12 September 2014 at 8:21 GMT

Daily Shot: Draghi passes the buck Team / Saxo Bank
  • Canadian dollar falls on declining oil prices, weak economic data
  • ECB QE programme in doubt as Draghi exhorts governments to clean house
  • Socialists not the worst offender in terms of French government spending

By Walter Kurtz

Falling oil prices are starting to impact Canada’s markets. Weaker than expected employment and housing data, combined with the oil markets are pressuring the Canadian dollar.




Brazilian retail sales came in below expectations as the nation slips further into recession. Softer demand for natural resources from China remains part of the problem.

Brazil retail



German (and other Eurozone) government debt is experiencing a material yield curve steepening, as longer and shorter dated bond yields diverge.

Germany 10 year


Germany 2 year


The big quantitative easing programme from the European Central Bank may not materialise as Draghi tells Eurozone governments “it’s your turn” to stimulate the economy. The ECB may be done for now — the targeted long-term refinancing operation, asset-backed securities purchases and negative rates are what we get.


Expectations of monetary policy divergence between the Federal Reserve and other central banks have raised currency volatility across the board. If US economic data remains robust, this trend will continue.

Currency volatility

Source: Wall Street Journal


The US leveraged finance market for middle-market firms is in the middle of a full-blown bubble.

Leverage is out of control...

LBO transactions

Source: Lincoln International

…and equity valuations are incredibly frothy.


Source: Lincoln International

Let's hope someone at the Federal Open Market Committee is paying attention.


As I have said before, I welcome comments on the Daily Shot. If you disagree with something or want to add to the discussion, send over your comments and I’ll try to include them here. As an example, below is a response (in full) to my rude comment on France yesterday:

Dear Sir,

First of all, let me thank you for your daily letter which is always a pleasing and informative read! I particularly appreciate the diversity of topics you should to address.

I am however sometimes a bit puzzled when you indulge into politicized comments, which seem not as rigorous as your economic expertise, especially when it comes to Europe, and especially when it comes to France.

Having lived for a long time in the US, I do know how this country is portrayed there, and how this portray is most of the time full of good insights, but also sometimes a bit affected by difficult-to-get-rid-of clichés.

That is why I take this occasion to react on your last letter, in particular on your government spending chart, ending up with the (ironical I suppose) "Louange Socialisme!" comment. I do not want to argue on what socialisme really means in France (compared to how it understood in the US). Instead you will just find below an augmented chart, which tells you which party was ruling the country during the period when government spending decreased/increased as a % of GDP.

Have good read, and Louange socialisme ;) 

Best regards,

Government spending as percentage of GDP

Source: Natixis


Now some food for thought. This chart shows the level of satisfaction vs. the priority of various issues — some items are a bit surprising.


Source: Gallup

-- Edited by Michael McKenna
* Walter Kurtz is an alias

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