ECB: Potential stimulus may not be stimulative for stocks - CIBC

CIBC analysts, Katherine Judge and Royce Mendes explain that if the European Central Bank introduces another round of TLTRO’s it might not be stimulative for equity prices. 

Key Quotes: 

“The ECB has taken a number of steps in recent years to support the Eurozone economy, most notably President Draghi’s pledge to do whatever it takes to the keep the monetary union together, the QE program and the two rounds of Targeted Long-Term Refinancing Operations (TLTROs). But, while the latter were positive for lending conditions, they had little apparent effect on stocks, in contrast to Draghi’s speech and QE.”

“Even looking at just Eurozone bank stocks, it’s not clear those equities received any support. As a result, President Draghi’s recent suggestion that another round of TLTROs is on the table could be a positive for an economy that has hit a rough patch, but monetary action in that form might not turn out to be very stimulative for stocks.”