Monday 2 June 2014 


I record a video for the retail network of BNP Paribas Fortis in Belgium on the topic of systematic investing. For investors with a medium or longer-term horizon who have money to invest on a more or less frequent basis, systematic investing is very attractive. It’s easy (available cash is automatically invested in funds that have been carefully selected in advance) but even more importantly, one avoids the excruciating question “should I do it or not?” each time one has money to invest. A corollary and big advantage to this approach is that the average price at which one has invested is smoothed over time (technically known as ‘dollar cost averaging’). 

Tuesday 3 June 2014 


Several meetings with journalists and clients to present our market outlook for the second half of the year. A frequently asked question is whether there is too much complacency in markets – a reference to the absence of any lasting impact from developments in Ukraine and the trend decline in US and European government bond yields – although everybody agrees that next year the Fed will start tightening. Both topics (Ukraine, declining bond yields) reflect the focus of markets on near-term catalysts. In the case of the US, there is no near-term catalyst (rate hikes should only start in the summer of 2015), whereas in Ukraine there was no catalyst strong enough to have investors pulling out of risky assets. 

Wednesday 4 June 2014 


I’m speaking at an international seminar for BNP Paribas client relationship managers. The organiser has given me the topic “The symphony of markets”. Though I like using metaphors during presentations this one was particularly challenging, if only because I’m far from an expert in classical music. In the old days when inspiration was lacking, one would visit a library. Now one consults Google or Wikipedia. The movements in a symphony are the financial market cycles for investors. There are typically three or four movements, whereas in the economy there are four (recovery, expansion, crisis, recession). The conductor is now an asset allocator who will have to see to it that the performance is well-balanced… 

Thursday 5 June 2014 

Amsterdam / Rotterdam 

After a press meeting in Amsterdam I head to Rotterdam for a client conference. While a colleague is driving I sit in the back of the car to follow Mario Draghi’s press conference on my laptop via live webcast. This also allows me to send some Tweets. Despite having promised a lot, the standard line having become that the ECB is unanimously seriously concerned about the deflation risks and the strength of the euro, the package of decisions surprises positively and markets rally. Interestingly, the weakening of the euro is explicitly mentioned as an expected consequence of the ECB’s decisions. Has the euro become a policy target after all? On Twitter, the reactions are unsurprisingly mixed. Some argue the ECB has emptied its cupboard by taking so many measures simultaneously. Others regret the absence of fully-fledged quantitative easing (QE) (i.e. buying government bonds). 

At the client conference later that afternoon I summarise my view: 1) It’s a comprehensive set of measures; 2) it is finely balanced (e.g. the negative deposit rate in isolation would have limited impact because excess reserves in the system have become quite limited, but stopping the sterilisation of the Securities Markets Programme increases these excess reserves); 3) the ECB bank lending survey shows credit demand is expected to rise, so the Targeted Long Term Refinancing Operation (TLTRO) should see good demand; 4) once the Asset Quality Review conducted by the ECB is finished, one should expect banks to be more keen to extend credit. As to the issue of QE by buying government bonds: 1) I suppose the Governing Council is less unanimous about this instrument so the ECB probably only wants to use it as the ultimate recourse; 2) the ECB wants to keep some powder dry, in the meantime hoping that the TLTRO will be sufficient; 3) with government bond yields already having declined so much, massive ECB buying would run the risk of creating a government bond market bubble (some months ago, the media mentioned an ECB source saying that it would require EUR 1000 billion to have some meaningful impact on inflation).  

In the early evening I have a dinner with clients. There are several tables and economists Paul Krugman and Carmen Reinhart move from one table to another to answer questions (I’ll come back on this in a separate post). I don’t think I’ve ever experienced such an interesting mix of consumable food and … intellectual food. After dinner, Krugman and Reinhart speak at a conference organised by Elsevier. I participate in the closing panel with Dutch economists (though I’m Belgian…). It’s very lively and views differ strongly, on fiscal policy, on what the ECB should do, on debt relief and on structural policy. It’s well past midnight when I arrive at my hotel. It has been a most interesting day. 

Friday 6 June 2014 


In the offices of the Financial Times I record a video interview with John Authers of the FT on the topic of the ECB having opened the floodgates. The link is here:


William De Vijlder

Vice – Chairman of BNP Paribas Investment Partners