Already, people are tempering expectations around Lagarde’s new run as ECB President. While others lament the anemic levels of inflation around the world.

The Limits of Lagarde | by Yanis Varoufakis (Project Syndicate, 5 min read) Varoufakis argues that for every euro that Draghi’s ECB printed to buy Italian public debt, it created two euros to buy German public debt. There was no economic rationale for buying bunds. Was Draghi remiss? Of course not. He laboured within absurd political constraints imposed by institutions. Lagarde will face the same. [Bearish Eurozone]

Quantitative Easing and Exuberance In Stock Markets: Evidence From The Euro Area (De Nederlandsche Bank, 23 pages) Controlling for other improving macro conditions, this study demonstrates that QE programmes coincide with exuberant investor behaviour which tends to persist the longer the QE programmes run. The central bank argues that macro prudential measures should be used to address these risks. [Bearish Euro equities and credit]

Inflation Trends in Asia: Implications For Central Banks (ECB, 27 Pages) This paper estimates trend inflation for the 12 largest Asian economies between 1995 and 2018 and benchmarks the trends to current inflation figures. They find that most of the decline in inflation in the region is explained by lower trend inflation rather than transitory shocks. [Bullish Asian bonds]

Inflation Remains in a Coma in Major Economies, Frustrating Central Bankers (Dr. ED’s Blog, 4 min read) Edward Yardeni believes Inflation is currently hibernating globally in major advanced economies. Powerful forces of aging demographics, technological disruption and large debt are responsible for this deflationary trend. Ultra low-interest rate is failing to re-ignite inflation and is driving stocks higher. [Bullish G7 bonds]