Europes banks rise then roll on LTRO

Can Europe’s ailing banks really count on Draghi?

• European banks are direct recipients of ECB’s new ‘QE-lite’ TLTRO programme of long-term funding at attractive rates.
• Bank stocks duly rose—at least at first—on the announcement which was a partial surprise as the ECB gave details of timing (September 2019 to March 2021) and scope sooner than widely expected.
• But that didn’t last. The Euro STOXX Banks index has plumbed 4-year lows, down as much as 4%
• TLTRO III came with multiple negative trimmings. Some—like a big cut of growth the ECB expects in 2019 (now just 1.1% from 1.7%)—are alarming to investors in already struggling banks
• The ECB also surprised by pushing out the date of its first hike in a decade to "through the end of 2019, and in any case for as long as necessary" from a previously vague though at least earlier, ‘through the summer’ guidance.
• For some of the weakest global banks, many domiciled in the Eurozone, the news is little short of a revenue warning at the margin.
• Deutsche Bank stock is infamously in a possible ninth possible annual decline in 12 years.
• Since December though, shares have tacked on as much as 10%, as the market sizes up the revamp plan of its new CEO
• Technically, the appearance of a rising wedge pattern in a downtrend can be interpreted as bearish
• Recently established support at €7.70 looks far less convincing than the kickback low near €7.10 from early February. Breach of €7.70 could be the first sign that QE-lite won’t be as bullish news for Deutsche Bank and other laggardly banks as it appears