Futures Soar, Dollar Plunges With Gridlock Now Seen As Bullish

It was supposed to be the worst of possible outcomes: a combination of years of gridlock (a Biden presidency with a Republican Senate), coupled with a contested election (which Trump is set to do by contesting state elections all the way to the Supreme Court), was according to Wall Street a bearish trigger that could launch as much as 20% of downside to stocks.

A disputed election is bad for stocks
Legislative gridlock is bad for stocks.
But the combination of the two is great for stocks

— zerohedge (@zerohedge) November 4, 2020

Well, once again Wall Street was dead wrong, because despite predictions ahead of the election that not having an early clear result could derail stocks, equities soared another 2% overnight rising above 3,500 – up nearly 300 points from the early Sunday prints – as the prospect of gridlock provided some solace and calm, led by tech and healthcare stocks on hopes the election results won’t trigger major changes to taxes or regulations that have underpinned the bull market. In short – a continuation of the status quo for at least two more years.

Nasdaq 100 futures jumped another 2.6% after the index surged on Wednesday when the vote count failed to produce a Blue Sweep as the market had fully priced in.  Healthcare stocks also surged amid relief that regulatory pressure that could have swept through the sector in a Democratic sweep would not materialize. Sectors seen benefiting from a major stimulus package, such as financials, weakened.

“Up until about last week, the consensus belief was a full blue sweep — now that’s changing you’re seeing a repricing taking place in the market,” Anna Han, equity strategist at Wells Fargo Securities LLC, said on Bloomberg TV. “We’re seeing a boost today because a more status quo Senate may ease the burden of regulations on the tech sector.”

In the latest election developments, Joe Biden won Michigan and Wisconsin, putting him on the brink of taking the White House from Trump, hours after the president’s team opened legal fights to stop vote counting in a least two states. Some votes in battleground states such as Georgia, Pennsylvania and North Carolina are still being counted, while Trump is contesting the outcome in Arizona.

While the winner has still yet to be declared, Biden leads in electoral votes with Fox News tallies President Trump at 214 vs. Biden at 264 (including Arizona), while CNN tallies President Trump at 213 vs. Biden at 253, with close races in several key states remaining to be called including Georgia (16 votes), Pennsylvania (20 votes), Arizona (11 votes), North Carolina (15 votes) and Nevada (6 votes). We are expecting updates from Nevada from 12:00ET/17:00GMT today while Arizona is not expected until after 21:00ET Thursday / 02:00GMT Friday. Assuming Arizona is included, if Nevada goes in favor of Biden (as polls are indicating with 86% of votes tallied) then this would be sufficient to secure a Biden Presidency. Conversely, for Trump to secure the win he would require Georgia, Pennsylvania, North Carolina & Nevada to all be declared in his favor.

Regardless of whether Biden or Trump wins the presidency, investors welcomed the prospect that either candidate would likely face some opposition in Congress that would be a barrier to sweeping legislative changes.

“The market likes the fact that we have a gridlock,” said Gary Bradshaw, senior vice president at Hodges Capital Management in Dallas. “We are not likely to see big tax increases, and not a lot of regulation.”

At the same time the great reflation trade unwind continued, as traders tempered so-called “reflation” trades that had predicted a strong Democratic score in presidential and U.S. Senate races would lead to a bigger stimulus and higher inflation, as well as some safe-haven buying on caution the election is so close: “There is no blue wave,” said Robert Sears, chief investment officer at Capital Generation Partners. “The chance of a lot of fiscal spending … that scenario is out of the window now because it looks like Republicans are going to keep the Senate.”

While investors now view Gridlock as positive, they remain somewhat worried about the presidential race being too close to call or contested for a prolonged period. “Markets can live with either candidate,” said Francois Savary, chief investment officer at Swiss wealth manager Prime Partners for the simple reason that only the Fed chair matters to markets. “The scenario they don’t want are legal problems over the outcome and significant political unrest.”

The election results were more “down the middle,” said Matt Peron, director of research at Janus Henderson Investors in Denver, “meaning no clear mandate on either side, so there will have to be a lot of compromise.” “I think the market sees that as a removal of uncertainty and the market likes that.”

And since Congress now appears hobbled for a long time, that only leave the Fed to stimulate the economy. Since a divided legislature narrows the scope for a massive stimulus package, traders now expect more aggressive action from the Fed to pump money into an economy still reeling from the coronavirus. That said, the Fed is likely to hold off from any major changes when it announces policy later today with the U.S. election still in the balance.

Increases in tech shares and some strong corporate results buoyed Europe’s Stoxx 600 index. Chip makers including Dialog Semiconductor Plc were among the biggest gainers following an upbeat forecast from Qualcomm on demand for 5G devices. Qualcomm leaped 15% in the pre-market.

Asian stocks also firmed on Thursday, ,ed by the health care and communications sectors. Trading volume for MSCI Asia Pacific Index members was 21% above the monthly average for this time of the day. The Topix added 1.4%, with SoftBank and Eisai contributing the most to the move. The Shanghai Composite Index rose 1.3%, driven by Kweichow Moutai and SAIC Motor.

As futures surged, driven mostly by the tech sector, treasuries pushed higher with 10Y yields dropping as low as 0.715%, more than 20bps below where they were on Tuesday night as investors discounted chances for a massive stimulus package to help the U.S. economy, while the Bloomberg Dollar Index slumped for a third day, dropping to the lowest level since May 2018…

… as leveraged investors were pricing in a Joe Biden win and looking for the greenback to extend recent losses, according to traders in Europe quoted by Bloomberg; on a three-day basis, the greenback is down by the most since April while the euro is up by the most since July.

Elsewhere in FX, the Norwegian Krone was the biggest gainer among Group-of-10 peers after the central bank held rates steady, while the pound rose 0.7% to 1.3075 after the BOE also kept policy rates unchanged but boosted bond buying by GBP150BN starting next year

In rates, treasuries extended Wednesday’s bull-flattening move despite gains for U.S. equity futures ahead of FOMC statement at 2pm ET. 10-year Treasury yields were lower by ~2bp at 0.74%, traded below its 50-DMA for the first time in more than a month; 30-year breached its 50- and 200-DMAs; 2s10s and 5s30s yield curves are flatter by ~2.2bp. With yields lower by more than 4bp at long end, 10- and 30-year yields breached key moving average levels as U.S. presidential election outcome remains unclear. U.K. government bonds reversed an early advance as investors shifted their focus to the slower pace of debt-buying implied by the Bank of England’s new asset-purchase targets.

In commodities, WTI and Brent front month futures saw modest losses on the day, albeit the contracts are off worst levels and in proximity to the unchanged mark, as the crude complex takes a breather from recent price action as the US election vote count enters the final stretch. Gold surged 1.3% to 1.927, with silver following tick for tick as the dollar tumbled.

Bitcoin climbed by more than $750 to $14,793, more than doubling its value in 2020 for the first time.

Looking at the day ahead, jobless claims and the Federal Reserve’s rate decision are expected today. Booking, Cigna, GM, Square and T-Mobile US are reporting earnings.

Market Snapshot

• S&P 500 futures up 2% to 3,503
• STOXX Europe 600 up 0.5% to 365.05
• MXAP up 2.2% to 180.69
• MXAPJ up 2.5% to 601.04
• Nikkei up 1.7% to 24,105.28
• Topix up 1.4% to 1,649.94
• Hang Seng Index up 3.3% to 25,695.92
• Shanghai Composite up 1.3% to 3,320.13
• Sensex up 1.7% to 41,298.33
• Australia S&P/ASX 200 up 1.3% to 6,139.61
• Kospi up 2.4% to 2,413.79
• German 10Y yield fell 1.1 bps to -0.649%
• Euro up 0.5% to $1.1780
• Italian 10Y yield fell 4.6 bps to 0.576%
• Spanish 10Y yield fell 1.9 bps to 0.073%
• Brent futures down 0.2% to $41.16/bbl
• Gold spot up 0.8% to $1,917.68
• U.S. Dollar Index down 0.4% to 93.08

Top News from Bloomberg

• Joe Biden stood on the brink of claiming the presidency from Donald Trump on Thursday, with a handful of states expecting to complete their vote counts despite Republicans opening legal fights to stop counting in at least two states
• The Bank of England boosted its bond-buying program by a bigger-than- expected 150 billion pounds ($195 billion) in another round of stimulus to help the economy through a second wave of coronavirus restrictions
• Norway’s central bank said the prospect of more Covid infections and restrictions over the winter pose a threat to the economic outlook, as it signaled years more of crisis-low interest rates
• The European Commission cut its forecast for 2021 U.K. economic growth almost in half, in its first ever regular outlook based on the assumption that negotiations for a post-Brexit trade accord will yield no result. The projections see the economy growing 3.3%, down from 6% projected earlier this year. GDP will plunge by more than 10% this year, one of the worst performances expected in Europe, the commission said

A quick look at global markets courtesy of NewsSquawk

Asian equity markets were higher across the board as the region took impetus from global peers including the tech-led rally on Wall Street as further election results trickled in and although the presidency still hangs in the balance with several key states still to be declared, betting markets have Biden as a heavy favourite and Fox News also tallies him as just 6 electoral votes shy of a victory at 264 vs. 214 for President Trump. Meanwhile, prospects of a Blue Sweep diminished which underpinned tech and defensives stateside. ASX 200 (+1.3%) was led higher by tech and healthcare with financials also buoyed after NAB topped forecasts for FY cash profit despite declining 37% Y/Y, although upside in the index was capped by weakness in the commodity sectors and ongoing souring of ties with China which saw Treasury Wine Estates slump on news China may impose anti-dumping duties of more than 200% on wine imports from Australia. Nikkei 225 (+1,7%) was also buoyed and rose above the 24k level to print its highest level since January, while Hang Seng (+3.3%) and Shanghai Comp. (+1.3%) moved higher in tandem with the rising tide across global stocks and despite a liquidity drain by the PBoC, as it also announced to conduct a Medium-term Lending Facility on November 16th with the amount to be determined by market demand. Finally, 10yr JGBs traded positive as they tracked upside in T-notes and following a break of the psychological 152.00 level, while the BoJ were also present in the market today in which it upped purchase amounts in 1-3yr and 3-5yr maturities as it had previously flagged.

Top Asian News

• Indonesia Falls Into Recession as Outbreaks Hamper Recovery
• Indonesia’s Jobless Rate Surges to Nine-Year High Amid Recession
• Inside the Chaotic Unraveling of Jack Ma’s $35 Billion IPO
• Turkey’s Biggest IPO in Years Back on Track After Pandemic Delay

Another session of gains for Europe (Euro Stoxx 50 +1.2%) after the region picked up the baton from a stellar APAC session in continuation of price action seen throughout the prior day whilst the US presidency hangs in the balance. In terms of where we stand, Biden’s on 264 electoral colleges vs. Trump’s 214 (assuming the Arizona tally is included), with 270 needed for a victory. Several key states remain to be called including Georgia (16 EC votes), Pennsylvania (20 EC votes), North Carolina (15 EC votes) and Nevada (6 EC votes). For Trump to win, he would need to pick up all of the remaining swing seats. Meanwhile, the latest implied probability from betting odds on Betfair Exchange are suggesting an 84% chance of a Biden win. That being said, legal challenges/calls for recounts are expected from Trump. Major US equity futures trade firmer, with ES (+1.9%) above 3,500, NQ (+2.9%), YM (+1.3%), RTY(+1.3%) all in solid positive territory. Back to Europe, additional impetus could be derived by EU negotiators clearing the Rule of Law issue, a major hurdle in the passing of the EU Recovery Fund. However, the legal jargon still has to be agreed between the European Parliament and Council, with reports stating that differences remain over the exact size of the budget and support. Major EU bouses see broad-based gains of around 1.1-1.2%, whilst the UK’s FTSE 100 (+0.4%) sees modest underperformance in Sterling-dynamics post-BoE. Sectors are mostly higher with the IT sector outpacing peers following earnings from Qualcomm (+15% pre-market) who posted beats across the board, thus propping up the likes of STMicroelectronics (+3.2%), Infineon (+3.7%) and Dialog Semiconductor (+6.5%), with the latter experiencing added impetus from its respective earnings report. Meanwhile, the banking sector resides as the laggard, with ING (-6.8%) and Commerzbank (-6.6%) dragging down the sector post-earnings, although SocGen (+4.0%) bucks the trend after narrowing its cost of risk and upping its CET1 ratio guidance. In terms of individual movers, AstraZeneca (Unch) whose earnings were sullied by reports that the Co. fell short of its target to deliver 30mln doses of its COVID-19 vaccine to the UK by the end of September and will only be able to supply only 4% of what it promised by year end, according to reports citing the head of government vaccine taskforce. However, the Co. reportedly stated it is ready to supply hundreds of millions of COVID-19 vaccines and weekly delivery schedule of vaccines will roughly match what the UK Gov’t has in mind for vaccination plans.

Top European News

• Europe’s Second Lockdown Wave Risks Double-Dip Recessions
• ING to Cut Jobs, Close Offices as Profit Misses Estimates
• SocGen Rebounds From Losing Run After Equities Trading Gains
• Commerzbank Warns on Pandemic’s Second Wave as Earnings Miss

In FX, the Dollar is weaker in relation to most major rivals in the run up to the FOMC and doubtless anticipating dovish guidance from the Fed and Chair Powell, but no action in terms of policy stimulus. However, the DXY is hovering around 93.000 within a softer 93.548-92.897 range awaiting the climax of the US Presidential Election that looks increasingly likely to see Republican Biden replace Democrat Trump, albeit with a gentle Blue ripple rather than the tidal wave prophesied by polls. Also ahead, another pre-NFP gauge in the form of Challenger lay-offs and the more timely IJC updates, but all unlikely to steer attention away from the FOMC and casting votes in the 2020 ballot.

• EUR/NZD/AUD/GBP – All in the running to claim top G10 spot as the Euro eyes a series of recent highs capping advances beyond 1.1800, including the pre-ECB peak, while the Kiwi has caught up with its Antipodean peer on the way to reclaiming 0.6700+ status vs the Greenback, with Aud/Nzd retreating from the high 1.0700 area to test bids/support around the figure and the Aussie meeting resistance above 0.7200 against the Buck in wake of mixed trade data overnight. Elsewhere, Sterling has rebounded firmly from pre-BoE lows as the MPC continues to keep NIRP cards close to its chest and Governor Bailey added that there is no timetable for the use of negative rates, if sub-zero is adopted at all presumably. Hence, Cable is back above 1.3000 and Eur/Gbp below 0.9050 even though the UK construction and composite PMIs slowed.
• CHF/JPY – The Franc has pared more losses vs the Dollar through 0.9100 and is pivoting 1.0700 against the Euro before a very topical SNB event entitled how to steer rates in negative territory hosted my Maechler and Moser, while the Yen is consolidating above 104.50 in advance of a raft of Japanese data and well away from option expiries in Usd/Jpy plus Eur/Jpy at 105.00 (1 bn) and 124.50 (1.1 bn) respectively.
• CAD/SEK – No breach of 1.3100 yet for the Loonie vs its US counterpart and perhaps little inclination so close to Friday’s Canadian-US jobs report face-off, while the Swedish Crown is straddling 10.3000 in Euro cross terms following somewhat conflicting data (new orders down in September, Q3 GDP up q/q, but negative y/y).
• NOK/EM – The Norwegian Krona has not been knocked by the Norges Bank’s downbeat assessment and outlook for the economy as it holds comfortably above 11.0000 vs the Euro, while the Yuan has rallied sharply from PBoC fix levels to register another multi-year peak vs the Greenback close to 6.6100 (Cnh vs Cny circa 6.6235 at one stage).

In commodities, WTI and Brent front month futures see modest losses on the day, albeit the contracts are off worst levels and in proximity to the unchanged mark, as the crude complex takes a breather from recent price action as the US election vote count enters the final stretch. Reports noted that oil traders added to bearish bets on WTI yesterday on the prospect of a Biden, and thus a pursuit of cleaner energy and his agenda to tackle global warming. Aside from that, news flow has remained light for the complex and price action is likely to be dictated by macro updates barring OPEC+ sources/comments. WTI resides around USD 39/bbl (vs. low 38.27/bbl), while its Brent counterpart sees itself north of USD 41/bbl (vs. low 40.33/bbl). Elsewhere, spot gold and silver are underpinned by the softer Buck, with the yellow metal edging higher above USD 1900/oz (vs. low 1902.50) and silver eyeing USD 24.50/oz to the upside (vs. low 23.88). Conversely, LME copper sees modest losses amidst thin trade for the red metal as the red metal eyeing the Chinese ban of imported copper ore and copper concentrates from Australia. Meanwhile, Dalian and Singapore iron ore prices fell amid speculation exports from Australia picked up last month.

US Event Calendar

• 7:30am: Challenger Job Cuts YoY, prior 185.9%
• 8:30am: Initial Jobless Claims, est. 735,000, prior 751,000; Continuing Claims, est. 7.2m, prior 7.76m
• 8:30am: Nonfarm Productivity, est. 5.6%, prior 10.1%; Unit Labor Costs, est. -11.0%, prior 9.0%
• 2pm: FOMC Rate Decision

DB’s Jim Reid concludes the overnight wrap

An extraordinary last 24 hours. The great thing about WFH during an election is that you can go to sleep in the afternoon after a long night and be back at your desk within 10 seconds if needed. Don’t tell anyone. Anyway it was a day where if you had known all the politics in advance it was unlikely you would have predicted the immediate market reaction. Apologies for the slight if you did.

Through the sleep deprived haze, markets generally were subject to a lot of revisionism as the current most likely “Biden / GOP Senate” outcome was the one most feared pre-election, especially with it being close enough to suggest legal challenges ahead. However such a scenario yesterday didn’t deter the market as investors rallied round the idea of a GOP Senate preventing tax rises and increased regulation and offsetting the reduced likelihood of near-term major stimulus. Markets also started to price in more Fed action in the absence of more fiscal which gave the liquidity trade a boost. It reminds me a bit of 2016 when a Trump victory was feared in advance and then within minutes of his acceptance speech the market narrative changed quickly to tax cuts and deregulation. Maybe our equity strategist Binky Chadha’s famous chart that in close elections it doesn’t matter who wins, the market always goes up afterwards was the right one. We’ve included this in the email blast below as a reminder.

In terms of the current state of play, we know now that former Vice President Biden currently has 253 electoral college votes to Trump’s 214, after having Wisconsin and Michigan called for Biden yesterday. These were two states that President Obama won that President Trump flipped in 2016, which Mr Biden appears now to have flipped back. Biden is leading in Arizona (+3%, with 14% uncounted) and Nevada (+0.6%, with 14% uncounted) currently and if those leads hold he will get to the required 270 votes to win the election. He could also just win Pennsylvania, where he is catching up the President. We will likely hear more from these states later today.

President Trump on the other hand would need to win one of those two back and maintain his leads in Pennsylvania (+3%, with 11% uncounted), Georgia (+0.6%, with 5% uncounted) and North Carolina (+1.4%, with 5% uncounted) to earn a second term. Many of the counties across all 5 states that have yet to fully report vote counts are waiting on results from mostly urban areas with a larger percentage of the population, which is partly why the vote count is taking longer. These areas have historically leaned Democratic and the missing vote counts are largely mail-in votes which Democrats used more often than Republicans this year. So there may be some further Biden support ahead in a few of these states, though Arizona is expected to tighten in favour of President Trump.

Regardless of the uncounted votes cited above, President Trump last night declared victory in Pennsylvania, while also saying that the campaign would be filling a lawsuit in the state for ‘meaningful transparency’. The President’s campaign also said it filed a lawsuit in Michigan, and are also said to be weighing asking for a recount in Wisconsin, which has been called for Mr Biden, who leads there by just over 20,000 votes with over 98% of precincts reporting. The Attorney Generals in both Pennsylvania and Michigan said that they have not yet received said lawsuits and have continued counting votes according to their state laws.

As noted above the Senate is now very likely to remain with the Republicans, after Maine Senator Susan Collins won re-election yesterday. There are now only three seats that we are unsure of – one in North Carolina and two in Georgia. The one in North Carolina is very likely to remain with Republicans with Senator Tillis up +1.8% with only 6% of the vote outstanding. Georgia looks set to have two runoff elections in January, which Democrats would have to win both in order to get the Senate to 50-50. It is hard to know exactly what those runoff elections would look like as there would not be a figure such as Mr Trump or Mr Biden at top of the ticket and both parties are likely to put a lot of focus and money on those races regardless of the Presidential outcome.

In spite of the election uncertainty, global equity markets continued to surge yesterday, with the S&P 500 climbing +2.20% in its strongest day since 5 June even if it was off the 3.48% highs seen in the second half of the day. There was also a massive move for US Treasuries, with 10yr yields falling -13.6bps to 0.763% in their biggest daily move lower since March, as investors adjusted to the lower likelihood of a major stimulus next year as Republicans performed stronger in Senate races than had been anticipated. Our US rate strategists said that the election result as it appears is bullish rates. See their piece here.

19 of the 24 S&P 500 industries rallied, though notably cyclicals such as Banks (-3.97%), Autos (-1.69%) and Materials (-1.65%) all fell back as the likely lack of substantial stimulus sent rates lower and flattened the yield curve. On the other hand, Media (+5.20%), Biotech (+5.08%) and Software (+4.16%) were all up substantially on chances for low rates for longer and possibly less regulation with a split Government. This saw the NASDAQ outperform the S&P, with a +3.85% rise, while European indices including the STOXX 600 (+2.05%), the DAX (+1.95%) and the CAC 40 (+2.44%) similarly moved higher. We saw a similar split in Europe, with Health care (+4.90%) and Technology (+2.96%) shares leading the way at the expense of Banks (-1.47%) and Energy (-0.19%) to a lesser extent.

The uncertain US election outcome has also led our FX strategist George Saravelos to turn neutral on the dollar, having previously argued for a broadly weaker dollar across both G10 and EM FX. The view now is that the election result means that there’s less chance of easier fiscal policy, significant risks of a protracted contest over the outcome, and this comes as the Covid winter wave has been bigger than expected with the US numbers likely to worsen. You can see the piece here.

As if the election uncertainty wasn’t enough for investors to digest, attention today will turn to the Federal Reserve’s latest monetary policy decision. In their preview (link here), our US economists write that they don’t anticipate any material announcements at this meeting, but do think that Chair Powell could provide a status update on the FOMC’s views about strengthening QE forward guidance and extending the duration of purchases. Earlier tomorrow the Bank of England will also be announcing their latest decision at 7am London time, so it may already have happened by the time you read this email. Our UK economist argues that additional QE in the range of £75bn-100bn is likely as the MPC ramps up their response to the second coronavirus wave against the backdrop of England returning to lockdown today for the next month. Overnight, the Sun newspaper has reported that the BoE could announce additional QE of as much as £200bn today, with £150bn likely and this is weighing on the pound (-0.20%).

Back to markets and Asian stocks are following Wall Street’s lead this morning. The Nikkei (+1.29%), Hang Seng (+2.73%), Shanghai Comp (+0.94%), Kospi (+1.86%) and Asx (+1.28%) are all up. Futures on the S&P 500 are also up +0.73% while yields on 10y USTs are down a further -2.6bps overnight to 0.739%. Elsewhere, crude oil prices are down c. -1.89%.

In terms of the coronavirus, there were further concerning reports out of Europe, with the UK reporting another 25,177 cases and Italy a further 30,550. Although having said that, the U.K. was at 26.7k cases two weeks ago so we have not seen dramatic daily increases over that period. Poland announced new restrictions, while in Denmark, the Prime Minister said that the country’s mink population would be culled because of concerns that a mutated strain of Covid-19 in minks would undermine vaccine efforts. Across the other side of Atlantic, the US reported 100,702 new infections in the past 24 hours, the highest since the pandemic began with Wisconsin saying that the hospitals are at or near capacity. Finally back in the UK, MPs formally voted to approve the English lockdown that came into force at midnight, and the chair of the UK Vaccine Taskforce said that 4m of the Oxford-AstraZeneca vaccines would be available by year-end, along with 10m doses of the Pfizer-BioNTech one. Meanwhile, the Sun has reported overnight that the UK Chancellor Sunak will today announce that they are further extending the furlough program beyond Dec. 2 in those areas kept in the highest levels of coronavirus restrictions.

Finally, yesterday’s data took something of a back seat amidst the other events, but the ISM services index in the US for October fell to 56.6 (vs. 57.5 expected), which was the weakest reading since May. Europe also reported their final services and composite PMIs for October, though there the Euro Area composite PMI was revised up to 50.0 (vs. flash 49.4). As well as this, the ADP’s employment report for October showed a weaker-than-expected +365k addition to private payrolls.

To the day ahead now, and along with more on the US election outcome, the aforementioned decisions from the Federal Reserve and the Bank of England are likely to be the main highlights. Otherwise, data releases include German factory orders for September, Euro Area retail sales for September, and the weekly initial jobless claims from the US. Other central banks speakers include the ECB’s de Guindos, Holzmann, Muller, Weidmann and Schnabel.