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Google Shows Cracks, Foxconn Retreats (#GotBitcoin?)

Google parent Alphabet Inc. in the first quarter posted its slowest revenue growth since 2015. The poor results highlight the risks for one of Silicon Valley’s biggest names in effectively leaning on one massive, if lucrative, business. Google Shows Cracks, Foxconn Retreats (#GotBitcoin?)

Parent company Alphabet posts slowest revenue growth since 2015.

Google’s once-untouchable online-advertising operation took a body blow, hurt by mounting competition and struggles within its increasingly high-profile YouTube unit.

For all its myriad arms and efforts to diversify, Google remains essentially an old-fashioned billboard operation with a high-tech gloss—and it now faces more rivals.

The company’s results are an outlier amid what has otherwise been a steady earnings season in the technology sector. Peers like Facebook Inc. and Twitter Inc. previously posted strong earnings, while Amazon.com Inc. last week reported record profit that will allow it to pour fresh cash into improving its Prime membership program.

Alphabet shares fell 7% Monday after hours, with the drop picking up during the earnings call as executives declined to answer direct questions about the flagging growth. Nearly an hour in, one analyst, Ross Sandler of Barclays, audibly sighed. “I guess I’ll beat a dead horse on the deceleration,” he said.

“We are very excited about the opportunities across the board,” responded Chief Financial Officer Ruth Porat.

If Alphabet shares drop in regular trading on Tuesday to match the after-hours decline, that would wipe more than $60 billion from the company’s market capitalization and mark the worst single-day session in nearly seven years. Before the earnings report, shares were up 24% this year.

Alphabet reported first-quarter revenue of $36.3 billion, roughly $1 billion short of forecasts. Per-share earnings of $9.50 also disappointed, and were a substantial fall from a year earlier, when results were supercharged by the conglomerate marking up its stakes in private technology companies.

Growth slowed across the board. Revenues were up 17% year-over-year, compared with 26% in last year’s first quarter. The company’s margin, a constant concern for analysts and investors, fell to 18%, compared with 25% last year.

The crimped margin can in part be blamed on last month’s $1.7 billion fine from European regulators for abusing the dominance of its search engine and limiting competition. Excluding the fine, the company’s margin came in at 23% and its per-share earnings were $11.90.

The longer-term issue, however, is competition. Rivals like Amazon, once content to play in their own corners of the Silicon Valley sandbox, are making big plays at online advertising. In a potentially existential threat to Mountain View, Calif.-based Google, more online shoppers now begin their searches directly on Amazon than on search engines.

Ms. Porat and Chief Executive Officer Sundar Pichai repeatedly said on the call that the company was experimenting with changes to the advertising product that hurt short-term growth, but neither went into specifics, nor said whether they applied to desktop or mobile platforms.

The shift to mobile is a long-term drag for Google, which annually pays billions to rivals like Apple Inc. to place advertisements onto rival phones. Google was able to keep a lid on such “traffic acquisition costs” in the quarter, coming in lighter than analysts expected. That figure marked one of the few bright spots in the company’s earnings.

YouTube, perhaps the company’s most closely watched arm, remains a financial black box. Hailed as an inspired acquisition 13 years ago, Google still hasn’t broken out the unit’s results in an earnings report. That has left investors to piece for clues, as expensive forays into original programming and cable-television replacement services have thus far failed to pay off.

Analysts estimate YouTube is responsible for around 15% of Google’s sales. On the call, Ms. Porat said that growth in clicks on the platform fell in the first quarter.

YouTube has recently attracted criticism that it doesn’t effectively control the sometimes dangerous content posted and promoted on the video-streaming service. The rising costs likely reflect additional efforts by the company to police the platform, not unlike the heavy investment Facebook has made in response to critiques about its products.

Mr. Pichai said that reducing harmful content was “the most important area of focus” for YouTube.

In a milestone long on the horizon, Google this quarter stretched to a record in employment, adding another 18,000 jobs and crossing what is at least a psychologically significant barrier of 100,000 full-time employees. That surely understates total head count, as Google doesn’t detail its burgeoning contract workforce.

The new faces are a sign of success, but introduce risks. Some current and former employees lament what they call the slow degradation of the company’s entrepreneurial culture, and the cost of fighting for Silicon Valley talent places increasing pressure on Google’s bottom line.

Updated: 4-30-2019

Alphabet Shares On Track For Worst Day Since 2008

Google parent’s shares decline as much as 8.6% as investors react to sluggish earnings report.

Investors sent shares of Alphabet Inc. falling toward their worst day in 10 years Tuesday, punishing the Google parent’s stock after its quarterly results signaled growth is slowing at the search-engine giant.

Shares fell as much as 8.6% shortly after the opening bell, a drop that would mark the stock’s worst day since December 2008. The decline erased a sizable chunk of Alphabet’s 2019 advance, putting the stock up 14% for the year, compared with the S&P 500’s 17% year-to-date rally.

Tuesday’s slide came after the company reported quarterly sales and profits that were weaker than analysts had expected. Perhaps more worrisome for Alphabet investors, the figures showed growth slowing across the company’s business units.

The data came on the heels of upbeat results from other popular internet companies Amazon.com Inc., Microsoft Corp. , Facebook Inc. and Twitter Inc., all of which climbed following their latest earnings results. Shares of each of those companies are up 28% or more for the year.

Those gains are a sign that investors are favoring faster-growing companies with more sturdy revenue gains as global economic growth slows in early 2019. The Federal Reserve’s pause in interest rates has also pushed investors to seek out higher-yielding assets and take on more risk, analysts say.

But Alphabet’s slide was another example of investors penalizing shares of firms that miss earnings expectations this reporting season, with many wary of a slowdown in profit growth expected this year.

“It is rightly being compared to the other large digital companies,” said Christopher Rossbach, chief investment officer at J. Stern & Co., a private investment office that owns shares of Alphabet, Amazon and Facebook. “A 5-10% reaction on numbers that have come in below analysts’ short-term expectations is normal, especially for a stock that has done as well as it has.”

The decline in Alphabet shares sliced tens of billions of dollars off the company’s market value, putting it further behind peers Microsoft, Apple Inc. and Amazon in the race to be the world’s largest public company. Alphabet’s market cap dipped below about $825 billion, based on the company’s updated share count released Tuesday in a regulatory filing, according to Dow Jones Market Data.

Microsoft has a market value just below $1 trillion following last week’s upbeat earnings, while Apple is at about $960 billion and Amazon.com is at roughly $950 billion. Apple is slated to post its latest results after the market closes Tuesday.

For the first quarter, Alphabet posted revenue of $36.3 billion, about $1 billion short of forecasts. That marked a 17% increase from the same quarter a year earlier, the slowest growth since 2015. Profits of $9.50 a share also missed expectations.

The company’s margin dropped to 18% from 25% a year earlier, hurt by a $1.7 billion fine from European antitrust regulators last month for limiting how some websites could display ads sold by rivals.

Excluding the fine, though, the company’s margin came in at 23% and its per-share earnings were $11.90 a share, a sign of the steady profitability that has drawn investors to Alphabet in recent years.

“We are still very positive on it for the long term,” Mr. Rossbach said. “We think it’s growing very healthily for a company at the scale that it has.”

Foxconn Tore Up A Small Town To Build A Big Factory—Then Retreated

The iPhone maker got fat incentives to build a $10 billion LCD plant that largely hasn’t materialized on land where Mount Pleasant, Wis., razed homes and crops.

Six miles west of Lake Michigan lies a cleared building site half again as big as Central Park, ready for Foxconn Technology Group’s $10 billion liquid-crystal-display factory.

Contractors have bulldozed about 75 homes in Mount Pleasant and cleared hundreds of farmland acres. Crews are widening Interstate 94 from Milwaukee to the Illinois state line to accommodate driverless trucks and thousands of employees. Village and county taxpayers have borrowed around $350 million so far to buy land and make infrastructure improvements, from burying sewer pipes to laying storm drains.

One Thing Largely Missing: Foxconn.

President Trump and Foxconn Chairman Terry Gou hatched the factory plan in 2017, and both attended last summer’s gold-shovel groundbreaking in Mount Pleasant, 20 miles south of Milwaukee.

As of Dec. 31, the Taiwanese manufacturing giant, famous as an Apple Inc. supplier, had spent only $99 million, 1% of its pledged investment, according to its latest state filings. The company projected as many as 2,080 in-state employees by the end of 2019 but had fewer than 200 at last year’s end, state filings show. The village is still awaiting factory building plans for review. Locals said Foxconn contractors have recently been scarce on the site.

The impact on Mount Pleasant, by contrast, is palpable. Its debt rating has slipped. Local politics has become fraught. Neighbors have fallen out over land seizures.

“At some point we’re talking about things that are just imaginary,” said Nick Demske, a commissioner in Racine County, where the plant is. “We’re pretending.”

Mount Pleasant and the county referred inquiries to county executive Jonathan Delagrave and an outside spokesman. A project this massive is bound to have hiccups, Mr. Delagrave said. “I think it’s fair for people to question it, absolutely. But I also think that it’s fair to say a lot of good things are happening.”

Foxconn said it “stands by the job creation commitments that we have made, and we look forward to completing” the manufacturing facilities. “After the winter break, which has an impact on construction projects of this scale, we are now looking forward to beginning the next phases of construction…by Summer 2019 with production expected to commence during the fourth quarter of 2020.”

It said it awarded contracts in the past months valued at nearly $34 million for construction of utilities and roadways. “We believe in Wisconsin, its people, and its potential to become a high technology hub.”

Communities across America are in an incentives race for marquee projects, but some big ones have collapsed. Amazon.com Inc. walked away from a $2.5 billion package from New York City. General Electric Co. returned $87 million in incentives after significantly scaling back its headquarters in Boston because it no longer needed the space.

The Foxconn project is among the biggest U.S. public-incentive deals ever offered to a foreign company, a more than $4 billion package of state and local tax breaks and investments. A Foxconn video last year showed renderings of a futuristic campus resembling Apple’s spaceshiplike Silicon Valley headquarters, with light rail shuttling workers. Foxconn said the video was for illustration purposes.

Foxconn, known formally as Hon Hai Precision Industry Co., is the main assembler of Apple’s iPhone and a major employer in China. It reported annual revenue of $5.29 trillion New Taiwan dollars (US$171 billion today) in 2018 and said profits have been under pressure from lower iPhone sales in China.

Foxconn had planned to make large state-of-the-art screens in Mount Pleasant but said last summer it would make small screens of an older technology instead, citing the distance from the Asia supply chain after Corning Inc. said it wouldn’t build a glass facility next door.

In January, Foxconn said it was backing out of the plan to build an LCD factory in the village, citing high U.S. labor and material costs. Days later, after a phone call between Mr. Trump and Mr. Gou, Foxconn reversed course and said it would go ahead with the facility making small screens, adding some other functions.

The community of 27,000 people remained skeptical the project would materialize on the scale promised. Those doubts grew when Mr. Gou said this month he was giving up daily control of the company he founded to run for Taiwan’s presidency. Foxconn said Mr. Gou will remain involved.

On April 23, Wisconsin Gov. Tony Evers said that Foxconn told him it would seek changes to its state contract and that he asked it for details as soon as possible. The state hasn’t paid incentives to Foxconn, because it missed employment goals.

Foxconn said in a media statement the same day it was eager to explore “areas of flexibility within the existing agreement” though it remained committed to hiring 13,000 people in the state. Foxconn’s chief U.S. strategist, Alan S. Yeung, the next day tweeted: “Who has the crystal ball to predict if 13,000 jobs will be created by the year 2032? Esp in April ’19?” He later told reporters he backed the 13,000-job commitment.

Foxconn is still actively investing, local officials said. It built a multipurpose building in Mount Pleasant, largely a staging area for construction for now, and is using a nearby building as a training center. It has sponsored student engineering competitions at the University of Wisconsin and bought downtown buildings in Green Bay, Racine, Milwaukee and Madison; most are empty.

Foxconn executives didn’t participate in a village briefing on the plant in April. Foxconn said its construction contractor attended the meeting on its behalf. He spoke for about five minutes and excused himself without taking questions from the audience.

Claude Lois, a consultant Mount Pleasant hired to manage the deal, said at the briefing the village must abide by its 170-page Foxconn contract, regardless of the company’s delays or tweaks. It would be foolhardy to slow down public investment, he said.

Leslie Maj, a 60-year-old former business manager, raised her hand. “Is our village going to go bankrupt? Is our county going to go bankrupt?” she asked. “I’m telling you, we’re afraid.”

Mr. Lois told her he would try to get a Foxconn executive at the next meeting. The village spokesman said there were financial guarantees in the agreement that require Foxconn to cover the cost of public investments over time.

Updated: 5-2-2019

Foxconn Chairman Meets With Trump As Wisconsin Plant Plans Fall Behind

Taiwanese manufacturing giant and Apple supplier has been lagging behind its projections for factory.

Foxconn Technology Group Chairman Terry Gou is heading to Wisconsin Thursday, where the Apple Inc. supplier is building a factory, a day after meeting with President Trump at the White House.

Foxconn confirmed in a statement that Mr. Gou met with Mr. Trump, saying the two “discussed the latest updates and the positive progress of the Wisconn Valley Science and Technology Park project among other matters.”

The Taiwanese manufacturing giant is lagging behind its projections for the Wisconsin liquid-crystal display factory, where it pledged two years ago to invest $10 billion and hire 13,000 people by 2032.

The Foxconn project is one of the biggest U.S. public-incentive deals ever offered to a foreign company, a more than $4 billion package of state and local tax breaks and infrastructure investment.

Foxconn had spent only $99 million, 1% of its pledged investment, as of the end of the December, according to its latest state filings. The company had fewer than 200 employees, though it projected having as many as 2,080 in-state employees by the end of 2019, state filings show.

President Trump has been involved with the Wisconsin project since its inception, and said he was the one who advised Mr. Gou to build in rural southeastern Wisconsin. At last year’s groundbreaking, President Trump touted the plant as a pillar of his plan to bring advanced-manufacturing jobs to the industrial Midwest and described Chairman Gou as “one of the most successful businessmen in the world, very few people even close.”

But President Trump didn’t mention Foxconn in a Saturday night rally in Green Bay, a rare omission for a project he has described as “the eighth wonder of the world.

The White House didn’t respond to a request for comment.

As he arrived for his White House visit, Mr. Gou wore a baseball cap decorated with the Taiwanese and American flags, and presented a cap like it to President Trump, according to Taiwan’s official Central News Agency. On his official Facebook page, Mr. Gou posted photos of himself standing outside the White House and saluting while standing in front of the Lincoln Memorial.

Mr. Gou, who recently announced his candidacy for president of Taiwan, also discussed his political future with President Trump, according to Taiwan’s news agency.

The U.S., like most countries, doesn’t officially recognize Taiwan, having switched diplomatic recognition to China four decades ago.

Wisconsin Gov. Tony Evers, a Democrat who defeated Republican Scott Walker last fall, wasn’t informed of or invited to the White House meeting, according to his spokeswoman.

The governor will be meeting with Mr. Gou later in the day, he said during an unrelated news conference Thursday morning. Mr. Evers said he planned to tell Mr. Gou that he was eager to help Foxconn succeed, as well as ensure the project protects taxpayers and meets the state’s environmental standards.

The governor said on April 23 that Foxconn is seeking changes in its contract with Wisconsin, which would award up to $2.85 billion in incentives if Foxconn meets employment and investment benchmarks. Mr. Evers asked the company to provide details on the changes soon “so that we can all view this project with as much relevant information as possible.”

The local governments in Mount Pleasant, the factory site’s location about 20 miles south of Milwaukee, have borrowed $350 million so far to clear and prepare a 1,200-acre site for Foxconn. The site is mostly barren, except for heavy equipment and a multipurpose building used as a site for staging construction equipment.

Foxconn said this week that it is picking up the construction pace after a monthslong winter break. Foxconn said it recently awarded $34 million in contracts for construction of utilities and roadways at the site. The company said it expects to begin “the next phases of construction…by summer 2019 with production expected to commence during the fourth quarter of 2020.”

Mr. Trump’s Prod

Mount Pleasant’s Foxconn odyssey started with a presidential suggestion. Mr. Trump was in a helicopter over Wisconsin in early 2017 after giving a “Build American, Hire American” speech at a tool factory. He looked out on an abandoned manufacturing site south of Racine County, he said at the Foxconn groundbreaking. He had heard Mr. Gou was looking to expand, he said, so when they met soon thereafter, he suggested Foxconn look at southeastern Wisconsin—a suggestion taken up and driven by the state’s then-governor, Scott Walker.

“I had this incredible company going to invest someplace in the world—not here necessarily,” Mr. Trump said. “And I will tell you they wouldn’t have done it here, except that I became president.” He didn’t mention Foxconn on April 27 during a rally in Green Bay, Wis., though he touted manufacturing-job growth the state.

The Racine County area was once among the wealthiest in the state, credited with inventing products from the garbage disposal to malted milk, and home of the Frank Lloyd Wright-designed headquarters of SC Johnson, maker of Pledge, Raid and Drano. The county lost major employers with the manufacturing decline. The city of Racine has one of the state’s highest poverty rates.

Foxconn offered the chance to reinvent the area as Wisconn Valley Science and Technology Park, an advanced-manufacturing answer to Silicon Valley, said Mr. Delagrave, the Racine County executive. “When you have a chance to transform your community,” he said, “my philosophy is you take that opportunity.”

State and local governments and economic-development groups devised a complex deal in which the state offered $2.85 billion in tax credits, to be paid incrementally if Foxconn hit hiring and investment benchmarks. Mount Pleasant agreed to borrow money to acquire the land for the project within a year and meet aggressive timelines for clearing and preparing the infrastructure.

Messrs. Trump and Gou in the White House in July 2017 announced Foxconn had chosen Wisconsin as the site. The state and local governments signed off on incentives and benchmarks that year.

“What they asked for was speed,” said Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce, which was involved in early talks with Foxconn. “They’re used to the Chinese government saying, ‘Oh, you need that property? You’re on.’ ”

The village bought hundreds of pieces of property, holding out the possibility of enforcing eminent domain. It worked out deals with Racine County, the water authority and the power company to bring services to the site. The state legislature agreed to bypass some permitting processes, letting Foxconn fill wetlands without getting an environmental-impact statement. The state received a $160 million federal grant to help expand Interstate 94 a decade ahead of schedule.

The public work has met or exceeded target dates, the village spokesman said.

“It’s almost like they were working triple time to make sure it gets done so nobody had the chance to change their mind,” said Cathy Jensen, 50, a retired grandmother who is fighting seizure of her five-bedroom house in state court.

She said she wants to stay in the house where she has lived for 23 years, although the neighborhood has changed. “Out the back was cornfields one year, cabbage another, that was the only changes of scenery,” she said. “Now it’s horrible, you don’t even want to look at it.”

Most homeowners signed deals and moved out. Decisions divided friends, neighbors and couples, Mrs. Jensen said. “It was, ‘Why are you doing this? Why are you fighting, or why are you not fighting?’ ”

Jim Spodick, 62, a retired developer and co-host of a YouTube show, “Talking Racine,” regularly drives the 30 minutes around the property, photographing progress. “People wanted to believe and they did believe,” he said, watching contractors demolish a grain silo, “and there’s a whole lot of shock going on right now.”

Holdouts

Kim and Jim Mahoney, 49 and 48, are rare holdouts still living on the vast site. Ms. Mahoney said the village recently dropped its bid for their 1,800-square-foot house, leaving them on a cul-de-sac with a view of Foxconn’s multipurpose building. The village spokesman declined to comment, citing confidentiality requirements.

“I don’t want Foxconn to fail,” said Ms. Mahoney, a paralegal and a regular at public meetings who keeps an inventory of houses and farms that are cleared. “It would be devastating to the people of Mount Pleasant and this state. We just want Foxconn and the village and the state to be held accountable to the deal they made.”

Moody’s Investors Service downgraded Mount Pleasant’s credit rating in August over its debt for the project. Moody’s in January said Foxconn’s anemic hiring was a negative sign for the village, noting Foxconn has been lowering expectations for hiring and making “continual changes in the scope of the project.” The village spokesman said its credit rating is solid and it is confident it has adequate guarantees.

The Foxconn agreement has a clause that acts as insurance, said the Milwaukee commerce association’s Mr. Sheehy. Foxconn agreed to pay taxes starting in 2023 on at least $1.4 billion in property value, whether it built anything or not. So Foxconn is set to pay a minimum $31 million a year, or $886 million through 2047, roughly what the village committed to invest.

“Whether you have a yurt out there or a modern plant making screens,” Mr. Sheehy said, “it will be worth $1.4 billion.”

The village had bought additional sites, hoping to transfer them to Foxconn for expansion. This month, its board voted to lease back 966 acres to a farmer for $170,000 a year, after buying the property from him last August for $1.7 million.

Mr. Demske, a poet and librarian, ousted a 20-year Racine County supervisor last year. Mr. Demske initially campaigned on better jobs for Racine’s poor and on criminal-justice reform and ended up focused on bringing more accountability to Foxconn, a topic he said came up constantly as he knocked on 1,600 doors. A Marquette University Law School poll found in April that 47% of registered Wisconsin voters think the project will cost more than it is worth.

One of five newly elected supervisors, Mr. Demske said he wasn’t certain Foxconn would produce anything there. He said the relationship between Foxconn and Mount Pleasant gives the company disproportionate say-so. “We’ve dug ourselves in too deep,” he said. “What can you do with an entity that big other than ask them to play nice with you?”

Negative Yields Deepen Along With Europe’s Problems

The amount of negative-yielding government bonds outstanding through 2049 has risen by 20% this year.

A growing number of investors are paying governments in Europe for the privilege of holding their bonds.

The amount of negative-yielding government bonds outstanding through 2049 has risen by 20% this year to about $10 trillion, the highest level since 2016, according to data from Deutsche Bank Securities.

The expanding pool of such bonds—which guarantee that a buyer will receive less in repayment and periodic interest than the buyer paid—highlights how expectations for growth in much of the developed world have deteriorated.

Government debt sold by countries including Germany, Ireland and Sweden are among those with negative yields. German debt maturing in 2024 recently yielded minus 0.42%, while Irish and Swedish bonds of the same maturity traded at minus 0.32% and minus 0.15%, respectively. Corporate bonds issued by Sanofi SA SNY +1.21% maturing in 2022 and LVMH Moet Hennessy Louis Vuitton SE MC -0.58% maturing in 2021 also currently trade at a negative yield, according to data from FactSet.

Negative yields also mean it will be difficult for developed economies to revive growth should they enter a recession, with historically low interest rates still in place. The European Central Bank’s deposit rate is currently minus 0.4%, and policy makers this year ended bond purchases that were intended to boost growth and inflation, adding trillions of euros of government and corporate bonds to the ECB’s balance sheet.

“It’s just not a great starting point to already have negative interest rates,” said Torsten Slok, chief economist at Deutsche Bank Securities. “It’s getting more and more difficult for policy makers to respond to headwinds.”

Policy makers upended expectations for a rate increase later this year, and lowered growth and inflation expectations, suggesting negative interest rates will remain in place well into the future. In March, the ECB slashed its forecast for real gross domestic product growth this year to 1.1%, from 1.7% just three months ago, and its forecast for consumer-price inflation to 1.2% from 1.6%.

Consumer confidence also weakened this month, after improving in the three previous months, according to a monthly European Commission survey. And that decline followed purchasing managers surveys earlier this month that showed business activity slowed in April.

Europe’s growth problems are evident in two of its largest economies. In Germany, where growth has stalled, officials plan on running a budget surplus rather than stimulating growth by running a budget deficit. This is a problem because such fiscal restraint by Europe’s largest economy could choke off growth in the rest of the region. By contrast, in Italy, where the heavy debt burden is already seen as a problem, officials have proposed borrowing more to kick-start persistently slow growth.

The discrepancy highlights the conflicts that can arise from having a monetary union but not a fiscal union and a political union, said Gershon Distenfeld, co-head of fixed-income at AllianceBernstein. The ECB sets interest rates for the 19 nations that use the euro currency, but there is no comparable entity that coordinates government spending among those countries.

Still, Mr. Distenfeld has bought German government debt at negative yields, while hedging the euro against the dollar to make the trade more profitable.

“One day people are going to wake up and say, ‘What was I doing buying five-year German debt at negative yields?’ ” he said. “But that may not happen in the next year.”

The gap in yields between U.S. government securities and sovereign debt from Germany of similar maturity has been unusually wide at near 3 percentage points. That is about what foreign investors pay on an annualized basis to hedge against fluctuations in the dollar, and conversely what U.S. investors gain by hedging against the euro.

Many investors in Europe have opted not to hedge and instead are buying negative-yielding European debt, pushing those yields lower.

Investors in currencies, which are heavily swayed by expectations for interest-rate policy, have recently pushed the U.S. dollar to a 22-month high against the euro. That reflects speculation that the Federal Reserve is less likely to cut interest rates than the ECB.

While a weaker currency is good for European exports, it doesn’t provide much help because of continuing trade tensions throughout the global economy that are slowing commerce, Mr. Slok said.

Policy makers have already moved to make low-cost loans available to banks in an attempt to stimulate lending, and are examining a tiered approach to deposit rates. That could exempt banks from punishing fees imposed by the ECB on part of the excess liquidity that the firms parked with the central bank.

Richard Sega, global chief investment strategist at Conning, who manages accounts for pension funds and insurance companies, said he is buying U.S. corporate and mortgage bonds without hedging for currency risk for European clients.

Bond yields are significantly higher in the U.S., though European investors could lose money if the euro were to rally against the dollar. The chances of that appear slim because Europe’s problems are so extensive, Mr. Sega said.

“I don’t think there’s a big chance that a resurgence in European growth leads to tighter financial conditions,” he said

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