Markets

oil barrels

Oil Rally Fuels Reflation Euphoria

Julius Baer Research |  Non-OPEC producers under the lead of Russia will join OPEC’s supply cuts, which was necessary for the deal to become effective. With the paperwork done, oil producers must now walk the talk. There are many buts and ifs and we remain sceptical if compliance with the quotas is sufficient to materially shift the oil market’s balance


Inditex

Greens’ accusation of Inditex’s alleged tax evasion may be a call for more fiscal transparency

The Green party lawmakers in the European parliament have accused the world’s biggest clothing retailer Inditex of avoiding paying at least 585 million euros in taxes between 2011 and 2014. According its report ‘Tax Shopping: Exploring Zara’s Tax Avoidance Business’, the fact that Inditex diverted bonus payments to the Netherlands has cost Spain some 218 million euros in uncollected tax revenues, Germany 25 million, Italy 57 million and France 78 million, amongst others.


aenasede

No dilemma in AENA: between competitiveness and making money, the government picks the latter

They say that governing is all about choosing (between what is bad and what is worse) and this government is once again facing a difficult decision: whether to lower AENA’s airport tariffs, thus benefiting Spain’s tourism industry which generates the most jobs, or do their own thing and make money. I say this because, obviously, the best way of making money is not to lower the tariffs AENA charges the airlines.



high yield credit

High Yield Credit – Good By Default

AXA IM | Our twelve month default rate forecast for US high yield (HY) now stands at 3.6% (peak forecast was 6%+) and 2.1% for European HY. The twelve month default rate should peak at just under 6% in January-February 2017 as should the US-EU default rate differential at just over 4%. European HY remains cheap from a default valuation perspective; US HY remains rich but has been improving.



Markets

Inflation May Not Be Coming, But People Are Starting To Believe It Is

AXA IM | The broad regime change is now underway, from regulation, austerity, QE and bond markets towards, more growth, market pricing and real assets. The recent sell off in bonds is not so much about a change in views on inflation and growth (the new narrative to ‘explain’ bond yields), as it is a normalisation of interest rates away from QE towards ‘free market’ valuations, ones which are set by inflation and growth and would be much higher.


Talgo's high speed train

Spanish Small & Medium Midcaps: Talgo

Alfonso de Gregorio (Gesconsult) | Talgo is a value investment. Its stock price its attractive and it has huge possibilities of winning new contracts which would really boost the company’s valuation. Amongst the risks facing the company, there is the scarcity of contracts in the period 2015-2016, which has generated a certain lack of confidence in the company’s ability to win new contracts.


Bayer's M&A deal with Monsanto

Low Interest Rates Fuel Record M&A Deals

Ofelia Marín-Lozano | The exceptionally low interest rate scenario, with short-term rates even in negative territory, are undoubtedly an incentive for major corporate transactions. Being able to get 20-year funding at a fixed annual rate of below 2% is fuelling a slew of M&A deals which, in another scenario, would be prohibitive.