MADRID | By Sean Duffy | Investors are expecting continued falls in the value of Greek bank shares and indeed the value of the Athens stock exchange. That is due to the fact that the new Government of Alexis Tsipras appears to be on a collision course with the country’s creditors, something that may spook investors in the weeks ahead should agreement not be forthcoming.
WASHINGTON | By Pablo Pardo | Steven Cohen, James Simmons, Ray Dalio, John Paulson… And, above all, of course, Julian Robertson and George Soros. Hedge fund managers have been lionized, adored, despised and hated. And for good reason: the success of those investment vehicles is unparalleled. According to the New York Times, there are currently 10,000 hedge funds in the world, and the number is growing, with assets worth $2.8 trillion (€2.2 trillion).
By Benjamin Cole via Historinhas | The Swiss National Bank gave up trying to peg the Swiss franc to the Euro, and let the Swiss currency shoot to the moon. Some bankers were squeamish about a large SNB balance sheet, which the bank was garnering by printing Swiss francs and buying non-Swiss bonds.
MADRID | By J.P. Marín Arrese | The Swiss National Bank decision to scrap the € 1.20 ceiling on its currency on Thursday caught investors by surprise. The ensuing steep appreciation, more than 30%, has also bewildered the Swiss monetary authorities. Shock waves hitting the Euro have sent its quote to fresh lows against the dollar, plunging the Forex into utter disarray. Furthermore, as short-term deposits will bear negative interest rates the key financial sector is bound to face rough times.
MADRID | The Corner | Maximum uncertainty shook the global markets today, after the Swiss National Bank unexpected double move of removing the controverted minimum exchange rate to the EUR of 1.20 and lowering interest rates to –0.75%. Volatility will continue in the coming weeks “as unhedged Swiss companies may start hedging and the SNB may come up with additional measures like enforcing the use of negative interest rates to strengthen other currencies against the CHF,” explained UBP’s Swiss equities expert Martin Moeller. Some analysts believe the strategy might be too radical and “counterproductive for the ECB.” Stocks in Switzerland fell about 10 percent, while broader European indexes rose modestly.
ZURICH | UBS analysts | Our central case is that we will not have deflation in any country except for Spain in 2015. But we cannot rule out the possibility of deflation, so here we look at assets that may outperform during periods of deflation. Generally deflation is bad for equity which de-rates aggressively but the story is more nuanced because particular sectors and styles are affected quite differently.
MADRID | By J.P. Marín Arrese | In the OMT case brought before the EU Court of Justice by the German Constitutional watchdog, the Advocate General has delivered a positive opinion. As the Court usually follows such opinions, the last hurdle for implementing the planned QE has been lifted. Yet, the Advocate General sets a number of requirements that will curtail the ECB’s room of manoeuvre.
LONDON | Barclays analysts | The European Court of Justice has already published its opinion about the Outright Monetary Transaction (OMT): the ECB’s anti-crisis plan was “necessary” and “in principle” is in line with EU law. This much awaited opinion will have important implications for any broad-based ECB government bond purchases (QE), which we think are likely to be announced next week.
MADRID | By J.P. Marín Arrese | The Spanish Justice Department has launched a thorough investigation into the accounts which were submitted prior to the original BANKIA share issuance back in 2011. Experts from the Bank of Spain have delivered a devastating report implying these accounts did not provide a fair elucidation of the balance sheet. Should the final ruling follow that line, it could open the way for multi-billion euro claims from investors. Even though BANKIA has announced it can cope with such losses, with taxpayers footing two-thirds of the bill, the impact on Spanish financial market credibility could wreak havoc.
MADRID | The Corner | ECB staff members have presented models for buying as much as €500 billion ($593 billion) of investment-grade assets, mostly sovereign bonds, according to sources close to the Governing Council. This will amount to an incomplete, partial solution according to some analysts. “It looks like a lot of money, although it won’t be enough” to expand the lender’s balance sheet by €1Tr as is planned, said Alberto Vigil of Barclays on Monday.