Top Stories

Markets

ecb1

Markets 9th September 2014

G4 central banks expanded their balance sheets by $4Tr in 4 years

MADRID | The Corner | The size of the ECB’s private asset purchase plan is an enigma. According Mr Draghi, the central lender aims to bring its balance sheet to 2012 levels, that is,  from the current €2Tr to €3Tr (March 2012). Some analysts believe he went too far in Jackson Hole and the expansion shall not exceed €450bn (see chart above). Meanwhile, the G4 central lenders have increased their balance sheets in $4Tr since 2010- Only the BoJ continues to expand it at a rate of $650bn/year. And even if the Fed starts unwinding its stimulus program in October, if we add about €450bn annual from the ECB would liquidity would be increased by €1Tr.

greek banking sector

Markets 8th September 2014

How many NPLs in the Greek banking sector are also non-recoverable loans?

ATHENS | By Jens Bastian via MacroPolis | The recent presentation of half-year results by the four systemic banks in Greece – National Bank of Greece (NBG), Piraeus Bank, Alpha Bank and Eurobank – brought a mixture of good news and underlying structural challenges affecting the operational capacity of domestic lenders.

No Picture

Markets 8th September 2014

Will we see a second round of QE in Europe soon?

MADRID | The Corner | “The ECB’s quantitative easing in Europe came late compared to the US Fed’s but before we expected,” Barclays’ Alberto Vigil commented on Monday, who believes that a second round of QE stimulus in the eurozone is about to take place soon. “Little bears may become a little like bulls,” he ironizes.  The combination of the QE with the strength of the American data has already brought a significant correction of the euro of 7%.

 

 

No Picture

Markets 8th September 2014

Peripheral bonds at minimums will make financing costs plummet

MADRID | The Corner | The last ECB measures will apease investors who see that once again central banks are betting on the economy although this means forcing their mandates. And they had an immediate effect on the EU’s peripheral bonds: Spanish 10-year-bond yield closed at 2.05% and 5-year-bond at 0.72%, while risk premiums fell to multi-year lows. This will serve to drastically reduce the cost of financing and making it much easier for large companies to  get funding. The euro’s strong devaluation against major world currencies should serve to increase the competitiveness of European producers and increase the region’s exports, analysts at Link commented on Monday.

No Picture

Markets 5th September 2014

Spanish banks seek profits without lending

MADRID | By Francisco López | The purchase of Barclays’ retail banking division in Spain by CaixaBank has further accentuated the gap among the three major lenders (Santander, BBVA and Caixa) from the rest of their competitors. Experts insist on this process of bipolarisation of the Spanish banking system, with very big banks in the national and even international level, and other local, small or very specialised banks. All banks have done their homework with the restructuring, but now they face the most complicated challenge: to adapt their business models to the new scenario emerged after the crisis and become profitable again.

ecb

Markets 4th September 2014

ECB will give banks money to spend and punish those who sit on their hands

MADRID | The Corner | Mario Draghi finally unveiled the European Central Bank’s betting on further stimulating the eurozone: benchmark main refinancing rate will be cut from 0.15 per cent to 0.05 per cent and marginal deposit facility risen 0.1 per cent to 0.2 per cent. Also a programme to purchase a “broad portfolio of transparent asset-backed securities” will be in place from October this year. Thus, the ECB becomes the first central bank to announce large-scale asset purchases and negative deposit rates. Reactions were quick: the euro fell below the key threshold of $1.3 to hit a low of $1.2995. 

QE

Markets 4th September 2014

QE gathers momentum

MADRID | By J.P. Marín Arrese | Mario Draghi’s anxious call to governments, urging them to put the house in order by implementing a combined economic and monetary policy, seems the right course of action. Deflationary risks run high as prices fall well behind the medium-term target. Once again, the Eurozone seems stuck as the growth prospects dwindle. Nothing new, as its appalling record during the crisis shows. Filling gaps through moral lessons, instead of money, hardly solves deeply entrenched problems.

bonds and equities

Markets 1st September 2014

Do equities and bonds live on different planets?

MADRID | The Corner | While bonds are considering a world without growth nor inflation, equities seem much more optimistic. On their Monday comment, JPMorgan analysts point out that, on a global level, monetary policies are still increasingly more expansionary in aggregate form.

 

No Picture

Markets 18th August 2014

Markets welcome Eurozone economic ‘bad news’

MADRID | By J. J. Fdez-Figares (LINK) | Stock markets face today a new week in which geopolitical conflicts, especially in Ukraine, and macroeconomic data that will be announced during the day will monopolize the attention of investors. Although we expect trading volumes remain low, typical of summer dates, we do expect a slight rise in volatility, especially given the current stage of confusion, both in the geopolitical and economic environment that financial markets are facing.