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In Europe 6th October 2014

European Investment Banks: Q314 – It’s all about September

ZURICH | The Corner | UBS analysts explain that in September, volatility started rising in almost all major markets and asset classes. Higher Rates and FX volatility, driven by diverging monetary policies in the US and Europe, typically suggest higher activity and more favourable operating conditions for FICC. Although UBS analyts are still cautious about FICC for structural reasons, some cyclical improvement and potential upgrades in FICC consensus estimates for Q3 2014 are now more likely (UBS tweaks his CS and DBK 2014E EPS forecasts 2% and 3% upwards, respectively). For global IBs, they forecast FICC revenues up 9%, Equities up 3% and IBD up 12% y/y. In the European IB space, they prefer Barclays and SocGen for stock specific reasons.

moscovici hearing

In Europe 3rd October 2014

Moscovici: between French drive and German rigour

BRUSSELS | By Alexandre Mato | “I’m French, I’m deeply French, I will remain French”, the former finance Minister said before EU legislators, eliciting uproarious laughs from those present, a remark which was followed by a declaration of independence “but here I will stand as a European Commissioner”. There is much at stake, and Pierre Moscovici was attempting to reassure Europe that his was a brief to ensure growth in an economy that can scarcely afford the spending required to do so.

 

euro dollar

In Europe 1st October 2014

IN DEPTH: Is low inflation the greatest problem for the European economy?

MADRID | By J. L. Martínez Campuzano (Citi) | I beg your pardon, I meant to say “persistently low” inflation. If it is not (and here we are in agreement), then why is the ECB repeating the same argument over and over to justify its decisions? Non-existent official rates, negative deposit rates, unlimited liquidity provision for banks, and the latest invention: the purchase of securitised corporate paper for credit operations. 

BCE's QE

In Europe 30th September 2014

ECB’s QE: how it can really work (or fail)

MADRID | By Javier Arce |  The true danger of a third recession in the eurozone can dissipate, and quickly. Only if after the stress test and the banking union, the euro’s depreciation, the EQ, the takeover of Juncker and its new Commission… we realize that we live in El Ejido, and not in Hernani. Let me explain that.

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In Europe 29th September 2014

Inflation: A monetary cancer metastasizes in Europe

VIENNA | By Keith Weiner via Truman Factor | The European Central Bank again cut the interest rates it controls. Notably, the deposit rate was moved deeper into negative territory. It is now -0.2% (minus 20 basis points, that is not a typo). The ECB says it’s trying to nudge prices higher, but it’s actually feeding the cancer of falling interest. The linked article above, like most, is focused on the quantity of euros and the presumed direct relationship to price. The following bit of editorializing from that article is uncontroversial in Frankfurt, London, New York, Mumbai, or Shanghai.

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In Europe 27th September 2014

Does Greece need a third programme?

By Jens Bastian via MacroPolis | During his visit to Berlin this week, Prime Minister Antonis Samaras repeatedly emphasised that Greece does not require a third financial support programme. In his conversation with Chancellor Angela Merkel he highlighted that the Greek sovereign was able to successfully return to international bond markets in April after a three-year forced hiatus.

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In Europe 25th September 2014

Euro area: A chartbook of key economic indicators

LONDON | The Corner | According to experts at Barclays, the significant depreciation of EUR/USD (Fig 1) has been a key data event in the past few months. However, the sharp fall in oil prices has partially offset this positive effect on inflation, which has remained at 0.4% y/y in August. The inflation data remain crucial for the ECB, which has repeatedly emphasised that there is unanimous commitment to use all available tools to prevent a period of prolonged low inflation. We now expect QE on sovereign bonds, most likely by Q1 15.

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In Europe 23rd September 2014

Change of pace in Europe: Spain, Portugal, Ireland and Belgium will lead growth between 2015 and 2016

MADRID | By Julia Pastor | ECB’s Mario Draghi brought put the bleak panorama that the Eurozone’s economy is facing on the table, and we saw it again reflected in the not-so-promising September manufacturing PMI. The index came in at 50.5 compared to 50.7 in the prior month, whereas EZ Services PMI accelerated at 52.8 for September versus 53.1 in August. Even the composite index plummeted to its lowest fee in the last nine months and reached 52.3. In Germany, both manufacturing and services indexes have also decreased; while in France only manufacturing improved, although it is still contracting.