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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.

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In Europe 15th August 2014

ECB under pressure, markets demand QE policy

MADRID | The Corner | The European weak economic growth increases the pressure on the ECB to take additional measures or the long-awaited QE to boost growth, beyond those already announced in June and of which the effects probably will not be seen until 2015. At the moment the ECB in its monthly report reemphasized that there is “a continued moderate and uneven recovery of the euro area economy”, with low inflation rates and a weak monetary and credit evolution. At the same time, inflation expectations for the euro area in the medium and long term remain firmly anchored in line with the ECB’s target of keeping the inflation rates at levels below but close to 2%.

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In Europe 15th August 2014

Putin’s ‘moderate’ speech calm the investors

MADRID | By J. J. Fdez-Figares (LINK) | The main European and American stock markets closed yesterday up in a new session with low activity and reduced volatility, where the investors interpreted the words of the Russian President Putin, in his speech in Crimea, as an attempt to avoid the international isolation of his country as a result of their involvement in Ukraine. Yesterday again the macroeconomic figures published in the Eurozone surprised negatively because to the shrinking economic growth in Germany in the 2Q 2014, the first produced since 1Q 2012 during the euro crisis, the stagnation of the French economy and in the whole of the eurozone during the same period – the German and French economies account for about 50% of the Eurozone.

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In Europe 14th August 2014

The IMF crisis and how to solve it

ATHENS | By Gabriel Sterne via The Agora | The IMF is approaching its 70th birthday and the Greek programme has been a candidate for one of the most credibility-sapping in its history. Here I trace the IMF’s role in programme from its stormy launch; its misfiring implementation; the Fund’s half-hearted apology; and ongoing efforts to draw lessons and revise its sovereign debt restructuring framework, which appear destined to deliver insufficient meaningful change.  A transparency revolution is both necessary and feasible. It worked for central banks in the 1990s. Why not the Fund?
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In Europe 14th August 2014

Germany: the sick market of Europe?

BERLIN | Alberto Lozano | Some figures were already announcing during the last weeks that Germany was losing momentum. Its equity market also was the 3rd worst performer since the European market peaked on June 10th, so the GDP fall of 0.2% in the largest economy of the Euro area is not a surprise. A negative effect from the balance of exports and imports and a fall in construction are the main causes for this slight GDP decrease. However, both households and government consumed slightly more than in the previous quarter. Therefore, growth in consumption and imports might be a positive signal for the Europe’s largest economy in the coming quarters of 2014.

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World economy 14th August 2014

Stock markets go up despite poor global macroeconomic data

MADRID | By J. J. Fdez-Figares (LINK) | European and American stock markets closed yesterday up in a session of low activity and  volatility. The good performance of Western stock markets ​​occurred despite the set of macroeconomic figures published during the day in China, Europe and the USA, which pointed again to a global slowdown in economic growth. The only explanation we can find to the good performance of stock markets yesterday is precisely that investors have interpreted that as long as the growth of these economies remain weak, the central banks will be forced to maintain its current policy of monetary expansion, which provide liquidity to the system, something that equity markets consider positive.

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In Europe 13th August 2014

German investors lose their confidence in Europe’s growth engine

MADRID | By J. J. Fdez-Figares (LINK) | After the rises experienced by the European and American stocks on Monday, these markets showed yesterday certain weakness, leading to a mixed closing in the major indices in Europe and negative in US. Thus, and since the beginning of the day in Europe some profit taking by the short-term investors were observed, who profited from the rebound that many values experienced on the day before. As there was a lack of relevant developments in the three main geopolitical conflicts (Ukraine, Iraq and Gaza), the investors’ attention turned to macroeconomic data, particularly towards indices released yesterday by the German institute ZEW.

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In Europe 8th August 2014

Germany’s domestic demand might be taking the helm

BERLIN | By Alberto Lozano | At the end of the week, good news are coming from Germany’s trade data. After calendar and seasonal adjustment, German imports rose by 4.5% on the month, rebounding from a sharp fall in May (-3.4%) with the highest month-on-month increase since November 2010. In addition, German exports increased by 0.9%, narrowing the criticised surplus to 16.2 billion euros from 18.8 billion the previous month.