Peter Lundgreen via Caixin| What should be deeply worrying about the growing banking crisis in Italy is the origin of the non-performing loans. One significant sector is retail and wholesale, meaning it’s a widespread problem. A severe banking crisis is a shock for any economy and will, in many cases, hamper economic growth. This is the risk that Italy and the Eurozone are facing.
George Soros via Caixin | Europe’s leaders must seize the moment to push forward reforms that can reshape the EU into an organization that people want to be a part of. Until the British public voted to leave the European Union, the refugee crisis was the greatest problem Europe faced. Indeed, that crisis played a critical role in bringing about the greater calamity of Brexit.
Last week the Council decided that Spain and Portugal’s recent efforts to reduce deficit were not enough. This lead to the two countries being fined, the first time this happens since the inception of the euro.
The ECB’s main priority will be to fuel confidence in the financial markets and inflation will be its alibi for this. In February, eurozone CPI receded to -0.2% year-on-year and, in the short term, the region should be prepared for negative rates to continue.
The figures issued by the Bank of Spain have confirmed what we could already see with the naked eye; namely that Spaniards are losing their fear of the future and spending again. After several years of austerity, the consumers in Spain have gradually loosened their purse strings over the past year. And to such an extent that consumer spending rose 3.1% in 2015, almost tripling the 1.2% registered a year earlier.
Francisco López |The OECD has once again downgraded its outlook for global growth, especially for the Eurozone. It will only grow 1.4% this year, almost half a percentage point less than the previous forecast in November. But is the downwards revision the result of the sharp drop in share prices, or is it the stock market which is in fact anticipating that growth will slow in the coming months?
LA CAIXA RESEARCH | Convergence between core and periphery countries must improve in order to strengthen the eurozone’s future growth and sustainability.
MADRID | By Ana Fuentes | She believes that central banks should act coordinately, since competition between them can cause currency distortions. British economist and former banker Frances Coppola has been one of the main critics of the European Central Bank’s QE “because it supports asset prices, but that is all it does.” She spoke to The Corner about shadow banking and how financials should be accepting and managing risk on both sides of the Atlantic.
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.
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.