eurozone

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Eurozone: Deflation and weak activity support QE

LONDON | Barclays analysts | We believe this week’s data on inflation and economic activity have provided more arguments to step up ECB’s asset purchase programmes by including EGBs on 22 January, which is our baseline scenario. Inflation entered negative territory in December and is likely to stay negative for a few months before a weaker euro improves the inflation and growth outlook.


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EU: When taxation is tailor-made

BRUSSELS | By Jacobo de Regoyos | The previous five years of Jean-Claude Juncker’s reign were suddenly thrown into flux following the publication of hundreds of secret documents regarding agreements between the Grand Duchy of Luxemburg-during his premiership- and over 340 multinationals. In essence, this amounted to the facilitation of tailor-made fiscal schemes that allow the payment of a corporate tax close to 1% instead of the stipulated 29%.


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EU: When taxation is tailor-made

BRUSSELS | By Jacobo de Regoyos | The previous five years of Jean-Claude Juncker’s reign were suddenly thrown into flux following the publication of hundreds of secret documents regarding agreements between the Grand Duchy of Luxemburg-during his premiership- and over 340 multinationals. In essence, this amounted to the facilitation of tailor-made fiscal schemes that allow the payment of a corporate tax close to 1% instead of the stipulated 29%. 


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EU Banks: Surprises for 2015

MADRID | The Corner | The ECB’s non-conventional measures, the banking restructuration and the adaptation to the new regulation make 2015 a crucial year. According to experts at Morgan Stanley, the many stories about restructuration, dividends and regulatory changes will allow to differentiate the performance of the different assets.



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Eurozone’s plight

MADRID | By JP Marín ArreseOnce again, Greece has ignited the flame of instability in the Eurozone. The prospect of early elections coupled with the left-wing party´s scores in the polls has resulted in severe shock-waves hitting other South-Med countries. The promised debt default by the better placed candidate in this race stands as a formidable threat to Europe. What happens in this relatively small country is bound to hit all of us. Confidence in sovereigns will dramatically fall while financials will also bear the brunt. 


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Falling oil price: 4 wins for Germany

ZURICH | UBS analysts | We see 4 wins for Germany in a backdrop of falling oil prices
1) German equity market is not exposed to Oil & Gas earnings. 2) While our Oil & Gas analysts expect energy capex to fall by 10% (which could hurt a cyclical Germany), the overall fall to European capex is < 3%. Plus capex is already at a 23 year low – can it get much worse? 3) Our economists think lower oil triggers sovereign-based QE given their view it pushes CPI even lower than Tuesday’s 0.3%.


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“The ECB is almost apologetic about the lack of growth and the weak inflation”

MADRID | The Corner | According to Patrice Gautry, chief economist at UBP, there is little doubt that monetary policy – due to be presented in detail at the beginning of next year – will be revised and reshuffled as follows: 1) bigger ECB spending; 2) more of a focus on private and public bond purchases rather than on LTROs and ABS and CoCo purchases.In short, broadened QE should kick in on 22 January, at the next ECB meeting.


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Draghi in drag

SAO PAULO | By Marcus Nunes via Historinhas | The European Central Bank opened the door to a dramatic escalation in its campaign to stimulate the eurozone’s stagnant economy early next year, signaling a new chapter in the bank’s fight against excessively weak inflation in the heart of Europe. ECB President Mario Draghi said after the bank’s monthly meeting that officials discussed purchases of government bonds, known as quantitative easing or QE, but that they needed more time to gauge the effects of policies that they have already implemented while assessing how falling oil prices may affect the bank’s consumer-price outlook.


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Eurozone faces an interest rates scenario highly dependent on ECB’s monetary policy

MADRID | The Corner | Risks for the Eurozone have significantly intensified in the last six months. According to experts at Afi, the reduction of the risk premium and more benign monetary conditions are not enough to boost the economic activity. The Euro depreciation, although stronger than the Dollar, was not as intense as that of other currencies, which suggests a moderate growth scenario for the export of the region. In such context, what is likely to happen with the interest rates in the next six months?