MADRID | The Corner | A bull market. But how sustainable? Asia ex Japan has just breached its 2011 high. Key to this is China. Over the last month MSCI China is up 7% on strong volume. It is now up 5% for the year. Easier monetary conditions, better growth data and improved earnings, meeting low valuations and poor sentiment, have driven the China rally and recent outperformance.
MADRID | The Corner | The fall in inflation in July to 0,4% YoY and a still high unemployment rate of 11.5% in the Eurozone show that the policy measures the ECB announced in June are going to take some time to reach the real economy.
MADRID | The Corner | The ECB reported on Thursday the data of interest rates applied in banking corporate loans in June, which have been reduced by 18 bp in loans worth up to €1M for the EZ (up to 3.57%). Moreover, these discounts have been widespread and even higher in peripheral economies’ banks: -21 bp up to 4.3% (weighting by GDP of rates applied in Spain, Italy, Ireland and Portugal).
BERLIN | By Alberto Lozano | Despite of the growing concerns following the escalation of the crisis in Ukraine towards the end of the month, the EZ manufacturing PMI index remains expanding in July (51.8), according to Markit data published today. Netherlands (53.5), Germany (52.4) and Austria (50.9) saw an acceleration of the growth, while Greece (48.7) continues depressed and France (47.8) keeps being the “Europe’s sick man” and the main brake to the European growth. With the worst figure in Europe, the French manufacturing sector even contracted in July at the fastest rate since December. Meanwhile Ireland (55.4), followed by Spain (53.9), registered again the sharpest rate of growth, supporting the eurozone manufacturing recovery.
MADRID | By Fernando G. Urbaneja | United Kingdom has displaced Brazil, which displaced before Spain as first market by benefit contribution to Banco Santander. Of the 2,750 million € earned in the first six months (+22% over the first half of 2013), 20% comes from the British market. Brazil contributes the 19% of benefits and Spain recovers share until reaching the 13%. And then there are United States (9%), Mexico (8%), Chile (7%), Poland (6%), Germany (5%), Portugal (2%) and other countries from Europe and Latin America (11%).
MADRID | The Corner | The Western stock indexes closed yesterday with prominent drops, reaction for which there was not a single trigger, but the sum of the various concerns that have been accumulating in recent days. The negative tone was maintained throughout the day, closing both European and U.S. stock markets near daily lows. It is important to emphasize the volatility increases, measured by the VIX index, which has reached its highest level of the last three months.
MADRID | The Corner | Juicy day for European markets, peripheral and emerging countries, after Portuguese BES announced €3.6 billion losses in 1S14, which reduce its CT1 to 5%, below the 7% asked in Portugal. Besides, we’ll be very attentive to how Argentina’s so-called “second default in 12 years” (we are working on an analysis explaining why the real problem lies on the US judge’s sentence) unfolds –late on Thursday S&P rated the country as selective default after it didn’t come to an agreement with a group of its bond-holders. Stay tuned!
ATHENS | Via Macropolis | Greece has decided to nominate current Defense Minister Dimitris Avramopoulos as its representative for the new European Commission after he proved to be the most appropriate compromise candidate. Avramopoulos’s nomination was confirmed on Sunday after Prime Minister Antonis Samaras spoke to one of the frontrunners for the job, ex-Foreign Minister Dora Bakoyannis to inform her that she would not get the nod.
MADRID | The Corner | One of 2014 most commented/loved/bashed books has been Thomas Piketty’s “Capital in the Twenty-First Century”, which put such an old concept as inequality back on the table. The truth is, as inequality is reducing on a global scale, it is increasing within many economies, including emerging countries like China and India. Increasing access to education and electricity in poor countries and areas pays out, as the World Bank is underlining in a campaign (check the video above).
MADRID | The Corner | Despite the slow recovery, unemployment in the eurozone has fallen faster than expected. According to the Labor Force Survey, the rate of jobless population has gone from 12.5% in 1Q13 to 12.2% in 1Q14. The reason? The single currency club is ageing. Also, immigration is playing a secondary role, as unemployment rate for non-EU citizens notably higher than for nationals in the EU28.