MADRID | The Corner | The escalation of the crisis in Ukraine has led to sharp asset prices and currency volatility with capital outflows from the region, particularly from Russia and of course Ukraine itself. UBS points out that the European banks within their coverage present “a meaningful exposure: the loans in Russia and Ukraine amount to over €60bn before taking into considerations any investment banking activity.”
MADRID | The Corner | The EU released on Wednesday a target to improve energy efficiency by 30% as part of a package of climate and energy policy for 2030, and a measure that some considered “a gift to Mr Putin.” The truth is Europe says it is on the verge to impose sanctions to Russia for the downing of Malaysia Airlines Flight 17, although it has been reluctant to use US-stule sanctions in the past due to its high dependence on Russian gas -see this chart by Statista which shows the deep interconnection-. But there seems to be a way for the Old Continent to wear off any gas cuts if things gets really nasty: liquefied natural gas (LNG). For countries like Spain, it would be a golden opportunity.
ATHENS | By Nick Malkoutzis | It seems slightly surreal to be discussing whether shops in Greece should open on Sunday when household disposable income has dropped by around 30 percent since 2010 and we have seen the emergence of consumers of need rather than choice. Nevertheless, this is the debate that has been prompted by a new law allowing stores in 10 areas of Greece to open every Sunday.
MADRID | The Corner | “We have been living in an unusually low volatilities -both implied and realized- environment,” JP Morgan’s Fernando Cavia argues. But the last two weeks analysts are seeing a change of trend: protection is gaining fans among European institutional investors who see some threat to equities’ potential.
BEIJING | By Liu Shengjun via Caixin | When China’s premier Li Keqiang recently met six experts to talk about reforms, he quizzed them on their data and bemoaned slow progress in changing local governments.
MADRID | The Corner | “Apple became a stalled growth stock that has started to show momentum again,” analysts at UBS believe. The tech giant is announcing its fiscal 3Q results on Tuesday after the markets close. Although 3Q reports have historically been sluggish for the firm because clients don’t want to purchase gadgets until the new ones come out in September, expectations are high. UBS rises their price target from $100 to $115 per share, among others because some new product categories could “put the mojo back in the story.”
MADRID | The Corner | New Commissioner for Economic and Monetary Affairs Jyrki Katainen –Finnish, as his predecessor Olli Rehn- has pledged pure orthodoxy about the European Stability Pact. In an interview with German daily Die Welt, Finland’s former Prime Minister and now one of the most powerful men in the EU ruled out speculations about creative interpretations of the fiscal framework. Mr Katainen is the same who, during the worst moment of the crisis (Aug 2012), asked Greece and Spain for collateral in exchange for aid and reckoned that some peripherals were introducing major structural reforms that were “simply not being recognized in the market.”
ATHENS | Via Macropolis | The Turnover Index in Industry continued heading south for the third successive month dropping by 4.9 percent in May from a revised -10.5 percent in April, according to the Hellenic Statistical Authority (ELSTAT). The May performance indicates the ninth negative reading in the past 17 months, while four months showed a double-digit drop over this period.
MADRID | The Corner | The world’s second economy is entering an enthusiastic summer period, with credit lending indicators rising in June. New loans denominated in yuan grew up by 1.08 bn CNY in China, aggregate financing went up by 1.97 bn CNY and the M2 monetary offer, in 14.7% year on year in June. All these data exceeded market expectations and show that the authorities are favoring the expansion of credit to boost growth.
MADRID | The Corner | Although the eurozone final consumer price data for June came in line with their expectations, analysts at Barclays believe the common currency club may struggle to absorb “rising labour supply into employment given growth potential.” That is why further structural reforms to expand labour-absorption capacity are essential to avoid persistent disinflation on wages and, ultimately, consumer prices, they say.