Bankinter | The US Senate finally approved the MoU to avoid double taxation with Spain, which will mean a tax cut for companies which operate in both countries. The current MoU dates from 1990 and the one ratified some days ago was signed in 2013.
Chris Iggo (AXA IM) | Sensible economic and monetary policies don’t necessarily go hand in hand with populism (see the recent sacking of the Turkish central bank head). In a world of more extreme policy agendas, a resort to manipulating currencies could be seen. No-one wants a strong currency now and the costs of devaluation are not really recognised in a low inflationary world. But attempting to override markets in setting the international price of currency is a difficult policy, especially if done unilaterally.
BBVA Research | The recovery of the Spanish economy will continue during the two years 2019-2020. In fact, and despite the risks which still hang over the scenario, growth expectations have been revised upwards one tenth to 2.3% for 2019 and remain at 1.9% for 2020.
Peter Isackson via Fair Observer | Boris Johnson’s march to Downing Street is becoming a surreal, even psychedelic, cartoon hovering between tragedy and farce.
J.L.M. Campuzano (AEB) | The Bank of Spain has published the financial accounts for the Spanish economy at the end of the first quarter. Consolidated household and company debt fell in the first quarter to 132% of GDP, 4.1 percentage points below the rate the year before. Company debt represents 74.4% and that of households 58.4%.
Philippe Waetcher (Ostrum AM – Natixis) | Spain has recovered strongly since 2013. Probably as a reaction to the deep fall of the Spanish economy in 2008 and after the 211-2012 period. This reaction explains the strong performance of the Spanish economy observed in recent years.
From 21 July the regulator (CNMV) will no longer require an expert report on the emission of bonds or structured products aimed at retail investors to ensure the accuracy of the associated brochure. The new European norm on brochures will come into effect on 21 July, so the need for this requirement, which CNMC decided to seek in 2005 for Spanish shares, will disappear.
Link Securities | The ratings agency Moody´s downgraded its rating outlook for the Spanish banking sector as a whole from “positive” to “stable”, as a consequence of the banks´ slowing reduction of non-performing loans (NPLs).
The agency expects fewer disinvestments in 2019 than registered in 2018, when banks accelerated the sanitisation of their balance sheets.
Chris Iggo (AXA IM) | Bonds have sold off a bit last week, but I believe that the bull market remains in place. Global monetary policy is about to be eased yet there are reasons to be relatively relaxed about the near-term growth outlook. The mini-bond sell-off will make yields a bit more attractive. However, yield does not equate to return unless you hold bonds to maturity and there remains scope for returns to be substantially higher than current yields, especially at the long-end of the maturity spectrum.
Nick Malkoutzis via Macropolis | A narrative evolved in the build up to Greece Sunday’s elections, which has continued in the aftermath of New Democracy’s resounding victory.