Iberdrola plans to participate in the renewable energy auction the United Kingdom is preparing for next year. The Spanish power company will submit its East Anglia offshore wind project in the upcoming auction call to try to win one of the contracts for differences (CfD). The project will require an investment of close to 7.6 billion euros.
Agnieszka Gehringer ( Flossbach Von Storch Research Institute) | The labor market consequences of the corona crisis have been unprecedented. Roughly 21,4 million jobs have been destroyed within only two months, almost erasing the 22,4 million jobs created after the Great Recession of 2008/09. By comparison, during the Great Recession 8,7 million jobs were destroyed within the 25 months between February 2008 and February 2010
BofA Global Research | The Franco-German recovery fund initiative is a small positive surprise: EUR 500bn, joint EU issuance, allocated as grants. Caveats: it is too small in size to fix all problems, its exact design in allocation, repayment and timeline will be crucial. The political symbol could be strong, though, if the EU 27 can agree. The ECB may feel temporarily relieved now.
US Moderna Therapeutics has announced the first positive results (in its first phase) of its experimental Covid-19 vaccine. Early findings from a first human trial of the vaccine suggest that it may create an immune response. The objective of the trial, conducted in only 45 people, was to test the safety of three doses with two injections. The firm plans to make a $1.3 Bn capital increase in order to finance the manufacturing process of this potential vaccine at a 5% discount vs yesterday’s close.
The Franco-German axis is back in operation thanks to the coronavirus crisis. Yesterday, the French president and the German chancellor agreed to propose the creation of a €500 Bn reconstruction fund to the European Union (EU), far cry from the quite regularly speculated sum of around €1 Bn or €1.5 Bn. The proposal is very much in line with the recovery plan which the European executive is working on currently and is expected to be presented on 27 May.
Santander Credit Research | So far this year, new registrations are down 42.4%, with a drop of 83.8% in April on top of falls of 55.6% in March, 7.2% in February and 8.2% in January. The UK, Italy, France and Spain were the most affected markets, with falls of 97.3%, 97.6%, 88.9% and 96.5% respectively, while the decline in Germany was limited to 61.1%. The extent of the decline in sales (at least in Q2’20) will be even worse than in 2008/09, when many car manufacturers and suppliers were in trouble.
Keith Godfrey | “You eat alone, you choke” is an ancient proverb with origins lost in the mists of time. In Mafia circles it expresses their family centred, ruthless sense of unity and purpose and celebrates tight-knit self-propelling interest. And yet, as we know even in the best regulated Mafia families every now and then those interests can pull in different directions. When that happens, the family member breaking ranks is said to “eating alone”. The implication is that bad things will soon follow. And worst of all, whether from lack of protection or because of overzealous protection from outside parties, eating alone makes for bad business.
Mathieu Racheter (Julius Baer) | President Trump recently urged to halt plans of the government’s main pension fund to invest in Chinese equities. While the implications for Chinese ADRs listed in the US should be fairly small, there is a risk that the administration will extend the restrictions to other US investors. We continue to view Chinese equities as a core holding and reiterate our strategic Overweight rating.
The European Commission has been asked to set up a 2 billion euros reconstruction fund to assist the countries and sectors most affected by the Covid-19. The fund would operate, at least partly, on the basis of grants and subsidies rather than loans to avoid excessive leverage by any of the member states. This instrument should be financed by issuing long-term bonds guaranteed by the EU budget. The EC points out that this type of bond is not the same as the “coronabonds” demanded by some countries at the start of the pandemic.
Adrià Morrón Salmerón (Caixabank Research) | The measures necessary to combat the COVID-19 outbreak will generate a significant increase in public debt in the world’s major economies, including in the euro area.The sustainability of euro-area debt is not in question, but the environment is demanding and places the ECB in a key position. A swift and sustained recovery in economic activity is also essential, which in turn requires a coordinated economic policy response.