AXA IM | Our twelve month default rate forecast for US high yield (HY) now stands at 3.6% (peak forecast was 6%+) and 2.1% for European HY. The twelve month default rate should peak at just under 6% in January-February 2017 as should the US-EU default rate differential at just over 4%. European HY remains cheap from a default valuation perspective; US HY remains rich but has been improving.
Francesco Saraceno | François Hollande will not seek reelection in May 2017. This is rather big news, even it if was all too logical given his approval ratings. But what went wrong with Hollande’s (almost) five years as a President?
AXA IM | The broad regime change is now underway, from regulation, austerity, QE and bond markets towards, more growth, market pricing and real assets. The recent sell off in bonds is not so much about a change in views on inflation and growth (the new narrative to ‘explain’ bond yields), as it is a normalisation of interest rates away from QE towards ‘free market’ valuations, ones which are set by inflation and growth and would be much higher.
Alfonso de Gregorio (Gesconsult) | Talgo is a value investment. Its stock price its attractive and it has huge possibilities of winning new contracts which would really boost the company’s valuation. Amongst the risks facing the company, there is the scarcity of contracts in the period 2015-2016, which has generated a certain lack of confidence in the company’s ability to win new contracts.
The European Commission has recently presented its energy plan for the period 2021-2030. The tightening up on legal security for investors will especially benefit Spanish renewable installations.
UBP | The large majority of the NO points towards early elections, before the “normal” date of Q2- 2018; priority will be to rewrite the political law , to vote the 2017 budget and to continue on banks recapitalization. An interim government would probably come just in the few days after Renzi’s resignation.
Nick Malkoutzis via Macropolis | Political developments around the western world, from the victory for Brexit to Donald Trump being elected US president, have been a rude awakening for politicians, commentators and pollsters who did not see this shift in voter behaviour coming. So, we might want to consider if there is something going in Greece that we are failing to tap into.
Pablo Bejar | For the first time since 1982-83, the Latin America and Caribbean region is expected to be in recession for two consecutive years (2015-16). According to World Economic Outlook forecasts, growth is expected to be -0.6% this year following growth of -0.03% last year. The fall in commodity prices, lower global trade and continued weakness in advanced economies, combined with a set of internal factors in some of the larger regional economies, have driven growth lower.
Spanish midcap Telepizza has announced a Master Franchise Agreement with Momenin Investment Group (MIG) to open around 200 stores in Iran over the next 10 years.
OPEC has finally agreed to cut production by nearly 1.2 million bpd from January and for 6 months, representing about 4.5% of global output. Now we need to ask two questions: will the cartel countries respect the agreement? What will happen with the recent investment deficit in the sector? Will it still be profitable for the big producers to extract oil?