The economic slowdown in Europe is being felt in the third quarter companies’ results, which are leaving the stock markets in red. Losses are ranging from 4% to 12%, making the European results season show the worst trend in four years. It is interesting to review the main points that analysts at Morgan Stanley make.
The European Union lived an intense day on Tuesday. UK agreed on deal with the EU, but now the question if it will pass the test. Also Italy announced no changes in budget, while the IMF showed a cautious view. Further confrontation ahead between Rome and Brussels is expected. As commented by analysts at Julius Baer, “the EC is trapped in a philosophy of austerity whilst the Italian government is committed to fulfilling the election promises of a fiscal boost.”
BBVA is a well-managed bank, but with a geographical exposure that is currently very negative. The financial entity’s shares have risen in a roller coast since the new President of Brazil, Andrés Manuel López Obrador, announced and then retracted his party’s plan to limit bank commissions.
In contrast to comparatively stable levels in the US, PIMCO strategists flag that European HY spreads have nearly doubled since October 2017 (see chart). As a result, and for the first time in over five years, high yield spreads are wider in Europe than in the U.S., despite their higher average credit rating
Saudi Energy minister Khalid Al-Falih confirmed over the last weekend that Saudi Arabia will take the lead in OPEC to counter the oil price rout. As signs of a glut are emerging in the US, Al-Falih set the tone for a need by OPEC to cut oil production by 1mn (bpd) from October levels. US President Donald Trump reacted immediately by commenting that OPEC should not make any cut. This made Brent fall back near 1% below the psychological barrier of $70/b and the WTI to below $ 60/b.
The biggest challenges facing the U.S. are deep and seriously jeopardize Americans’ future prosperity. Namely, soaring national debt, Social Security’s solvency and the lack of affordable health care. The official debt is $21.7 trillion
The destruction of wealth in Europe continues and it will surely have political consequences in 2019 elections for the European Parliament. For Chris Iggo, CIO Fixed Income at AXA IM, “there has to be a risk that populists will receive more support.” The pressure from the electorate might be to force change in the way Europe is managed and to take steps to boost growth.
Almudena Díez | “The producer countries already impose considerable fiscal charges on the production of oil, basically because some of them live only on oil,” says Angel Durández, a member of Repsol’s Board of Directors.
A report from IRC and Citi examines efforts of more than 20 cities spanning four continents to build inclusive communities. For example, it highlights that many cities are already allocating resources to support displaced populations and bolster integration.
Atul Singh | How much value have technological advances created? On one side are internet bears who point out that productivity has been falling and the internet is not a big a deal. On the other side are internet bulls who argue that the internet has unleashed a new wave of productivity that is not captured by current measures accurately.