MADRID | The Corner | One of the risks of the Spanish economy is the significant lost of dynamism in the Eurozone. The latest data of the balance of trade published on Monday explain such fear. Thus, the Spanish exports registered last September a year-on-year rate of 9.6% (-5.1% from the previous month).
ATHENS | By Yanis Varoufakis via Truman | Tim Geithner is now on the public record, confirming that which we have always known: In February 2010, clueless as to the Euro Crisis that was about to engulf them, Northern European leaders decided to crush Greece. Collectively to punish (against even the Geneva Convention) a nation for having gone bankrupt within a Eurozone whose architecture never took into consideration the possibility that a member-state could become insolvent.
By Suki Mann and Thibault Colle (UBS) | We effectively have four-weeks of business left in 2014 and the path is clear for corporate bond markets to record some more upside in performance. That isn’t as welcome as it might at first look. Because we do actually need something for next year. We’re already sitting on excellent returns for 2014 of 7.7% in IG and 5.6% in HY; and with that, record low yields in IG (1.42%) and spread levels not seen since before the crisis (iBoxx IG at B+101bp). Supply in HY is at a record level (€72bn YTD) and we now have the second best year for issuance ever in IG non-financials (€201.6bn) after Tuesday’s deals from BskyB and RCI are accounted for.
MADRID | By Sean Duffy | Recession in Japan is the latest symptom of the faltering global recovery. As Tokyo reappraises the prescriptions of Abenomics, ECB’s Draghi attempts to bolster confidence with sovereign bonds reference.
MADRID | The Corner | Markets were sad on Monday until Mario Draghi emerged and spoke his magic words. It seems markets feel more secure every time the president of the ECB takes the lead and assures everything will be alright. Investors felt more confident after his intervention at the European Parliament’s Economic and Financial Committee. However, despite his speech regarding new potential actions in monetary policy, he also highlighted the need of deep structural reforms by the Members States. According to market watchers at Link Securities, sooner or later, “such reforms will have to be faced by Italy or France’s government, because it is necessary to make them competitive and able to grow again.”
By Volker Stanzel via Caixin | The world debate may be preoccupied with crises in the Middle East and in eastern Ukraine and with ISIS and fighting Ebola. Yet, tensions in East Asia have not subsided. Even though the region has seen quite a remarkable level of peace since China’s war against Vietnam in 1978-79, there is a new uncertainty.
LONDON | By Zoso Davies, Mike Kessler, Dominik Winniki (Barclays) | European corporates are becoming more acquisitive: European M&A is up 11% year-to-date by deal volume, despite a number of high profile proposals being rejected by boards or withdrawn. The pick-up in deal-making was driven by increasingly acquisitive behaviour: European issuers spent €779bn on deal-making through October (+48% y/y), of which three quarters was spent buying assets from other European companies. Inbound M&A has fallen, in part due to the stymieing of tax-inversion deals by US corporates.
ZURICH | By UBS analysts | Will a strong dollar much weaken overall U.S. growth and inflation? The answer importantly depends on how much export and import prices respond to changes in the dollar’s foreign exchange value. Exporters may cut dollar prices and profit margins in order to blunt a stronger dollar’s impact on their market shares and volumes. In fact, over the three months through October, dollar prices of nonagricultural exports fell steadily (by a cumulative 1.3%).
MADRID | By Álex García
MADRID | The Corner | The Japanese economy unexpectedly entered recession in the third quarter, just after the GDP decreased by an annualised pace of 1.6 per cent, versus forecasts that it would rebound by 2.2 per cent. Japan contracted by 0.4% in the 3Q14, leaving the country in a technical recession, which drove the Nikkei to near 3% losses and raised serious questions about the planned sales tax hike next year.