MADRID | By Jaime Santisteban | Amid the hot debate on when the banking union will be wrapped up, market makers are focusing on the main steps already taken: the ECB gets the decision-making power from the European Council and Germany tries to avoid that public money can be used in the transitional period. Link analysts don’t expect major fluctuations today, but they warn investors about some “red lights.”
WASHINGTON | Via The Next New Deal | Roosevelt Institute Fellow Mike Konczal (@rorytomb) explains why banks need higher capital standards to prevent another collapse, how much could they fund themselves through equity and the challenges ahead the U.S. financial reform such as the Dodd Frank Act’s progress, inequality and CEO pay.
China is reaching a crucial point in which both the Communist Party and the citizens must define what they want to be and in which direction they want to move. The human costs of three decades of rampant growth are huge and the country is facing pressing challenges such as environmental pollution, deep social inequalities and weak employment opportunities. It may be time for China to start figuring out the puzzle of allocating resources in a country of 1.3 billion people.
BEIJING | By Andy Xie via Caixin | Poor economic data in China will make the short-sighted howl, but policymakers know it is really a sign of rebalancing – and raising per capita incomes.
MADRID | By Jaime Santisteban | Analysts favor Madrid’s new measure of overhauling loan refinancing rules for struggling companies, which will make it easier for those firms to arrange debt-for-equity swaps with their creditors. Also, the expected ECB’s non-move has been widely commented today, expectations cooled down. AFI experts believe the market is starting to assimilate the ECB will definitely seat on its hands unless unless inflation falls below 0.5% or recovery is threatened. Daimler’s amazing sales in China are also catching market makers’ attention today.
MADRID | By Ofelia Marín-Lozano and The Corner team | Mario Draghi seemed satisfied on ECB’s Thursday meeting when calling the euro zone an “island of stability” on the grounds that the region has returned to growth levels of 2011. Old Europe’s awakening is a reality. Its GDP increased by an annualized 1.2% and its four main economies -Germany, France, Spain and Italy- also saw their individual growth figures go up. But the truth is the euro area is not back to 2008 pre-crisis levels nor is expected to get there until 2015. Europe has lost weight in the global scenario and apparently will continue to lose importance in the future, its GDP representing two thirds of U.S.’s by 2030.
FRANKFURT | By Dr. Beate Reszat | The other day, the New York Times provided us with an example of how fads and fashions can be used to draw attention to, and win acceptance for, an economic argument. In his article ‘In Search of a Stable Electronic Currency’ Nobel laureate Robert Shiller proposed the introduction of an inflation-indexed unit of account similar to the Chilean unit of development or unidad de foment (UF) which is existing since the 1960s. The article is in large parts a summary of the ideas of an academic paper the author published in 1998. In short, its main argument says that recent progress in computer technology has considerably widened the possibilities of inflation indexing which would allow for a better pricing, contracting and risk management in an economy.
MADRID | By Francisco López | Investment banks and international funds are betting on buying Spanish Treasury’s stocks. In fact, Spain’s 10 years bond yielded under 3.40% on Wednesday, an unprecedented level since 2006. Interests of Italian debt stands even under that of Spanish, but Brussels’ study on the euro zone imbalances pointed Italy as the new sick man of Europe, basically due to its high public debt and the lack of reforms.
MADRID | By The Corner team | Neither the recovery of euro zone leading PMI services index, nor the stability of low inflation levels or financial conditions favouring all the region, including peripheral countries, would justify new significant monetary stimulus from the European Central Bank in today’s meeting. Furthermore, there is not a consensus even within the ECB itself. “Just the continuing appreciation of the euro could make the ECB to take action”, Renta 4’s analysts in Madrid said earlier this morning. As regards central bank’s expectations on inflation up to 2016, Draghi will probably confirm they will continue to be firmly anchored in the medium term, even though levels in the short term are very low.
MADRID | By Alex García and @masaenfurecida |