The president of the ECB’s Supervisory Board, Daniele Nouy, recently again expressed concerns about the profitability challenge faced by the European banks, suggesting mergers as a solution. This consolidation process is also on the cards in India.
UBS | With 1Q16 results over it is time to take stock. European banks are down 18% YTD against a market 5% lower, with continuing hair-raising volatility in parts of the banks index. Our estimates changed surprisingly little during results: interesting considering the bearishness of many investors we meet.
Julius Baer Research | The potentially shortest Spanish legislature is bound to come to an end on 26 June 2016 when Spain will elect a new parliament for the second time within six months. Since the politicians have failed to form a new government after the last general election in December 2015, King Felipe VI has dissolved the parliament and called for new elections.
There was a time, during the Spanish property boom, when Spain was capable of taking in six millions of inmigrants and build more than Germany, France Italy and UK together, in which cement consumption also beat records: more than the whole of the US. Now that public works have hit a soft –and hopefully- temporary bump it has descended.
UBS | Improved EM asset performance this year has been driven by a) the tremendous credit stimulus from China, b) a change in the reaction function of the Fed, which helped EM currencies rally against the USD, and, c) the rebalancing in the oil market. Investors are already questioning the first two, but oil has continued to trade very well.
James Alexander via Historinhas | A new book has just been released on problems with central banks. The best chapter looks like the one on group-think. John Taylor, one of the book’s editors describes it thus: “Kevin Warsh’s (ex-FOMC member) report on the lack of effective deliberations at the FOMC is one of the most surprising parts of the book.
It has been revealed this week that Spain’s public debt has exceeded 100% of GDP for the first time, reaching 1.095 billion euros. According to the Bank of Spain, this figure represents about 101% of GDP. Almost at the same time, Bloomberg published a graph showing that this level had not been seen since 1909, as well as the level of debt during the Spanish Civil War. With just one month to go to new elections in Spain is this graph oportunistic?
Zhu Haibin via Caixin | A recent government plan to invest 4.7 trillion yuan in over 300 infrastructure projects from 2016 to 2018 received wide attention and raised questions about whether this was another massive stimulus similar to the one rolled out in 2008 in the aftermath of the global financial crisis.
UBS | A below -consensus payroll print and a 37,000 increase in the pace of initial claims reported in May have caused some to question the health of the US labor market. We examine why these worries are unfounded and how, if anything, these signs of “weakness” may actually be sig ns that wage growth could soon begin to accelerate.
The 2008 financial crisis was not a one-off event. The resources that were available to cope with that crisis would not necessarily be there if there was another crisis. Government debt and GDP ratios are still high, and pension and health costs are escalating across Europe.