UBS | Gamesa has confirmed it is in talks with Siemens regarding a combination with some of Siemens’ wind assets “through a merger structure”. A merger is the preferable option against the possibility of Siemens acquiring Gamesa. The primary reason is that the value of the potential synergies are shared between the two parties rather than, as is often the case in a take-over, transferred to the seller.
The current uncertain political panorama in Spain after the December 20 elections has not been reflected in any significant way in sovereign debt spreads. The yield on the 10-year bond compared with the German bund is around 130 bp, no more than 10-15 bp above the pre-elections level. One alternative to reduce (or diversify) exposure to Spain’s public debt may be take positions in Italian debt.
Ofelia Marín-Lozano | Since 2014, Spain’s economy has been recovering and this has been apparent in almost all sectors, but unevenly. One example is the retail sector, with big names like Mercadona, El Corte Inglés, Inditex and Carrefour. All four companies increased their sales in Spain in 2014 (by 2%, 5%, 2.6% and 0.1% respectively).
John Bruton | In June, the people of the United Kingdom may vote to leave the European Union (EU). At the moment, a narrow majority favors remaining in the EU, but a large group is undecided. That group could swing toward a “leave” position for a variety of reasons, including what might be temporary EU problems with refugees. However temporary the reasons might be, a decision to leave would be politically irreversible.
UBS | The Bank of Japan has now fearlessly (sort of fearlessly) embraced negative interest rates. The negative rates will not be comprehensively applied in Japan, but yet another central bank has broken through zero. Rates are, or have been, negative in Japan, the Euro area, Switzerland, Sweden and Denmark. From an economic point of view what does this mean? There are good and bad aspects to negative interest rates.
Yiannis Mouzakis via Macropolis | The IMF formally announced last week that it changed the policy of exceptional access criteria, in essence reversing a highly political decision of the Fund back in 2010, a decision that saved the euro and paved the path for half a decade of economic devastation that sealed Greece’s fate.
Li Yuqian and Yang Gang via Caixin | The offshore yuan market in Hong Kong has been shaken to the core by weeks of volatility that analysts blame on strong intervention by China’s central bank. Wild fluctuations for yuan-based interbank lending rates as well as onshore-offshore yuan spreads in Hong Kong began in January and could continue indefinitely while the People’s Bank of China defends its currency against short sellers.
Benjamin Cole via Historinhas | In general, the “class glass” is a poor lens for analyzing U.S. politics and macroeconomic policies. To be sure, the nation has interest-group politics in spades, and groups are often well-financed.
BARCLAYS | Net profit of €185m compares well with consensus’ €122m and includes €184m relating to an IPO litigation announced in December 2015 and reinforced by last week’s Supreme Court ruling. However, earnings performance is mixed with weaker than expected non-interest income and net interest income falling 5% QoQ (in line with expectations), but provisions are significantly better.
If Spain wants to continue to be one of the leaders in the global economy, it has to persevere with reforms in areas such as the labour market, education, and the university system. For example, in the last 40 years, Spain has had an average jobless rate of 16%, some 10 percentage points higher than that of our main partners.