Demetrios Pogkas via Macropolis | Following British Parliament’s recent backing of the government’s plans to start Brexit talks in the coming months, the exit of Britain from the European Union is a step closer to becoming a reality.
The key point about the Fed’s exit strategy is not so much the pace of rate hikes which will be very gradual or just gradual, but also how it will reconfigure its balance.
Spain continues to hold its own among the most important destinations for foreign investment. In 2014, it was ranked twelfth in the world and third in Europe in terms of net inward Foreign Direct Investment (FDI) flow and ninth in terms of stock. In fact, there are an estimated 10,700 subsidiaries of foreign companies in Spain generating 28% of national turnover to €434.4 billion, as last data of 2013 given by the Association Multinacionales por Marca España point.
The Euro area ended 2016 with a bang, according to BoAML, although growth and inflation will be hump-shaped. In Dec, the ECB ended the 2015/16 experiment of monetary policy covering for fiscal easing. But potential growth remains low. The UK is not really in much better shape: it is now a 1-1.5% growth economy, meaning low rates and austerity for longer.
Alfonso de Gregorio (Gesconsult) | We like Euskaltel because of its strong cash generation and good market positioning. In addition, there are the possibilities for inorganic growth and the good macroeconomic and industry outlook for the group’s business.
Julius Baer Research | Oil’s push above USD 58 per barrel on the first trading day of the year seemingly only was a temporary burst of energy. The market’s focus is on quota compliance as the oil producers must now walk the talk of supply cuts. We remain sceptical that the supply deal will have a material impact, swiftly erase surplus supplies and provide lasting support to prices.
The country’s Supreme Court has ruled that town councils should charge Spain’s electricity and gas companies for using the public domain for their energy transport installations, at a rate of between 3,000 and 12,000 euros per linear metre a year. This is what the court has set down in five legal rulings, putting an end to a long dispute between the town councils and the companies which refused to pay these fees.
UBS | As partly anticipated by the press, the government has announced overnight a decree (Italian press release) that allows the state to intervene on banks’ liquidity and capital using the €20bn buffer approved by the parliament. We believe this news is positive for the sector.
UBS | Last year was a challenging one for the cash equity exchanges. LSE was the only exchange that reported a year-on-year increase to volumes (+3.5%). The other exchanges experienced volume declines of 15-20% for DB1, Euro next and Borsa Italiana and a 35% decline at BME.
In general terms, leaving aside certain nuances, the short-term outlook in the US will be such that it will allow the Fed to raise interest rates, which will be taken as a positive symptom. But on the downside, this will mean higher funding costs. So issuers have already begun to anticípate these rate hikes which will make it difficult for them to match the debt issuance volumes of 2016.