AXA IM | We believe elections in the coming weeks is quite unlikely, for three reasons. First, all parties except M5S (Five Star Movement) have little interest to go through early elections, as voting intentions polls show that “classic” right and left-wing parties would all lose a substantial number of seats in Parliament to the M5S and the Northern League.
Julius Baer Research | Non-OPEC producers under the lead of Russia will join OPEC’s supply cuts, which was necessary for the deal to become effective. With the paperwork done, oil producers must now walk the talk. There are many buts and ifs and we remain sceptical if compliance with the quotas is sufficient to materially shift the oil market’s balance
The Green party lawmakers in the European parliament have accused the world’s biggest clothing retailer Inditex of avoiding paying at least 585 million euros in taxes between 2011 and 2014. According its report ‘Tax Shopping: Exploring Zara’s Tax Avoidance Business’, the fact that Inditex diverted bonus payments to the Netherlands has cost Spain some 218 million euros in uncollected tax revenues, Germany 25 million, Italy 57 million and France 78 million, amongst others.
Yiannis Mouzakis via Macropolis | Just as years of fiscal irresponsibility pushed Greece into its permanent state of crisis, seven years and numerous Eurogroups later it was still the fiscal side of things that made the biggest impression on developments at Monday’s Eurogroup.
Carax Alphavalue | The recent OPEC deal was more than welcomed by the Norwegian oil company which has more than 60% of its production coming from the Continental Shelf. With little by way of refining compared to its integrated oil peers’, Statoil’s (Add, Norway) earnings are a near direct call on oil prices.
J.L.M. Campuzano (Spanish Banking Association) | Many argue that the conditions are not there for an uptick in inflation on a global scale. Well, that’s true: weak world growth, globalisation and a still negative output-gap in many developed countries (and emerging ones). But are we not being carried away to some extent by the disinflation inertia of the last few years? All eyes will be on the US Fed’s decision on interest rates and its forward guidance at this week’s meeting.
Julius Baer Research | Emerging markets are still in a trading and not in a trending environment. The past was about central banks and monetary policy. 2017 will be about politics. We divide 2017 into two phases. In Q1/Q2 2017 we expect emerging markets to underperform and believe that there is a buying opportunity sometime in Q2 2017.
What is being called a “preventitive recapitalisation” of Monte dei Paschi is more than sufficient to provide the Italian and European banking sectors with some breathing space for the time being, avoiding the risk of contagion.
There was a consensus in the market that the ECB will announce an extension of its current asset-purchase programme and so president Mario Draghi did it by expanding QE more than expected to December 2017. He also committed to do it even longer if needed.”The presence of the ECB on markets will be there for a long time,” he explained.
AXA IM | Our twelve month default rate forecast for US high yield (HY) now stands at 3.6% (peak forecast was 6%+) and 2.1% for European HY. The twelve month default rate should peak at just under 6% in January-February 2017 as should the US-EU default rate differential at just over 4%. European HY remains cheap from a default valuation perspective; US HY remains rich but has been improving.