MADRID | By Ana López-Varela | Some analysts believe the Spanish oil company has been extremely punished by the markets. Repsol’s announcement of its pulling out of Canary Islands exploration on Friday, along with the fall in oil prices and the purchase of Talisman Energy (for more than for $8.3 billion), has put the firm under the spotlight.
MADRID | The Corner | Financial entities need to submit allegations on the European Central Bank’s solvency ratios recommendations next week. As expected, due to their systemic nature the ECB is asking the biggest lenders (Santander and BBVA) a 9.0% ratio versus the 8.0% required for their smaller peers such as Caixabank, Bankia and Sabadell.
MADRID | By Álex García.
MADRID | The Corner | Maximum uncertainty shook the global markets today, after the Swiss National Bank unexpected double move of removing the controverted minimum exchange rate to the EUR of 1.20 and lowering interest rates to –0.75%. Volatility will continue in the coming weeks “as unhedged Swiss companies may start hedging and the SNB may come up with additional measures like enforcing the use of negative interest rates to strengthen other currencies against the CHF,” explained UBP’s Swiss equities expert Martin Moeller. Some analysts believe the strategy might be too radical and “counterproductive for the ECB.” Stocks in Switzerland fell about 10 percent, while broader European indexes rose modestly.
ZURICH | UBS analysts | Our central case is that we will not have deflation in any country except for Spain in 2015. But we cannot rule out the possibility of deflation, so here we look at assets that may outperform during periods of deflation. Generally deflation is bad for equity which de-rates aggressively but the story is more nuanced because particular sectors and styles are affected quite differently.
MADRID | By Sean Duffy | Spain is on the path to recovery, and that recovery is to be directly felt by citizens in the form of tax cuts fuelled by the country’s improving economic situation. That was the message delivered by Spanish Treasury Secretary, Miguel Ferre Navarrete, in a speech delivered at Spain Investors Day.
LONDON | Barclays analysts | The European Court of Justice has already published its opinion about the Outright Monetary Transaction (OMT): the ECB’s anti-crisis plan was “necessary” and “in principle” is in line with EU law. This much awaited opinion will have important implications for any broad-based ECB government bond purchases (QE), which we think are likely to be announced next week.
BRISTOL | Guest post by Tony Yates (Long and Variable) | That’s what George Osborne’s twitter feed would have you believe. And it was echoed by Andrew Sentance. Statements like these are at odds with modern monetary macro, and they are pretty irresponsible.
LONDON | Barclays analysts | We believe this week’s data on inflation and economic activity have provided more arguments to step up ECB’s asset purchase programmes by including EGBs on 22 January, which is our baseline scenario. Inflation entered negative territory in December and is likely to stay negative for a few months before a weaker euro improves the inflation and growth outlook.
MADRID | The Corner | ECB staff members have presented models for buying as much as €500 billion ($593 billion) of investment-grade assets, mostly sovereign bonds, according to sources close to the Governing Council. This will amount to an incomplete, partial solution according to some analysts. “It looks like a lot of money, although it won’t be enough” to expand the lender’s balance sheet by €1Tr as is planned, said Alberto Vigil of Barclays on Monday.