MADRID | The Corner | Germany seems finally willing to boost its domestic demand. Real wages rose by 1.8% in 3Q (3T2014) compared to the same period from 2013, its largest rise in over three years, according to official data. An increase in wages along with penalized savings should result in more consumption.
MADRID | The Corner | “It’s not in the interest of OPEC producers to cut their production, whatever the price is… Whether it goes down to $20, $40, $50,$60, it is irrelevant, ” Saudi Arabia’s oil minister Ali al Naimi said in an interview with Middle East Economic Survey, quoted by Reuters. He sent oil prices tumbling below $60 per barrel. The oil crisis is causing violent and undesirable market volatility.
ZURICH | UBS analysts | The recent general strength of the dollar has a bearing on commodity prices, clearly. Commodities are universally priced in dollars, and as homogenised products dollar appreciation should lead to a decline in commodity prices in dollar terms. However, the strength of the dollar against sterling (in 2008/9) or against the yen (sporadically since 2012) did not lead to UK or Japanese exporters cutting the dollar price of their manufactured products or services.
Iris Mir | China’s real state market is cooling down. Rampant investment in the past few years has caused lingering oversupply and a drop in investment prices. Property developers suffer a very risky lack of liquidity and limited access to credit that prevents them from being able to repay previous loans. China’s real state sector represents a 15% of the national GDP; and it plays a crucial role in other sectors. The government is very keen on lending all the necessary support to maintain the speculative frenzy. But analysts believe that recent measures will not solve the structural problems of the housing market.
ZURICH | UBS analysts | The initial move in oil price was greeted as stimulating growth. The precipitous decline is triggering destabilising factors, especially in EM. As the US economy has accelerated, concern is growing that the Fed is about to shift policy in ways suited to its domestic objectives but not to the needs of increasingly stressed emerging and commodity producing countries and companies. In short, uneven global growth is simultaneously raising the spectre of unsustainable debt deflation across important parts of the (mostly emerging) world and a tightening of US dollar liquidity precisely when it is most needed.
By Ray Kwong | When it comes to putting the kibosh on things, the folks at Zhongnanhai (China’s version of the White House) have few peers. In recent memory, China has seen fit to ban puns, long beards, zombies, American pork, British cheese, clams from Alaska, Islamic-style clothing, TV programs that feature one-night stands, April Fools jokes, Bitcoin, film stars who use drugs or pay for sex, Windows 8, smoking in public places, the entire Muslim holy month of Ramadan, and the “The Big Bang Theory.”
And that was just this year.
MADRID | The Corner | The Spanish Council of Ministers has approved the definitive figure for the 2013 tariff deficit. The figure, €3.54 billion, will be recoverable via the electricity tariff over a period of 15 years. It will be remunerated at 2.195% of interest rate. The measure will have an impact on the main utilities that operate in Spain: EDP (Ba1 p, BB+ e, BBB- e), Enel (Baa2 n, BBB e, BBB+ e), Gas Natural Fenosa (Baa2 e, BBB e, BBB+ e) and Iberdrola (Baa1 n, BBB e, BBB+ e).
ATHENS | By Yiannis Mouzakis via MacroPolis | With the coalition in Greece getting only 160 votes for its presidential candidate in the first ballot, falling short even of the most conservative estimate, based on the currently available information it seems that the number of deputies that will vote in favour in the third round on December 29th will not reach the minimum 180 required.
MADRID | The Corner | The Russian market represents a low proportion of the Eurozone’s goods exports: below 3% for the major economies. In the case of Spain, the percentage is just 1.1%. According to experts at Afi, a decrease in the amount of Russian tourists arriving in Spain could have an impact on the Spanish economy. After all, its current contribution to the sector is just (2.4%), but before last summer, Russian tourism was a spur to Spanish tourism.
MADRID | The Corner | Janet Yellen spoke about patience in judging when to raise rates on Wednesday, which means no hikes for at least two meetings. The change in guidance was played down by the FOMC statement. BNP Paribas analysts thinks the US central bank wants to prepare markets for hikes but at the same time reassure them. They call for the first hike in September.