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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.
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Markets 4th December 2014

What if before the sovereign QE, the ECB launched a corporate bond purchase plan?

MADRID | The Corner | Even though the sovereign QE is present in the markets’ dynamics, it is likely that the ECB will first bet on a program of corporate debt purchase and then wait to see what happens. Experts at Morgan Stanley say that the likelihood of this plan is 30% and that it would have an impact on the households’ wealth as well as providing greater financial stability. However, the program would also have problems when it finishes, because equities don’t expire and the ECB wouldn’t be able to have those shares ad infinitum.

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In Europe 4th December 2014

The new ‘growth package’ from the EU

By Peter Lundgreen via Caixin | Last week, China’s biggest export destination, the European Union established a new growth package. The desired size of a new investment fund is 315 billion euros, and it will be called the European Fund for Strategic Investments (EFSI). During a period of three years, new investments financed by the fund are expected to lift annual GDP growth in the EU by 0.7 percentage points. The calculations from the EU show that the package can create between 1 million and 1.3 million new jobs.

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Markets 3rd December 2014

ECB preview: Not yet

Guest Post by  Thomas Harjes and Fabio Fois (Barclays) | Despite the softer November inflation print and some likely downward revisions in the ECB’s inflation and growth outlook next week, we do not expect the ECB to announce further policy easing when the Governing Council meets on Thursday, 4 December. We believe the ECB is going to wait at least another month. 

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Markets 3rd December 2014

Price target of Spanish firms up by +47.3%

MADRID | The Corner | By J.A. Santos | The stock market value of the 60 Spanish firms that we analysed reached €615.973 billion at the close of November 2014. This represents a +6.7% increase with respect to 2013. According to the market consensus, the weighted average earnings per share is €0.85 (-27.9% vs 2013).

 

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Markets 2nd December 2014

German macroeconomics will determine ECB bond purchases

MADRID | The Corner | Markets are already discounting the ECB’s QE of sovereign debt. That is why the risk premiums of the European periphery are now at historical low levels –take the Spanish one, for instance, which has dropped to 108 points. The yield of the 10-year bond has fallen to 1.85%. In this context, a sovereign bond purchase program still makes sense. “The latest inflation data of the Eurozone, which are at 0.3%, are a clear indicator of that,” Felipe López-Gálvez, expert at Self Bank, explains. However, the program would not acquire a full meaning until the German economy showed signs of weakness. “If Germany holds on,” then the ECB will not come to that extreme.

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Spanish economy 2nd December 2014

Spain’s unemployment registers its best numbers in 19 years

MADRID | The Corner | The number of unemployed people registered in the Public Services of Employment has fallen to 4,512,116. It dropped by 14,688 people in November with respect to the previous month. This represents the best figure for November since records began in 1996, according to the Ministry of Labour and Social Security. The unemployment rate has now fallen for three consecutive months

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World economy 2nd December 2014

Global Banks Outlook 2015: A year of diverging interest rates

ZURICH | By UBS analysts | We have a neutral stance on global banks as we look to 2015. Given a modest recovery in global growth in 2015E, credit demand is expected to remain sluggish while the margin outlook is likely to be mixed, reflecting diverging policy rate trends. We expect to see good cost control as banks strive for greater efficiency while overall asset quality should remain stable albeit picking up in emerging markets. While earnings momentum has been negative this year, we think current valuations are fair, with the sector trading on 10.1x PE and 1.0x PBV versus a sector ROE of 12.4%, on our 2015 estimates.