MADRID | The Corner | Only highly positive US corporate results will cheer EU stocks today, which started fallling for a sixth day, the longest streak in almost three years, as investors awaited a German Confidence report plunging to its weakest level in 23 months.
MADRID | The Corner | The European Central Bank’s Outright Monetary Transaction (OMT) will be back on the front pages on Tuesday. The European Court of Justice (the EU’s highest tribunal) will have to respond to the challenge of German judges, who said the OMT can be seen as monetary financing of governments, banned in EU treaties. “Every time the monetary union takes a step forward, German individuals and/or civil or political groups file a case with the Constitutional Court in Karlsruhe,” our senior analyst Luis Martí commented.
Out-dated, inefficient and malfunctioning are some of the adjectives normally used to refer to Chinese SOEs. Their unhealthy financial situation poses a great threat to the future growth of the world’s second biggest economy. The Communist Party is pushing for a fresh set of reforms to make them able to compete globally. For decades, these companies knew little about competition or innovation, until today.
BRUSSELS | By Alexandre Mato | Today’s Eurogroup meeting and the Ecofin on Tuesday will focus on French budgetary problems. Moreover, Luxembourg will raise the issue about the investment gap in Europe. After 5 years of austerity, the European Commission is trying to pursue an economic policy change in the last few weeks that will move towards a focused on greater growth.
MADRID | By Álex García.
MADRID | The Corner | Italian PM Matteo Renzi won the Parliament’s confidence vote on Italy’s labour reforms on Thursday, the most importan in his 8 months in the job. As the country’s economy has been stagnated for two decades, many wonder how far the center-left government’s plans will go. The current jobless rate of the eurozone’s third biggest economy is above 12% (44% youth unemployment). “Italy must reduce the proportion of workers on temporary contracts in the overall work force, but the details yet to be unveiled remain critical to assess whether it represents a true game-changer or not.” analysts at Barclays commented on Friday.
Guest Post by Olivier Debat (UBP) | High yield CDS indices combine a liquidity advantage, an interest rate advantage (no exposure) and a valuation advantage. Thus, we believe that investors concerned about high yield liquidity, its sensitivity to rates or its valuation should switch to high yield CDS indices to gain exposure to the high yield market.
LONDON | By Sigrún Davíðsdóttir at Icelog| After the Iceland banking collapse in October 2008, three things were set in motion by the government at the time (Independence Party, together with the Social Democrats): an investigation into the causes of the collapse, rewriting the constitution and an Office of a Special Prosecutor. The investigation was concluded with a report of 2400 pages published April 10 2010; so far, no country has done a comparable report on the financial crisis in 2008. Rewriting the constitution was not finished in the way intended due to a political backlash. The government now plans to review OSP’s role although the OSP was made a permanent serious fraud office in 2011 – and starve it of funds while the review is ongoing.
MADRID | The Corner | Weak loan growth continues in Europe, although there are signs of recovery in corporate lending in France, Italy, UK, Sweden and Belgium. Bank lending surveys point to improving mortgage demand in Italy and Spain; but some deterioration in the UK. For Corporates, banks are reporting some increase in expected corporate loan demand into the year end, most notably in France and Spain, Barclays analysts commented on Friday.
MADRID | The Corner | As the global economy’s last data disappoint, shadow banks could be “compromising” growth even more, the IMF’s Global Financial Stability Report released Wednesday pointed out. Since “banks representing almost 40 percent of total assets are not strong enough to supply adequate credit in support of the recovery,” Financial Counsellor José Viñals said, controlling their non-regulated peers remains a great challenge.