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coffee with beans

Markets 17th September 2014

Morning coffee: Fed decisions, UK jobs report and much more

MADRID | The Corner | What you need to be watching today: FOMC’s decisions, UK’s unemployment rate data, Eurozone and US CPIs. Also, ECB’s Mersch will speak in Hamburg.  European equity-index futures climbed buoyed by the important confirmation (269 votes in favour/ 244 against) of French PM Manuel Valls at the Parliament (Aa1 n, AA, and AA + e), only one month after he submitted the 2015 budget for the country and despite various rumours about a possible downgrade to Aa1 n by Moody’s this Friday.

zew

Markets 16th September 2014

Morning coffee: Germany’s ZEW, UK inflation, and much more

MADRID | The Corner | Don’t expect big changes in stock markets’ behaviour today: everyone is waiting for the main events of the week, that is, any move from the US Federal Reserve (FOMC meeting ends on Wednesday) and the Scotland referendum on Thursday. Just note that Germany is releasing ZEW index today, which gauges big investors and analysts’ confidence in the EU’s main economy. In the UK we’ll have consumer prices for August.

 

crowded elevator

Markets 15th September 2014

Elevator QE

SAO PAULO | Marcus Nune’s Historinhas- Guest Post by Benjamin Cole | If you ever farted loudly on a crowded elevator, then you know the reaction of most economists to the idea that national debts should be monetized through central bank quantitative easing (QE), aka “printing money.”

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Markets 15th September 2014

Santander’s governance deficit

MADRID | By J.P. Marín Arrese | Only a few hours following the death of former Santander chief Emilio Botín, his daughter Ana Botín was thrust into the spotlight as his replacement. This offered further proof -if it were needed-  of the firm grip on the Board of Directors which the family continues to hold. Its stake, reckoned to stand at less than 1%, has not prevented the swift transition from taking place.

Spain EPS revisions ratio

Markets 11th September 2014

Spanish 3-month EPS hits new all-time high

MADRID | The Corner | The pace of Global net EPS revisions has declined in August to -6.9% from -0.6% in July, although it is more significant the 3-month net earnings revisions that has improved from -7.9% to -7.0%, according to Hugo Anaya in his comment for JP Morgan. 

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Markets 10th September 2014

The ECB turns into a massive backstop

MADRID | By J.P. Marín Arrese | The ECB asset purchases drive has received staunch support from the financial markets. No wonder, as it turns the central bank into a huge and largely undemanding backstop. Under the covered bond programme, it will switch banking liabilities into fresh liquidity. The ABS purchases scheme will transfer loan portfolio exposure to the ECB. Overall, both measures amount to a solid backstop for redressing banking solvency. The move comes most timely, as stress tests and asset quality reviews are due shortly to be published.

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Markets 10th September 2014

Santander’s Botin, full-time banker

MADRID | By Fernando G. Urbaneja | As a child, Emilio Botín used to listen to his father urging the branch directors of Santander bank –back then a local commercial lender- to capture more term deposits. Until his death on Wednesday, Mr Botín was head of Europe’s largest commercial bank, attentive to the evolution of credit lending in each regional branch, as well as in Spain, the United Kingdom, Brazil or Poland. He was a full-time business banker. There were no distractions for Emilio Botín: even when he was hunting in Africa or playing golf he was looking through his business reports; at the weekends he used to meet the executives of Santander at his own place. The bank was his only truly passion.

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Markets 10th September 2014

Santander bank to appoint new chairman today after Emilio Botin’s death

MADRID | The Corner | Spanish banking landmark Emilio Botin died on Wednesday at 79 of heart attack, but the country’s main lender won’t be without a captain for long: a special board meeting will be hold on Wednesday to designate a new chairman, the bank said in a statement. Scion of a wealthy banking dynasty, Mr Botín was the head of Spanish banking internationalization. Shares in Santander dropped 1.7 percent to 7.6 euros at 0710 GMT after the announcement.

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Markets 9th September 2014

G4 central banks expanded their balance sheets by $4Tr in 4 years

MADRID | The Corner | The size of the ECB’s private asset purchase plan is an enigma. According Mr Draghi, the central lender aims to bring its balance sheet to 2012 levels, that is,  from the current €2Tr to €3Tr (March 2012). Some analysts believe he went too far in Jackson Hole and the expansion shall not exceed €450bn (see chart above). Meanwhile, the G4 central lenders have increased their balance sheets in $4Tr since 2010- Only the BoJ continues to expand it at a rate of $650bn/year. And even if the Fed starts unwinding its stimulus program in October, if we add about €450bn annual from the ECB would liquidity would be increased by €1Tr.