BofA| We present three scenarios for the ECB’s balance sheet in 2020 based on TLTROs and APP projections. At the top end, we estimate the ECB’s balance sheet to reach a record high; at the bottom end, we estimate a small decline. Banks’ interest in TLTRO III would be crucial in determining the actual outcome.
Alphavalue | A third of Spanish telco Telefonica’s board has bought shares since the fall of August. The investment is around € 26 million, led by Francisco Riberas. Pallete, Echenique, García Blanco, Vilá and Carvajal have also acquired titles.
CdM | Allianz Global Investors expects dividend payments of approximately 359 billion euros from European companies in 2020. This sum exceeds the 2019 record by 3.6% (12 bn euros). Dividends have contributed an average of 38% to the performance of European equities since 1974. On the contrary, 60% of government bonds in the euro zone have a negative nominal return.
DWS | Once again, strange things begin to happen in the subprime (that is, higher risk) segment of the US consumer loan market. We can see it, without going any further, in the delinquency rates of credit card balances held by thousands of small US commercial banks. Since autumn 2016, the percentage of delinquent loans (defined as loans with overdue balances for thirty days or more that continue to accrue interest) among these banks has doubled to approximately 6%, a figure higher than the levels reached during the financial crisis 2008. On the contrary, the loan books linked to credit cards of the one hundred largest banks are much more healthy.
BofA | We turn tactically neutral on European equities: We lower our weighting on European equities from positive to neutral following the 14% rally since August. Our macro projections remain unchanged: we expect a further 1.5 points upside for the Euro area composite PMI new orders to 52 by February, following the 2-point rise since September.
Neil Dwane (Allianz) | The financial markets are signalling that the situation in the Middle East won’t get out of hand, but US-Iran friction could continue for some time. The defence industry and oil and gas-related sectors could remain well-supported, but overall we believe investors should be cautious yet patient. Look to higher-quality stocks with lower correlations to the broader market and “hunt for income” if headline volatility is a risk you wish to avoid.
DWS | While earnings growth was hardly visible in 2019, we expect a reacceleration in 2020. In the short term, however, fourth-quarter reporting and political progress could still disappoint, making markets vulnerable to setbacks from high current valuations.
Compared to American companies, European companies have a higher average dividend yield and lower valuations, which are attractive for those investors who prefer to be more defensive in the last stages of the cycle.
Norbert Rücker (Julius Baer) | The oil market is off to a rocky start as the tensions between the United States and Iran escalate. The situation brings lots of uncertainty and geopolitical tea-leaf reading on reactions. While the closure of the Strait of Hormuz remains a very unlikely event, the deterioration in Iraq bears supply risks. Geopolitics tend to be a temporary force on oil markets and we believe this time is no different. We raise our near-term forecast to USD 65 per barrel, and maintain a Neutral view on oil.
Dave Yin (Caixin) | China is making major revisions to its antitrust law for the first time in more than 11 years to give it more teeth while reining in the dominance of the country’s internet goliaths.China is making major revisions to its antitrust law for the first time in more than 11 years to give it more teeth while reining in the dominance of the country’s internet goliaths.