Data from the world’s airport industry employers, the Airports Council International (ACI), suggest that 193 airports in Europe, which directly and indirectly account for 277,000 jobs and 12.4 billion euros of activity, are at risk of bankruptcy. In principle, most are regional airports with traffic of less than 5 million passengers per year.
Today the European Central Bank will meet again under pressure by the new wave of Covid-19 contagion in the Eurozone. In addition, latest inflation data have been disappointing. Will it announce new measures at this meeting? will it remain in standby mode?
The New York Times claims Macron has ordered a “broad government crackdown against Muslim individuals and groups.” The World Socialist Web Site, in a widely retweeted story, accuses Macron of “whipping up … anti-Muslim hysteria.” An American sociologist who researches white supremacists laments that French officials “respond to violent extremism with violent extremism.” What is this “broad crackdown”? Macron’s government has closed a mosque, which was run by a radical imam. A number of arrests have been made. “Anti-Muslim hysteria”? 51 more Islamic organizations are being investigated for alleged extremist sympathies. What about “violent extremism”? There are plans to take away the French passports of 231 foreign-born criminals.
The S&P move reduces near term risks of Italy falling below investment grade that would have had implications on BTPs holdings by real money accounts and market pricing, somehow challenging the ECB efforts to keep financing conditions under control.
Philippe Waetcher (Natixis AM) | The low inflation observed in the euro zone will translate into very weak wage dynamics. Demand will be weak while health constraints will weigh on activity. A situation that will not make it possible to fix on medium-term prospects compatible with the recovery plans. Inflation is the answer. The government on this point has more power than the central banks.
The COVID crisis brought about impressive activism on the part of financial regulators. Measures taken to offset the impact of the pandemic included: 1) encouraging forbearance and avoiding automaticity in non-performing loan (NPL) accounting and provisions; 2) allowing the use of capital and liquidity buffers; 3) reducing the supervisory, operational and reporting burden; 4) delaying the entry into force of more stringent requirements; while 5) bringing forward more lenient ones; and 6) ensuring the continuity in the provision of critical functions. Governments provided guarantees to loans to companies and individuals affected by the pandemic, which enjoyed better regulatory treatment.
Scope Ratings | Growth in house prices moderated in the second quarter for most European countries. With moratoriums and furloughs running out and unemployment expected to rise, house prices are at a crossroads. Low interest rates continue to support borrowers’ mortgage affordability but a second round of lockdowns leading to increasing business bankruptcies and further unemployment could prompt house prices to contract.
Today’s inaugural 10 year and 20 year syndications from the European Union under the new SURE program saw record demand from the global investor community, as witnessed by the impressive book sizes in excess of €145 billion EUR for the 10 year and €88 billion EUR for the 20 year bond.
In 2019, 50% of the imports and 47% of the exports were traded with the EU27, which makes the EU27 market the UK’s largest trading partner. In 2006, both, the shares of UK exports and imports to the EU27, were at the maximum level; since then both shares are on a general downward trend, the exports more than the imports. Since the referendum in 2016, the exposure to the EU27 market did not significantly change from the perspective of the UK. Hence, especially as a supplier, the EU27 matter for the UK. For the EU27, the UK is much less important as a trading partner: in 2019, only 4% of total exports go to the UK and 6% of the total imports are from the UK, respectively. While the trade shares decrease between 2001 and 2007, they remain relatively stable thereafter. Since the referendum in 2016, we have seen a slight decrease in the trade shares with the UK.
On October 2nd, the European Central Bank published a report on a digital Euro, providing a list of possible reasons for its launch. These include increased demand for electronic payments, decreased use of cash, the launch of global private means of payment, digital currencies issued by foreign central banks or monetary policy considerations. The ECB launched a public consultation last Monday, October 12 and will venture to take a decision on the introduction of a digital Euro by mid-next year.