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In Europe, World economy 15th November 2018

What to expect from US-China Trade War? Some ideas from a European perspective

Alicia García Herrero | 2018 will be recalled as the year in which the US wake up to China’s economic power through a trade war. The question to ask ourselves now is how this may affect Europe. The first issue to realize is that European and US exports into China are very similar, which points to a potential substitution of American products in the Chinese market but also the other way around, namely substituting Chinese exports into the US by European ones.

Four resignations in the cabinet of Theresa May are jeopardizing the Brexit deal agreement

In Europe 15th November 2018

The Brexit Agreement That Does Not Please Anyone

Despite the initial euphoria after an agreement was reached with Brussels on the UK separation from the EU, this was not easy for PM Theresa May. This morning, four resignations on her cabinet in just a couple of hours, meant the biggest blow to May’s leadership, and therefore sterling.

In Europe 15th November 2018

Europe’s Worst Results Season In 4 Years

The economic slowdown in Europe is being felt in the third quarter companies’ results, which are leaving the stock markets in red. Losses are ranging from 4% to 12%, making the European results season show the worst trend in four years. It is interesting to review the main points that analysts at Morgan Stanley make.

In Europe 14th November 2018

Current EU Major Challenges- Brexit And Italy Budget- Move But Still Remain Stranded

The European Union lived an intense day on Tuesday. UK agreed on deal with the EU, but now the question if it will pass the test. Also Italy announced no changes in budget, while the IMF showed a cautious view. Further confrontation ahead between Rome and Brussels is expected. As commented by analysts at Julius Baer, “the EC is trapped in a philosophy of austerity whilst the Italian government is committed to fulfilling the election promises of a fiscal boost.”

2019 European Parliament elections potentially a threat to EU unity like Brexit or the Italian budget saga

In Europe 12th November 2018

2019 European Parliament Elections A Potential Threat To EU Unity Like Brexit Or The Italian Budget Saga

The destruction of wealth in Europe continues and it will surely have political consequences in 2019 elections for the European Parliament. For Chris Iggo, CIO Fixed Income at AXA IM, “there has to be a risk that populists will receive more support.” The pressure from the electorate might be to force change in the way Europe is managed and to take steps to boost growth.

EuroStoxx Reports, In Europe 8th November 2018

What Lies Behind The Entry Of Hudson Into The Capital Of Deutsche Bank?

The share price of Deutsche Bank has risen + 9% since 26 October. This reaction is explained by the entry of Hudson since the results for Q32018 were unconvincing and the reaction to the stress tests did call attention. The US hedge fund Hudson Executive Capital has invested 550 M€ to take control of 3.1% of the capital – equivalent to 8.6€/share. Hudson thus becomes the fourth largest shareholder behind the Chinese group HNA (7.6%), a Qatari fund (6.1%) and Blackrock (5%).

In Europe 6th November 2018

Preparing For A New Normal In German Politics

Jens Bastian | With Merkel’s gradual retreat from German politics, a new sense of political timing is set in motion across capital cities in Europe. How will Athens react to the gradual changing of the guards in Berlin? While much air time and social media is being consumed with domestic political quarrels in Greece, both government representatives and opposition parties will be well-advised to look closely at the next developments in Germany.

PKO Bank Polsky, DNB Bank and Santander are the strongest European banks to face an adverse scenario

In Europe 5th November 2018

PKO Bank Polsky, DNB Bank And Santander The Strongest European Banks To Face An Adverse Scenario

The EBA published the results of the latest stress tests on 47 European banks, plus one in Norway. These covered 70% of banking assets in the EU and revealed that in adverse scenario they would produce a negative impact of -395 base points in the capital ratio CET1 fully loaded (-410 base points of the transitory definition) to place itself in 10% at the end of 2020 (10.3% transitory). The four Spanish banks, Santander, BBVA, Caixabank and Sabadell, overcame the tests although they came out a little below the average.

In Europe 2nd November 2018

Russia: Forget The Dollar, Ride The Oil

Xavier Colás (Moscow) | Very affected by US sanctions, Russia has embarked on a de-dollarization plan up to 2024 and discounts paying EU members in euros. But the volatility of the rouble disrupts the road map.

The euro suffers for Angela Merkel , but not the soverign debt

In Europe 30th October 2018

The Euro Suffers Because Of Angela Merkel, But Not Sovereign Debt

The market reaction to Angela Merkel’s decision has not been bad. The euro depreciated to 1.1373 against the dollar, but sovereign debt suffered more because of the greater risk appetite, and the returns on 10 years German bonds rose to +2.5 bp. However, given that Merkel has held the role of a stabilising figure in Europe, some analysts expect that the long term markets could be concerned by the vacuum she could create with her departure.