BARCLAYS | Heading into 2016, aside from the current market weakness, UK equity investors face at least five important questions. One of them is if the UK consumer is retrenching. The answer points that discretionary stocks have de-rated, while the Staples have not.
KnowledgeWharton | For Europe, there were a few topics dominating headlines in 2015, notably the migrant crisis, Islamic State terrorist attacks and threats, and anti-austerity movements. These tensions will continue to have a big effect on the European economic outlook in 2016, and together are even raising the question in some quarters of whether the European Union (EU) might disintegrate before long.
Spain closed 2015 with a zero inflation rate, after a 0.3% rise in December. This is a disturbing figure, after months of the ECB’s expansionary monetary policy, recently reinforced, which is targeting a fairly demanding annual inflation rate of close to 2%. Experts say the limited effectiveness of the ECB’s measures is due to the fact that it has not been able to generate strong expectations for eurozone growth.
BBVA Research | A significant review of the prudential treatment of sovereign risk , as a result of which it may lose its privileged status of zero risk weight, has started at a global level. The Basel Committee is already working on this issue, but no formal outcome is expected before the second half of 2016. In Europe, this topic is beginning to gain importance although no measure s are expected in the short term.
James Alexander via Historinhas | In a “currency war” it pays to be the loser. If you need an expansionary monetary policy, like most currency blocs today, don’t let anyone undercut with dirty devaluations. So, when a big baby like China decides to lower the value of its currency versus the biggest baby of all, the USD, make sure you are not caught in the cross fire.
UBS | 2015 has seen a sharp decline in oil prices, and we exit the year at around a 7-year low. However, we see reasons to be upbeat – we are certainly more optimistic than we have been for the past 2 years, and more constructive than merely extrapolating from current market conditions.
Yiannis Mouzakis via Macropolis | During 2015, Greece’s ability to meet its debt obligations became one of the most drama-ridden aspects of a story that started unfolding when SYRIZA won the January elections.
Peter Lundgreen via Caixin | On October 14, the German government lowered its GDP growth forecast for this year from 1.8 percent to 1.7 percent. Despite this, the economic minister, Sigmar Gabriel, expressed his expectation of higher economic growth next year.
Nick Malkoutzis via Macropolis | There are probably a number of officials in European capitals, and perhaps Washington, who have been scratching their heads over the past few days after the Greek government indicated that it would prefer the International Monetary Fund not to be involved in the country’s bailout.