AXA IM | A number of political developments are likely to trigger volatility in 2016, especially around the month of June. However, the real risk lies in the longer term. For the first time since the 1950s, EU- scepticism is threatening the European project not just to stall, but to step back. Political risk in the euro area has taken a backseat in recent months.
Francesco Saraceno | Last week the ECB published its Annual Report, that not surprisingly tells us that everything is fine. Quantitative easing is working just fine (this is why on March 10 the ECB took out the atomic bomb), confidence is resuming, and the recovery is under way. In other words, apparently, an official self congratulatory EU document with little interest but for the data it collects.
Icelanders are catching their breath after an eventful week that it started with an infamous interview where the then PM Gunnlaugsson failed to tell the truth. The question is what more the Panama papers will expose of Iceland, the most offshorised country in the world. The political effects aren’t yet clear but the popularity of the Pirate party has grown.
UBS | Il Messaggero published yesterday a draft memo with some details of Atlante, the system -wide fund that has been created to secure banks’ recapitalisations and purchase NPLs.
Despite the ECB’s rigid protocol with respect to public declarations, its influential German chief economist, Peter Praet, broke ranks a few weeks ago by saying that the central bank could not just continue to lower lending rates, but also “print new money” and give it directly to households, presumably to increase consumption.
Whilst many issues are being discussed in relation to the forthcoming European Union (EU) referendum in the UK, the issue of “sovereignty” is the one that divides the remain and leave camps. The highly respected think tank Open Europe, which is backing neither side, has made it clear that the economic effects of the two options are marginal in this report.
The ECB could end up with a new headache if the euro continues to appreciate as it has done over the last few weeks. In a short space of time, the eurozone currency has gone from 1,08 dollars to 1,14 dollars. Analysts believe Draghi will have to take some kind of action if it goes over 1,15 dollars.
Peter Lundgreen via Caixin | My best guess is that more than 99 percent of all economic analyses from the end of 2015 predicted a higher GDP growth in France this year. I myself have since long been skeptical about the economic growth prospects for the Eurozone, including that of France.
BoAML Research | The German government has not been overly active in investment expenditure over the last couple of decades. The average share of gross government investment spending in GDP stood at 2.1% in 2015 – private investment was worth roughly 18% of total GDP.
Yiannnis Mouzakis via Macropolis | Following Saturday’s leak of the exchange between the IMF’s European Department director Poul Thomsen and the head of the mission to Greece Delia Velculescu, PmAlexis Tsipras’s reading of the situation and his reaction to the WikiLeaks publication were puzzling.