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In Europe 18th December 2014

Russia represents 1.1% of Spanish exports

MADRID | The Corner | The Russian market represents a low proportion of the Eurozone’s goods exports: below 3% for the major economies. In the case of Spain, the percentage is just 1.1%. According to experts at Afi, a decrease in the amount of Russian tourists arriving in Spain could have an impact on the Spanish economy. After all, its current contribution to the sector is just (2.4%), but before last summer, Russian tourism was a spur to Spanish tourism. 

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In Europe 17th December 2014

Greece: Where did it all go wrong?

ATHENS | By Nick Malkoutzis via MacroPolis | When Greece returned to international bond markets in April this year after a four-year exile, it was trumpeted by Prime Minister Antonis Samaras as another step towards the crisis exit door. “Confidence in our country was confirmed by the most objective judge – the markets,” he said after investors snapped up three billion euros of five-year bonds with a coupon of 4.75 percent. Exactly seven months later, though, the yield on those bonds shot up to almost 10 percent. Suddenly, the markets do not seem so confident. So, what went wrong? 

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In Europe 16th December 2014

Greek elections: Syriza’s date with history

ATHENS | By Nick Malkoutzis via MacroPolis | Syriza leader Alexis Tsipras is following a well-trodden route by trying to force early elections over the presidential ballot. Several others before him have tried to exploit the loophole in the Greek constitution which means that snap polls have to be held if 180 MPs cannot be found to back a presidential candidate. The most recent opposition leader to follow this tactic was PASOK’s George Papandreou in 2009. 

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In Europe 15th December 2014

EU: Dumbing it all down

ZURICH | UBS analysts | Corporate bond markets in Europe have been quite resilient through these past few sessions in both IG and HY, offering relatively good outperformance. It would appear it is increasingly becoming a case of just buy it (corporate bonds), because that’s what’s best. Don’t worry, one will be looked after – the ‘structure’ after all is in place. There may be no growth, but you are promised low interest rates (zero at the front end), low funding yields (lowest ever, iBoxx corporate bond yields at 1.4%), a low default rate (less than 3%) and your money back at maturity.

Jose Manuel Gonzalez Paramo

In Europe 13th December 2014

“A change in the ECB’s mandate would be a mistake”

MADRID | The Corner | Former member of the Executive Board of the European Central Bank (2004-2012) and BBVA’s José Manuel González Páramo believes the Frankfurt-based institution may currently have a “a sales problem.” “It operates in a different context from that of the US. Incidentally, the US was starting to realise what was going on in the markets by the end August 2007, when the ECB was already flooding the European market with liquidity. The ECB does not have the mandate of all Europeans to do everything Europe needs: providing liquidity, supervising the banks, acting instead of the Commission where the Commission does not act, acting instead of the Council or lecturing its members…,” he explained.

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In Europe 12th December 2014

“Temporary factors” force analysts to revise Spanish GDP forecasts upwards

MADRID | Francisco López | The oil collapse, depreciation of the euro, low interest rates and the reduction of personal income tax are “temporary factors” that will allow the Spanish economy to grow faster than expected, according most analysts. Funcas forecasts that Spanish GDP will grow by 2.4% in 2015, 0.2 higher than their previous estimates.

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In Europe 10th December 2014

Falling oil price: 4 wins for Germany

ZURICH | UBS analysts | We see 4 wins for Germany in a backdrop of falling oil prices
1) German equity market is not exposed to Oil & Gas earnings. 2) While our Oil & Gas analysts expect energy capex to fall by 10% (which could hurt a cyclical Germany), the overall fall to European capex is < 3%. Plus capex is already at a 23 year low – can it get much worse? 3) Our economists think lower oil triggers sovereign-based QE given their view it pushes CPI even lower than Tuesday’s 0.3%.

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In Europe 9th December 2014

Greek economy: 2014 is not 2012

ATHENS | By Yiannis Mouzakis via MacroPolis | Since the eurozone crisis kicked off towards the end of 2009 in Greece there has been no other institution that has gained in prominence like the European Central Bank. 

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In Europe 8th December 2014

Norway bets on Spain

MADRID | The Corner | The Norway Government Pension Fund Global (GPFG) is the World’s biggest sovereign wealth fund. Managed by an investment unit of the central bank (NBIM) it counts with $900 billion under management, focusing on Europe. Lately its interest in Spain goes beyond the usual sectors: financial, construction and energy.

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In Europe 6th December 2014

Hawks and Doves in the ECB

MADRID | By Luis Arroyo | The British multimillionaire Gavyn Davies, former partner at Goldman Sachs and former chairman at the BBC, gave an excellent analysis of the insurmountable differences within the ECB’s Governing Council between Mr Draghi and Mr Weidmann. In the FT macroeconomics blog, Davies says that the distance is greater than the one between the Fed’s “hawks” and “doves”. Mr Draghi is doctrinally closer to Mr Bernanke; meanwhile Mr Weidmann is much more aligned to the right wing than the Fed’s “hawks” –so much so that it seems he represents the Austrian school.