MADRID | The Corner | It has been the biggest decline since January 2009. Germany’s industrial Production, adjusted for seasonal swings, dropped 4% in August from July, when it expanded 1.6 percent, the Economy Ministry in Berlin said on Tuesday. A sign that markets interpreted as a deterioration of Europe’s largest economy.
MADRID | The Corner | Newly appointed Commissioner for Financial Stability, Financial Services and Capital Markets Union, Jonathan Hill, received a “written exam” from the Parliament’s ECON Committee, whose members felt he had failed to sufficiently answer their questions at his first hearing. Lord Hill replied with his answers in writing on Sunday (see link below). Unfortunately, while Hill appears happy to offer his take on financial regulation, he was rather less forthcoming when it came to revealing his ties with The City of London.
ZURICH | The Corner | UBS analysts explain that in September, volatility started rising in almost all major markets and asset classes. Higher Rates and FX volatility, driven by diverging monetary policies in the US and Europe, typically suggest higher activity and more favourable operating conditions for FICC. Although UBS analyts are still cautious about FICC for structural reasons, some cyclical improvement and potential upgrades in FICC consensus estimates for Q3 2014 are now more likely (UBS tweaks his CS and DBK 2014E EPS forecasts 2% and 3% upwards, respectively). For global IBs, they forecast FICC revenues up 9%, Equities up 3% and IBD up 12% y/y. In the European IB space, they prefer Barclays and SocGen for stock specific reasons.
BRUSSELS | By Alexandre Mato | “I’m French, I’m deeply French, I will remain French”, the former finance Minister said before EU legislators, eliciting uproarious laughs from those present, a remark which was followed by a declaration of independence “but here I will stand as a European Commissioner”. There is much at stake, and Pierre Moscovici was attempting to reassure Europe that his was a brief to ensure growth in an economy that can scarcely afford the spending required to do so.
MADRID | By J. L. Martínez Campuzano (Citi) | I beg your pardon, I meant to say “persistently low” inflation. If it is not (and here we are in agreement), then why is the ECB repeating the same argument over and over to justify its decisions? Non-existent official rates, negative deposit rates, unlimited liquidity provision for banks, and the latest invention: the purchase of securitised corporate paper for credit operations.
MADRID | By Javier Arce | The true danger of a third recession in the eurozone can dissipate, and quickly. Only if after the stress test and the banking union, the euro’s depreciation, the EQ, the takeover of Juncker and its new Commission… we realize that we live in El Ejido, and not in Hernani. Let me explain that.
VIENNA | By Keith Weiner via Truman Factor | The European Central Bank again cut the interest rates it controls. Notably, the deposit rate was moved deeper into negative territory. It is now -0.2% (minus 20 basis points, that is not a typo). The ECB says it’s trying to nudge prices higher, but it’s actually feeding the cancer of falling interest. The linked article above, like most, is focused on the quantity of euros and the presumed direct relationship to price. The following bit of editorializing from that article is uncontroversial in Frankfurt, London, New York, Mumbai, or Shanghai.
By Jens Bastian via MacroPolis | During his visit to Berlin this week, Prime Minister Antonis Samaras repeatedly emphasised that Greece does not require a third financial support programme. In his conversation with Chancellor Angela Merkel he highlighted that the Greek sovereign was able to successfully return to international bond markets in April after a three-year forced hiatus.
MADRID | By Álex García.
ATHENS | By MacroPolis | Greece is the most socially unjust country in the European Union, with its performance deteriorating rapidly during the crisis, according to a recent study by the Bertelsmann Foundation.