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montoro

In Europe 3rd September 2014

Spain may press criminal charges against Pujol tax fraud

MADRID | By Ana Fuentes | According to the US-based organisation One, corruption takes around $1tn a year out of poor countries and kills millions. Yet this evil is not strange to developed nations. In Spain, 127 politicians are facing corruption charges although they have not lost their jobs. The last big scandal affects former Catalan leader Jordi Pujol, who in July admitted hiding an inheritance abroad for more than 30 years. A storm embarrassing the current ruling regional government who has called a referendum in November on whether the region should break from the rest of Spain. Madrid may seek criminal charges, Spanish Budget Minister Cristobal Montoro (see picture above) said on Tuesday. For some analysts, this could be a strategy to dent nationalism support.

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In Europe 2nd September 2014

Paris talks mark start of Greece’s most crucial troika review

ATHENS | via MacroPolis | The first round of the new review of Greece’s Economic Adjustment Program (EAP) is kicking off in Paris today and will last until September 4. The IMF spokesman has recently clarified that the aim of these meetings is to “discuss the way forward on the forthcoming review and is expected to be followed by the full mission to Athens in late September” for the full review. 

big banks mergers

In Europe 30th August 2014

GLAC, a term you’ll need to become familiar with after the summer

MADRID | By Raimundo Poveda | Those who are interested in banking policy are doomed to learn some new term day in, day out. GLAC (i.e. “gone-concern loss-absorbing capacity”) is the capacity to absorb the losses of an unfeasible bank. Let us recall that the banking regulation declares a bank “unfeasible” not when it collapses but when it fails to comply with the minimum capital requirements –even if its financial assets are positive.

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In Europe 29th August 2014

Eurozone’s credit continues to squeeze in July, especially in Spain

MADRID | The Corner | The ECB published yesterday figures on bank lending that show the  outlook keep being worrying. On the one hand there was an improvement in credit to households and on the other hand a further squeeze on credit to business, especially a pronounced decline in countries like Spain. The overall balance in July is a contraction of 1.6% YoY, which represents a further improvement since it got to the bottom during November, December and January (-2.5% YoY each month). Credit in the private sector continues to contract (-2.3% YoY) in line with last month but improving over July 2013 (-3.7% YoY ) and in general over the monthly evolution in 2014. In Spain the credit contracts € 7bn (-1.2% MoM from -1.04% MoM in June) and it moves back by € 77 bn YoY (-11.7%). In Italy the set-back is even bigger MoM (-3.6%) but is limited to +1.6% YoY.

Economic sentiment indicator

In Europe 28th August 2014

Economic sentiment worsens in Italy, Germany and France, but remains stable in Spain

MADRID | The Corner | In August the Economic Sentiment Indicator (ESI) fell in the euro area (by 1.5 points to 100.6) and the EU (by 1.2 points at 104.6). Once again the core Europe does not bring any good news, where sentiment dropped in Italy (by 4.1p to 97.8), Germany (by 1.9p to 104.1 ) and France (by 0.6p to 95.1), while sentiment remained flat in Spain (103.).  Among the data published by the European Commission today, the industrial confidence fell in the EA to -5.3 in August from -3.8 in July and construction sentiment dropped to -28.4 from -28.2. Sentiment in the services industry declined to 3.1 from 3.6 and retail trade to -4.6 from -2.3. Consumer confidence remained at -10.

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In Europe 28th August 2014

Hollande’s new government ready for reforms

MADRID | The Corner | The economy is stagnant, the confidence of businesses and consumers continues to decline and unemployment is touching new highs. France is being forced to carry out reforms from all sides, hence François Hollande and Manuel Valls have chosen the social democrat Emmanuel Macron as Minister of Economy, confirming their willingness to pursue the economic reform agenda.

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In Europe 28th August 2014

ECB stimulus speculations keep circulating

MADRID | The Corner | The expectation that the ECB will finally announce a QE program after Draghi’s words at Jackson Hole and the confirmation that the ECB would have hired Blackrock for advice on launching a ABS program continue to nurture the Eurozone bond rally and thereby the credit one. Yesterday many bond markets in Europe returned to record lows with improvements in 10 years of 3bp (Germany), 2.5bp (Spain) and 2bp (Italy).

european earnings season

In Europe 27th August 2014

European earnings: 2Q 2014 the strongest since 1Q 2012

MADRID | The Corner | Now that the earnings season in Europe has finished, Morgan Stanley analysts point out that, excluding small caps, there are 4% more companies that have beaten estimates versus those that have missed them. Therefore, this last quarter has been the strongest since 1Q12. The IT and consumption sectors are those with the best results. Moreover, Europe comes back in the 2Q to the EPS growth (3.7% above the expectations) and the companies start to raise revenue guidance.

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In Europe 27th August 2014

A QE would be key for Germany, France and Italy to overcome their current stagnation

MADRID | By Francisco López | Are there reasons for such optimism after Draghi’s words in Jackson Hole? Yes, but only if Draghi dares to execute a program of sovereign debt purchases immediately. It happens that not all experts are clear that it will be the case. Especially, because the package of measures adopted by the ECB in June has still not been implemented: two TLTROs auctions and the Asset-Backed Securities (ABS) program. Would it not be better to wait to check the effects of these measures?