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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.

Palomas HalconesTC

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. 

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In Europe 4th December 2014

No happy returns for Greece

ATHENS | By Jens Bastian via MacroPolis | Last week saw Greek politicians clock up air miles to European destinations. Government representatives flew to Paris in order to meet a troika delegation that has repeatedly delayed its return to Athens. 

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In Europe 4th December 2014

The new ‘growth package’ from the EU

By Peter Lundgreen via Caixin | Last week, China’s biggest export destination, the European Union established a new growth package. The desired size of a new investment fund is 315 billion euros, and it will be called the European Fund for Strategic Investments (EFSI). During a period of three years, new investments financed by the fund are expected to lift annual GDP growth in the EU by 0.7 percentage points. The calculations from the EU show that the package can create between 1 million and 1.3 million new jobs.