In the World

china blues 1

Li Keqiang’s last Two Sessions

Alicia García Herrero (Natixis) | China’s so-called Two Sessions, the country’s most important annual political gathering, marked a transition this year. Held in early March, it included the final work report – or summary of government business – delivered by outgoing Prime Minister, Li Keqiang, who after two five-year terms as China’s prime minister, handed over to Li Qiang. Against this backdrop, Li Keqiang’s 2023 work report was blissfully short,…

Global Economy

What risk premium do analysts use for your country? From Venezuela’s 29% to the Netherlands’ 5.6%

Pablo Fernández | We sent a short email (see exhibit 1) on March, 2023 to more than 15,000 email addresses of finance and economics professors, analysts and managers of companies obtained from previous correspondence, papers and webs of companies and universities. We asked about the Risk-Free Rate (RF) and the Market Risk Premium (MRP) used “to calculate the required return to equity in different countries”. By March 31, 2023, we…

china happy

China’s March manufacturing PMI stands at 51.9 (52.6 previous), services PMI rises to 58.2 (56.3 previous)

Link Securities | China’s official advance manufacturing activity index, the manufacturing PMI, came in at 51.9 in March, above the 51.6 expected by the analysts’ consensus, although it was below the 52.6 of the previous month. We recall that a reading above 50 points indicates expansion of activity from the previous month, while a reading below that level indicates contraction of activity. Most components decelerated after February, although production, new…

oil barrelsTC

US crude oil inventories fall to 7.489 Mb

Link Securities | The US Energy Information Administration (EIA) reported yesterday that US crude oil inventories fell by 7.489 million barrels in the week ending 24 March 2023, their biggest drop since November last year. Analysts had instead expected a rebound of 0.092 million barrels. Gasoline stocks fell by 2.904 million barrels, above analysts’ expectations for a decline of 1.617 million barrels. Finally, distillate inventories, which include diesel and heating…

Companies restructuring

Insolvencies increase sharply as normality returns

Crédito y Caución (Atradius) | After two years of decline during the pandemic years, global insolvencies increased by 9% in 2022. The increase was related to the halting of Covid fiscal support packages and the lifting of temporary changes to insolvency legislation. In some markets, insolvencies have completely normalized or even exceed pre-pandemic levels. In the majority of countries, though, we observe that insolvencies are in the process of adjusting…

silicon valley bank

First Citizens’ purchase of SVB confirms importance of avoiding irrational fear and discriminating between institutions, regardless of size

Bankinter : US banks celebrate the purchase of Silicon Valley Bank/SVB by First Citizens (FC) with a +2.5% rise in yesterday’s session. Positive highlights: First Citizens (+53.7%), First Republic (+11.8%), Bank of America (+4.9%) and Citigroup (+3.8%). Analysis team’s view: This is an interesting deal for First Citizens and good news for US banking and the global financial sector. Our reasoning is as follows: (1) FC acquires SVB’s assets (loans…

dollar rally

US bond holdings fall by $76bn in a week: they don’t want bonds, they want cash

Intermoney | First Citizens finally proceeded to buy SVB for $500 million, assuming $56 billion in deposits and $72 billion in loans. The estimated cost of SVB’s bankruptcy has been set at $20 billion, a loss borne by the FDIC and representing 15% of the fund’s total. Not surprisingly, just a year ago, SVB was worth $40 billion and was the 14th largest bank in the US. Just a month…

Kristalina IMF

IMF warns of heightened risks to financial stability

Banca March : Kristalina Georgieva, head of the IMF, has warned of increased risks to financial stability, which “come at a time of higher debt levels”. Georgieva recalled that the global GDP growth forecast is below 3%, mainly due to the war in Ukraine and the restrictive monetary policy.


Alphabet launches “Bart” AI chatbot to compete with ChatGPT

Banca March | The search engine Google has announced the launch of Bart, an artificial intelligence chatbot to compete with Open-AI’s popular ChatGPT. For the time being, the US multinational communications services company has opened access to the intelligent assistant to a limited number of users in the United States and the United Kingdom, in order to detect possible failures. Like ChatGPT, Bart is a chatbot that can be conversed…

precios inflacion

Reaching 2% inflation to be a long schlep for the Fed: aiming for 3.6% this year, 2.6% in 2024 and 2.1% in 2025

Intermoney | The same could be said of the update of the macro picture forecasts. Economic projections are not necessarily a roadmap for policy and are subject to change. In fact, they have been changing from quarter to quarter. The projections point to inflation at 3.6% this year, one tenth of a percentage point higher than forecast in December. In 2024 it will moderate (2.6%), but it will not be…