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Markets 12th April 2012

Standard Life: be patient, deleveraging is a long-term process

LONDON | Standard Life Investments, the global investment manager, said on Thursday that the debt deleveraging cycle was showing signs of improvement, especially in the US, while admitting that the process remains a long and complex one after such a major financial crisis. In the latest edition of Global Outlook, Standard Life Investments highlighted that one of the key features differentiating this business cycle from most of its predecessors was…

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Markets 12th April 2012

Listen, Germany: it’s not (only) a debt problem, we need direct investment

By Luis Arroyo, in Madrid | A misdiagnosis can be fatal for the patient. Especially if the doctor is German, or Spanish but disciple of the Bundesbank school. Inflation is bad and so the public deficit is, that is the slogan. Let the people discuss whether this or that department should be reduced or not, and what about pensions or public investment?, VAT yes or no?, while the economy gets worse and…

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Markets 11th April 2012

Equities don’t like it when Quantitative Easing ends, warns Morgan Stanley

From a Morgan Stanley research note, a cautionary tale on what happens when the US Federal Reserve’s Quantitative Easing tap is closed and, more globally, when central banks stop supporting currently struggling economies in the developed countries. Analysts describe QE termination as one of the main risks of the next stage in the cycle… in Europe, too. “Our analysis of European equities around the first hike by the Fed historically…

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In Europe 4th April 2012

Chancellor Merkel should remember that Spain is not Germany

FRANKFORT | That is the view from Berlin: the biggest problem Germany contends with is Europe. And this is so particularly because of this fact, more than 17 million people are unemployed in the euro zone. But while in Austria the unemployment rises to 4.2% and 5.7% in Germany, the Spanish labour market suffers the tragedy of jobless figures that come to 23.6%. And there is no prospect of improvement. The problem is…

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Markets 3rd April 2012

Switch on the sterling pound printers, Schroders advises Number 10

LONDON | Although under threats of a possible sovereign debt rating downgrade, the UK’s government showed how to take advantage of the little margin for manoeuvre available when presenting the 2012 budget. Some pro-business measures would boost growth, said investing management firm Schroders, but they will not be enough to avoid a return to the Bank of England’s monetary expansion programme. Schroders released its viewpoint over the coming months and pointed…

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Spanish economy 2nd April 2012

Trick or treat: the Spanish budget

By Luis Arroyo, in Madrid | Spain’s 2012 budget brings a contraction in public spending of €18 billion and an increase in taxes of €9 billion, both items totaling €27 billion, which would put central government deficit at 3.5%. To reach the pursued 5.3%, the rest of the effort corresponds to the autonomous regional governments, not exactly the most successful part of the public administration in matters regarding austerity. In addition,…

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In Europe 30th March 2012

“The ECB liquidity has been more stabilising than the bailout funds”

By Tania Suárez, in Madrid | Alberto Matellán, director of Strategy and Macroeconomics at Inverseguros SVB, considers that the effect of the ECB liquidity auctions will fade away and that, in the end, fundamentals will have a bigger influence. In order to stabilise the euro zone situation, is it a reasonable option the simultaneous use of the rescue funds? The bailout funds are a mechanism for ‘buying time’; so, from that viewpoint,…

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In Europe 29th March 2012

Tough: Britain is experiencing the worst recovery in its history

By Luis Arroyo, in Madrid | The United Kingdom learnt this week that in 2011 its economy grew by 0.4%, leaving the level of real GDP at 4.1% below the maximum point reached before the recession. The Bank of England, theoretically, has put in place successive programmes of monetary expansion, but what it has achieved is a rise in inflation up to 5%. Meanwhile, many blame budget cuts for the deficit of…

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In Europe 28th March 2012

UK economy approaches technical recession with -0.3% 4Q 2011 GDP

LONDON | UK growth behaviour turned up worse figures than expected for the final three months of 2011. The Office for National Statistics published Wednesday its revised estimate for gross domestic production growth for last year’s final quarter, showing that the economy contracted by more than previously calculated. Q4 GDP was cut from -0.2% to -0.3%, with most of the downward update being made to household and government expenditure, while the contribution…

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Markets 27th March 2012

The Standard and Poor’s 500 Index’ excessive optimism

MADRID | At Barclays Spain, analysts have spotted an oddity. They say that in the United States market participants seem to discount two elements that appear to be contradictory: on one hand, that the Federal Reserve will keep its expanding monetary policy going on for the time being, something that Ben Bernanke would have made clear last Monday; and on the other hand, that the US economy will grow above expectations. “but the…