BOAML | For a while, we’ve been asked by clients how “big tech” might compete with the European banks. This question now seems to need an answer. We think the European banks sector faces plenty of challenges, but a head-on challenge from the likes of Amazon and Google etc aren’t among them, in our view.
Renta 4 | Telefonica shares hit their lowest level in August since 2006, since when they have recovered more than +10%. We see that investors have turned their back on the operator, disappointed by a business evolution which has not improved at an operational level and lacking confidence in a significant and sustained improvement in the future.
Bankinter | Declarations by three ECB hawks (Weidmann, Bundesbank; Knot, Netherlands; and Nowotny, Austria) contrast with the dovish declarations of Lagarde, who takes over from Draghi as ECB President in October.
Miguel Navascués | There are many signs that the public think the crisis is over. One is the bankruptcy of Podemos, but there are many more. But has it ended? I doubt it.
José Ramón Díez Guijarro (Bankia Estudios) | In recent years there has been a debate in academic circles about the limits of monetary policy, once the barrier of negative interest rates has been crossed. With the additional problem that not even in Japan, where the natural interest rate has spent practically two decades in negative territory, has the central bank dared to dive deep into the zone of below zero interest rates, even though the economy has been stuck in a deflationary stagnation which has given birth to new economic jargon (japanisation) to refer to this type of economic process. The doubt is whether the Bank of Spain got is wrong by not using monetary policy more intensively or got it right be assessing the risks of traveling in this unknown territory as greater than the possible benefits.
“There is no probability of deflation, there is very low probability of recession, there are no threats of de-anchoring of inflation expectations,” Mario Draghi said on Thursday. The governor of the European Central Bank announced once again – as he did in March – that it will delay the rate hike at least until 2020 and kept all options open, especially in case economic prospects deteriorate. ECB’s decision is in line with those of other central banks in the world. The Fed has just opened the door to a rate cut, something that Australia and India have already done.
Pablo Pardo (Washington) | Ángel Ubide, who was advisor to Spanish PM Pedro Sánchez between 2015 and 2016, has an enormous experience in financial markets. He has worked in the IMF, Goldman Sachs and three of the largest and best known hedge funds on Wall Street, Tudor, DE Shaw and now Citadel, where he is director of fixed income studies. He has also been a senior fellow of the Peterson Institute for International Economics, the most important think-tank specialising in economics in the US.
José Ramón Díez Guijarro (Bankia Estudios) | Fortunately, in the EMU, with the exception of the second half of 2014, when the expected inflation expectations traded by the five year German bond reached negative territory, this deflation risk seems much more contained. This could be the principal difference between the European and Japanese economies.
via The Conversation | New Year’s Day 1999 saw the largest monetary changeover in history. On that date, just 20 years ago, 12 members of the European Union formally adopted a brand-spanking-new currency, the euro. Today seven additional EU member states use it, along with Montenegro, Kosovo, Andorra, Monaco, San Marino and Vatican City. If survival is the ultimate gauge of success, then this grand monetary experiment can be said to have succeeded.
Inflation fell six decimal points in November to 1.7%, the lowest in seven months in Spain. Within the deflationary evolution, almost general across components, energy process (electricity and oil) stand out. Analysts at Bankia Estudios predict a further fall for next year: It will recover in the first months of 2019 to around 2% and close the year at 1.5%.