BancaMarch | The European Commission warns that Spain is moving away from the adjustment path and asks for measures that compensate the alignment of pensions with prices.
Nick Malkoutzis (Macropolis) | Over recent weeks, there has been much talk from government officials about a “new Greece” emerging after the July elections. This has been supported by legislation that has already been passed, such as interventions in the way the country is governed, and the draft laws that are being lined up, such as the development bill, which is seen by New Democracy as a bureaucracy-buster that will pave the way for more investment.
A. Menut and A. Tentori (AXA IM) | Italian politics are back at centre stage, with Lega party leader Matteo Salvini unexpectedly triggering a government crisis and making way for what in many ways is yet another spurious coalition. The positive political climate, more European Union-friendly, together with non-negative – although weak – growth should be encouraging for markets.
J.L.M. Campuzano (AEB) | The Bank of Spain has published the financial accounts for the Spanish economy at the end of the first quarter. Consolidated household and company debt fell in the first quarter to 132% of GDP, 4.1 percentage points below the rate the year before. Company debt represents 74.4% and that of households 58.4%.
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.
Craig Willy via Fair Observer | It will be a busy few years for Japan, which hosts the G20 summit on June 28-29 followed by the Tokyo Olympics in 2020. The international attention sparks questions concerning how durable its economic success will be.
Link Securities | We highlight the negative impact that the new conflict between the European Commission (EC) and the populist government of Italy is having on the European securities markets and on the euro. Rome has not taken the necessary measures to contain the public deficit, which it will lead to a further increase in Italian public debt, whose weight could surpass 135% of GDP in two years.
Link Securities | According to Bloomberg, citing sources close to the issue, the European Commission is considering opening disciplinary proceedings against Italy next week because of its inability to control its debt.
Debt/Ebitda ratios of US companies is estimated to be around 3.3X compared to 2.3X in 2008, although the coverage of interest ratio (Ebitda/interests) reaches 7.4X compared to 7.3X in 2008. Therefore, although the level of debt is indeed high, the capacity to pay is also elevated, which is what really matters.
Despite the general deleveraging in the US, the corporate and non-corporate sector has begun to indebt itself again, currently to a level of 72.6% of GDP ($15 trillion). According to calculations of economists at the firm Solunion, the real level of non-financial corporate debt could exceed by 30%, or $3.9 Tr.