MADRID | By JP Marín Arrese | Stock markets all over the world are plummeting while bond yields have regressed to fresh lows, as investors grow increasingly worried about growth prospects. Signs the US economy might be slowing down, coupled with the Eurozone plight, paints a gloomy scenario. Yet, the utter lack of direction in policies across the Atlantic stands as the most worrying concern.
MADRID | By JP Marín Arrese | No need to wait for IMF forecasts. The hasty downfall in oil prices signals a steep deterioration in most export-led economies, ranging from China to Brazil. An upsurge in the US dollar coupled with prospects of more stringent credit conditions, are rapidly changing the global mood towards risk aversion. As hot money flees emerging countries bogging down their investment plans, main suppliers of capital goods such as Germany become increasingly crippled.
LONDON | By Koon Chow at Barclays | A pertinent question asked by some investors is whether EM markets have become complacent again and whether new exogenous shocks may catch investors at a vulnerable point just as they are settling down to ‘summer’ carry trades. We see this risk in some markets but it is far from a universal theme in our view. In EM local markets – FX and bonds – we see Turkey as probably the most vulnerable to exogenous risk aversion. At the other end of the spectrum are Brazil, Central Europe, and Colombia, which do not appear vulnerable in part because of the high local real yield levels.
MADRID | By Francisco López | Ben Bernanke’s warning about a posible withdrawal of Fed monetary stimulus a year ago prompted a notable rise of premium risks and general drops in global stock markets, but deeper in emerging economies. And it indeed hit the so-called BIITS (Brazil, Indonesia, India, Turkey and South Africa). Today, stocks have recovered and stand at levels prior to the taper shock, although some collateral damages are there.
MADRID | By Luis Arroyo | The appreciation of the euro, in a deflationary context as the current one, may be the last push so as to cross the ECB’s red line and reach a Japanese style deflation. Macroeconomic variables don’t encourage optimism, especially because inflation in the euro zone is getting closer and closer to the ECB’s zero red line.
BARCELONA | by CaixaBank research | Crucial countries such as China and Brazil are already starting to see evidence of their economies speeding up. On the other hand, most emerging countries have steadily strengthened their economic systems, spreading structural reforms, liberalizing markets and keeping a close eye on the solidity of financial institutions.