MADRID | By The Corner | Experts at Morgan Stanley consider that Portugal is now a good opportunity due to its current technical levels. Since the Espirito Santo incident, the PSI20 has plummeted by 17.5%, but these analysts see a potential technical recovery of 10-12%. The Portuguese treasury has covered its entire financing needs for 2014 and is now raising funds for 2015.
Europe’s leaders avoided their usual muddling through complacency to do something radical — and it worked. Europe’s banking union, constituting a supranational pooling of most instruments of banking policy, was established over two years ago, in the early hours of June 29, 2012. To a greater extent than was initially realized by most observers, this step marked a watershed in the European crisis by making it possible for the European Central Bank (ECB) to stabilize sovereign debt markets.
MADRID | By Francisco López | The first world power is doing worse than expected. USA’s GDP decreased in 1Q by 2.9% year on year, nearly three times the 1% foreseen just a month ago and far from 1.8% that Wall Street expected. European stock markets, unlike the American, reacted immediately with heavy losses. Spanish Ibex 35 leaded the way losing 1.25 and finished below 11,000 points.
MADRID | By Álex García
MADRID | By Carlos Díaz Güell | Last week’s greatest news for SMEs were the Targeted Long Term Refinancing Operations (TLTRO), variety of LTROs that got a T standing for target. Banks will be allowed to borrow money at 0.25% interest rate at 4 years max.
MADRID | The Corner | Head of Economics at the International Energy Agency remarked that “the investment in renewables in Europe has tripled the US’ investment in the entire shale gas production.” Prices are 20% below the right level to recover the cost of new investments due to the existence of overcapacity and subsidised prices in renewables.
LONDON | By Chris Walker and Marvin Barth at Barclays | Despite the ECB delivering more easing than expected, the EUR remains close to the levels heading into Thursday’s meeting. Did the ECB then fail? In a word, no. The ECB’s objective is to raise inflation from unacceptably low levels well below its mandate of “less than but close to 2%” and a crucial element of doing so is to keep inflation expectations anchored near the Bank’s target.
BERLIN | By Jean Pisani-Ferry via Caixin | The small world of central bankers, market participants, economic officials and financial journalists is feverishly debating whether the European Central Bank (ECB) is about to embark, and should embark, on an unconventional monetary policy course. For the outsider, the whole discussion may look odd: Why has the issue become important? Hasn’t the ECB already embarked on such a course?
MADRID | By Álex García
LONDON | By Barclays analysts | The latest disappointing inflation and growth data have reinforced market expectations of ECB action(s) in June. The significant rally of short rates seems consistent with expectations of a policy rates cut, as well as a chance of additional liquidity injections. At this stage, we see limited room for a further rally and suggest paying tactically 1y Eonia.