MADRID | The Corner | JPMorgan’s economic outlook forecasts that global growth is taking hold around midyear and as a rebound from weakness the US and Japan is reinforcing a more modest acceleration in the Euro area and emerging Asia. If JPMorgan analysts are right, this episode’s contours should mirror growth pivots in earlier expansions (during 2003 and 1993).
Berlin | By Alberto Lozano | Mario Draghi is speaking today again. Although no decisions or changes in the ECB’s monetary policy are expected, markets expect to know the ECB president’s assessment of the latest economic and financial developments.
MADRID | The Corner | The fall in inflation in July to 0,4% YoY and a still high unemployment rate of 11.5% in the Eurozone show that the policy measures the ECB announced in June are going to take some time to reach the real economy.
MADRID | The Corner | The ECB reported on Thursday the data of interest rates applied in banking corporate loans in June, which have been reduced by 18 bp in loans worth up to €1M for the EZ (up to 3.57%). Moreover, these discounts have been widespread and even higher in peripheral economies’ banks: -21 bp up to 4.3% (weighting by GDP of rates applied in Spain, Italy, Ireland and Portugal).
BERLIN | By Alberto Lozano | Despite of the growing concerns following the escalation of the crisis in Ukraine towards the end of the month, the EZ manufacturing PMI index remains expanding in July (51.8), according to Markit data published today. Netherlands (53.5), Germany (52.4) and Austria (50.9) saw an acceleration of the growth, while Greece (48.7) continues depressed and France (47.8) keeps being the “Europe’s sick man” and the main brake to the European growth. With the worst figure in Europe, the French manufacturing sector even contracted in July at the fastest rate since December. Meanwhile Ireland (55.4), followed by Spain (53.9), registered again the sharpest rate of growth, supporting the eurozone manufacturing recovery.
MADRID | The Corner | Thursday’s Eurozone PMI data for July provide welcome relief after a series of weak short- term indicators, particularly for May, UBS analysts point out. While the PMIs for France remained soft, those for Germany and the broader Eurozone were much stronger again, signalling business activity close to three-year highs, particularly in services.
MADRID | The Corner | Although the eurozone final consumer price data for June came in line with their expectations, analysts at Barclays believe the common currency club may struggle to absorb “rising labour supply into employment given growth potential.” That is why further structural reforms to expand labour-absorption capacity are essential to avoid persistent disinflation on wages and, ultimately, consumer prices, they say.
MADRID | By The Corner | Experts at JPMorgan think that it is largely due to positioning, regulatory concerns and profit-taking post ECB announcements in June. However, their funding costs have barely moved in the meantime and remain near historical lows. This is likely to have helped their earnings further in Q2.
MADRID | The Corner | After France and Italy’s (second and third most important countries in the single currency bloc) poor industrial production data of -1.9% (vs previous -0.51%) and +1.4% (vs previous +0.2) respectively, expert at Barclays Alberto Vigil wonders why analysts are so sure that there will be an acceleration in the 2S14.
*The green line is the Eurozone’s GDP, whereas the other two are Italy’s and France’s industrial production.
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.