MADRID | The Corner | The liquidity net increase of the new measures by the ECB may be substantially less than expected, because of two main reasons: as a consequence of the 3-year LTRO maturity next December and February, and due to the improvement in the workings of the money markets.
MADRID | The Corner | The much-awaited German Ifo Business Climate Index for industry and trade fell to a seasonally adjusted 109.7 points this month, below forecasts for 110.2 and down from 110.4 in May. Although the country’s firms still make positive assessments of the current business situation, the Munich-based institution explained in a press release on Tuesday, they feel less optimistic about the future. And fear the potential impact of the crises in the Ukraine and Iraq.
BERLIN | By Alberto Lozano | Although when speaking of reforms nobody is pointing to Germany, international organizations are pushing for it in the country, especially in the services sector. The goals are boosting consumption and rebalancing the euro monetary union, and higher productivity in services sector becomes a challenge with large potential gains for both Germany and the whole Eurozone. But some voices insist this won’t easily happen.
MADRID | By J. J. Fernández-Figares | According to Eurostat, the US became by far the largest foreign investor in the European Union (EU-28) during 2013, with a figure that triples 2010 data. For its part, the second largest foreign investor in 2013 was Brazil, with €21bn.
MADRID | The Corner | After a sluggish start, growth seems to pick up in the euro area. The 18 countries sharing the common currency showed an industrial production rise of +0.8% in Apr 2014 over Mar 2014, and +1.4% over Apr 13, according to Eurostat.
MADRID | By Ofelia Marín-Lozano | Now that stock markets are at maximum levels (absolute maximum for S&P 500 and relative one for Eurostoxx 50), stress tests are decisive to reactivate credit. They are already in the first phase (which consists in evaluating the assets’ quality or AQR) and the overall outcomes will presumably be published in November. It seems likely that credit will recover sooner, inasmuch as banks know their individual results and the ECB may advance some messages.
ATHENS | By Nick Malkoutzis via MacroPolis | The May 25 result should have been a watershed moment, prompting Greece’s decision makers to seriously contemplate the mistakes that have fed the extremist monster: implementing drastic austerity while ignoring the social safety net, engaging in relentless artificial political polarisation, ignoring education, treating immigration with malevolent neglect, undermining institutions, snubbing justice and, when all else failed, attempting to cosy up to Golden Dawn and adopt some of its agenda.
MADRID | By JP Marin Arrese | A couple of years ago, Draghi rescued the Euro from its plight. Yesterday, he saved Europe from a protracted economic performance. By delivering more than expected by markets, he changed the rules of the game in monetary policy. His bold rate cut bringing funds hoarded by banking institutions into negative territory seems close to unconventional manoeuvring. His targeted 4-year massive 400 billion liquidity injection will prop up credit to enterprises and individuals, providing a robust boost to growth.
MADRID | By Julia Pastor | In a historic move, the ECB cut the benchmark rate to 0.15 percent from 0.25 percent, and reduced the deposit rate to minus 0.10 percent from zero, becoming the world’s first major central bank to use a negative rate and pushing entities to increase credit lending. Spanish Ibex35 reacted to the news with a 0,8% increase.
LONDON | Barclays analysts invite you to answer the following question: What action do you expect the ECB to take at its Thursday 5 June meeting? The survey closes at 10am London time on Thursday, 5 June 2014, and the results will be published at noon that day in the NY open edition of this publication.