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.
MADRID | By Luis Arroyo | Despite Italy’s PM Matteo Renzi is the only one fighting the hard EU economic line, Italian public debt reaches 135% of GDP. The country is required by the fiscal compact to return to 60% in 20 years, which would involve perpetual austerity for an entire generation at least. However, the problem does not only affect Italy but all the European Southern countries.
LONDON | By Barclays analysts | ECB is going to cut its policy interest rate and/or announce targeted liquidity measures, with a view to support bank lending at the 5 June Governing Council meeting. In his remarks at the ECB Forum on Central Banking being held in Portugal, ECB President Draghi highlighted the risk of a negative spiral between low inflation, falling inflation expectations and credit for the euro area.
MADRID | The Corner | The rise of the far-right Front National will harm more the European project than any economic recipe imposed from Berlin. In the end, Germany is indeed setting hard conditions for the EU integration, but at least is favoring it, whereas France’s Marine Le Pen has a clearly anti European speech and intends to bring power back to the countries.
MADRID | By Jaime Santisteban | Investors looking for a safe heaven who bet on peripheral debt and stocks have seen their profits jump. “Holding Greek 10-year bonds has brought 20% profitability in just 4 months. Portuguese debt is also to highlight. Spanish 10-year bonds (over 6% profitability) are trading at a higher yield than the stock market index,” ATL Capital Strategy Director Marta Díaz-Bajo explains for The Corner.