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European economy 22nd June 2020

The Appeal Of Investing In Banks Is Very Strong: Expectations For Revaluation Are Close To 100% In A 1-2 Year Period

Ofelia Marín-Lozano (1962 Capital SICAV) | The starting point is much more solid than in 2008, when the banks emerged from many years of double-digit credit expansion and high rates. In addition, European banks have significantly improved their equity base, which is double, or even almost triple, the levels reached a decade ago in all their solvency ratios. The ratio of higher quality capital to risk-weighted assets, (CET1 or common equity tier 1) has risen from levels below 6% in 2011 to over 14% today. 

Retail Eurozone

European economy 5th June 2020

Quarantine Drives Eurozone’s Retail Sales To Record Lows

Bankia Estudios | Retail sales again recorded a sharp decline in April (11.7% vs 11.1%), driven down to an all-time low. By items, the rise in online sales stands out, showing a significant increase (10.9% vs. 0.7%), pointing to a change in the pattern of consumer behaviour. This could, in part, be consolidated in the medium term, although it is too early to draw conclusions. The rest of the items recorded sharp falls, although of lesser intensity than in March.

exports gorgeous

Spanish economy 29th May 2020

The Spanish Export Sector’s Deterioration Due To The Health Crisis Is In Line With The Eurozone: A Fall Of Around 3%

Bankia Estudios | As expected, the improvement in the external sector observed in the first two months of the year did not continue in March. The Covid-19 crisis hit both exports and imports hard, with setbacks of more than 14% year-on-year: only trade in chemical products, mainly medicines, and food was exempt from the contraction. The Q1’20 accumulated drop in Spanish exports (3%) is similar to the one noted in the EMU (3.2%) and Germany (3.3%), but much lower than that in France (8.6%). 

 

1008p2 Wall Street sign Main i

World economy 10th May 2020

US Stocks To Be Relative Winners In A Post-Covid-19 World

Patrik Lang, Head Equities (Julius Baer) | We have downgraded eurozone equities to Underweight given slower earnings recovery expectations, increasing political risk and unfavourable sector exposure. In our view, relative valuations do not fully reflect these negatives. On the other hand, we have upgraded US equities, which should benefit from a relatively fast post-Covid-19 recovery.

The trick of the Italian budget law

European politics 5th May 2020

Are Italy’s Days In The Eurozone Numbered?

Asad Zangana (Schroeders) | Many economies are facing a deep recession as a result of Covid-19, but Italy went into this crisis in a more precarious situation than most. The country stands out as the most likely candidate to exit the eurozone for several reasons. First, with gross debt estimated at 135% of GDP in 2019, it faces a significant challenge in both servicing its debt, but also refinancing it.

eurozone quarantine

European economy 2nd April 2020

A Two-Month Quarantine Can Mean A Recession Of -3.6% In The Eurozone’s Annual GDP

Unigestion | The current shock that the investment world is facing has three unique features: it is exogenous, it will likely be temporary, and its effect on the real economy is extremely uncertain. According to our core scenario, 2020 should see the first global recession since the Great Financial Crisis. This scenario assumes that the quarantine will have a limited impact on financial services, insurance, utilities and healthcare services, and leaves 20% of usual energy consumption.

Eurozone

European economy 3rd March 2020

The Eurozone’s Growth Will Be Half Of The Forecast Due To Covid-19 : 0.6% In 2020

Bank Of America Global Research | We lower our Euro area growth forecast to 0.6% for 2020 (-40bp), on the back of lower foreign demand (global growth downgraded to 2.8%, from 3.1%), supply chain disruptions and at least temporarily lower domestic demand from local virus hot-spots. We keep our 2021 forecast unchanged at 1.1%, assuming a permanent loss in activity. Euro area growth is expected be close to zero in 1H20 (with negative quarters in Italy and Germany part of our base case).

Spain inflation

European economy 28th February 2020

M3 growth in the Eurozone is still higher than the level compatible with 2% inflation

J.L. M.Campuzano (Spanish Banking Association) | The European Central Bank (ECB) published on Thursday the statistics for monetary aggregates in January. In January specifically, the growth rate accelerated to 5.2% per year. This increase in the M3 money supply continues to exceed the theoretical level compatible with medium and long-term inflation of 2%. The main contribution was from credit to the private sector, with an increase of 3.4% over last year.