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In Europe 10th December 2014

Falling oil price: 4 wins for Germany

ZURICH | UBS analysts | We see 4 wins for Germany in a backdrop of falling oil prices
1) German equity market is not exposed to Oil & Gas earnings. 2) While our Oil & Gas analysts expect energy capex to fall by 10% (which could hurt a cyclical Germany), the overall fall to European capex is < 3%. Plus capex is already at a 23 year low – can it get much worse? 3) Our economists think lower oil triggers sovereign-based QE given their view it pushes CPI even lower than Tuesday’s 0.3%.

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World economy 5th December 2014

TTIP: Germany’s got the upper hand

BERLIN | By Alberto Lozano | The Transatlantic Trade and Investment Partnership (TTIP) is being negotiated between the European Commission and the United States in Brussels. Once again, Germany, as Europe’s economic and political powerhouse, could have the last word on its contents and approval. 

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In Europe 29th November 2014

EZ can’t rely on Germany for growth

BERLIN | By Alberto Lozano | The Eurozone cannot afford another recession, hence the international and European institutional pressure to force Germany to speed up its economic growth. However, the German economy has grown by only 0.1% in 3Q and, according to the experts, it seems unlikely that it will accelerate in the coming quarters.

 

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In Europe 25th November 2014

Is growing by 0.1% normal, Mr Schäuble?

MADRID | The Corner | Berlin is sticking to a rigid budgetary policy, prioritizing a 2015 balanced budget instead of growth. And hard liners aren’t just willing to make any move. As German Finance Minister Wolfgang Schäuble defended on Tuesday during a budget debate in Parliament:  “We are not in a recession. We are not in an economic crisis,” Schäuble said, “Our economy is almost working at normal capacity.” Germany narrowly avoided a recession in the third quarter, growing by 0.1 percent, thanks to a sharp rise in private consumption (0.7 percent quarter-on-quarter, the biggest rise in three years) that compensated the lack of investment.

 

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In Europe 4th November 2014

Further depreciation of the Euro due to poor eurozone data

MADRID | By Francisco López | The latest movements within currency markets function as a gauge of the economic momentum in both Europe and the US. The decline of the Euro against the Dollar has increased in the last few days due to poor macroeconomic data in the eurozone, which is in sharp contrast with the vigour shown by the US (who showed growth of 3.5% in the third quarter of 2014).

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World economy 13th October 2014

Export-led economies lose steam

MADRID | By JP Marín Arrese | No need to wait for IMF forecasts. The hasty downfall in oil prices signals a steep deterioration in most export-led economies, ranging from China to Brazil. An upsurge in the US dollar coupled with prospects of more stringent credit conditions, are rapidly changing the global mood towards risk aversion. As hot money flees emerging countries bogging down their investment plans, main suppliers of capital goods such as Germany become increasingly crippled. 

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Markets 17th September 2014

Is state backing mezzanine ABS worth it?

MADRID | By Julia Pastor | ECB’s upcoming ABS drive with senior, higher credit quality assets will be launched with or without guarantees from the states, that is for sure. The question is if countries will guarantee riskier tranches, the so-called mezzanine ABS. Spain is willing to do so if others go for it, yet Germany, France and the Netherlands are refusing. This makes sense since a state back up would mean to put assets with uneven exposure to bankruptcy on the same level. An eventual agreement would be a very difficult political decision. Details of the ABS plan will be announced after the central lender’s next monetary policy meeting on Oct. 2.

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Markets 16th September 2014

Morning coffee: Germany’s ZEW, UK inflation, and much more

MADRID | The Corner | Don’t expect big changes in stock markets’ behaviour today: everyone is waiting for the main events of the week, that is, any move from the US Federal Reserve (FOMC meeting ends on Wednesday) and the Scotland referendum on Thursday. Just note that Germany is releasing ZEW index today, which gauges big investors and analysts’ confidence in the EU’s main economy. In the UK we’ll have consumer prices for August.