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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. 

No Picture

Markets 13th October 2014

Which “austerity”? Fiscal or monetary?

SAO PAOLO | By Marcus Nunces via Historinhas |Matt O´Brien has gone over to the “dark side” writing “Why is the recovery so weak? It’s the austerity, stupid.”: Welcome to Austerity U.S.A., where the deficit is back below 3 percent of GDP and growth is still disappointing—which aren’t unrelated facts. It started when the stimulus ran out. Then state and local governments had to balance their budgets amidst a still-weak economy. And finally, there was the debt ceiling deal with its staggered $2.1 trillion of cuts over the next decade.

euro dollar

In Europe 1st October 2014

IN DEPTH: Is low inflation the greatest problem for the European economy?

MADRID | By J. L. Martínez Campuzano (Citi) | I beg your pardon, I meant to say “persistently low” inflation. If it is not (and here we are in agreement), then why is the ECB repeating the same argument over and over to justify its decisions? Non-existent official rates, negative deposit rates, unlimited liquidity provision for banks, and the latest invention: the purchase of securitised corporate paper for credit operations. 

US China exchange rate conflict

World economy 1st October 2014

China under the markets’ spotlight: What is really going on?

MADRID | By Ana Fuentes |  Protests in Honk Kong have served to put even more pressure on Beijing’s economy, which is already struggling to maintain growth, boost household consumption and ease credit lending. The last monetary easing by the country’s central bank and the rumours that its governor could be replaced for being too reform-minded has seen certain questions arise. Are they pertinent or just distorting noise?

BCE's QE

In Europe 30th September 2014

ECB’s QE: how it can really work (or fail)

MADRID | By Javier Arce |  The true danger of a third recession in the eurozone can dissipate, and quickly. Only if after the stress test and the banking union, the euro’s depreciation, the EQ, the takeover of Juncker and its new Commission… we realize that we live in El Ejido, and not in Hernani. Let me explain that.

No Picture

Markets 29th September 2014

Are central banks correctly assessing macro data?

MADRID | The Corner | The divergence between the different central banks’ monetary policies is increasing tension in Western financial markets (variable, fixed-income and forex) , leaving many investors clueless. Volatility is expected to increase in the coming months, which will add tension to the picture. In the short term, investors will want to determine if central lenders are correctly interpreting the macro scenario. That is why macro economic indicators which will be published in the coming days have so much relevance. 11 a.m. final reading of euro-area consumer confidence, which remained unchanged at minus 11.4 in September.

Germany and the euro

Markets 26th September 2014

Euro’s depreciation gives Draghi a respite

MADRID | By Francisco López | The ECB’s measures since June have been oriented to fight the ghost of deflation, increasing the Eurozone’s economic activity and, in an indirect manner, managing the euro’s depreciation. For the moment Mr Draghi has failed in the first two goals, although he has succeeded in the third one. The euro is plummeting –which is good news.

No Picture

World economy 24th September 2014

US economy likely to stay buoyant despite corrections

Guest post by Jean-Sylvain Perrig, UPB Chief Investment Officer | The US economy is back on track. Its second-quarter bounce was sharper than previously thought and it is expected to stay on a reasonably good path of 3% in the coming quarters, thanks notably to a rebound in capex, a falling unemployment rate and a sharp improvement in the real estate sector. That will further boost consumer confidence, which has already reached its highest level in seven years.

No Picture

Markets 23rd September 2014

Europe needs tail wing- ECB willing to open windows

MADRID | By Jaime Santisteban | After successive quarters of economic expansion, increased demand and rises in industrial production which had triggered widespread optimism, the economic recovery has lost momentum in the Eurozone, halting abruptly in Q2. That was the main message conveyed on Monday by Mario Draghi at the European Parliament. Weak credit growth may prove an obstacle to recovery, and the continued lag in this sector is likely to persist for the rest of this year, with gradual increases in lending expected in 2015 and 2016.

TLTRO

Markets 20th September 2014

TLTRO alone might not be a game changer for Eurozone credit recovery

MADRID | The Corner | Supply and demand conditions for Eurozone credit generation are improving – this is clearly reflected in the ECB’s latest Bank Lending Survey – but the way towards a full normalisation is still long. We believe that reduced bank funding costs might support, but will not aggressively accelerate, the recovery in credit growth.