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.
MADRID | By Álex García.
MADRID | The Corner | After two months of decline, US construction rebounds in July at the fastest pace in eight months. As the Commerce Department reported yesterday, the number of housing starts rose 15.7% in July compared to June, reaching an annualized figure of 1.09 million units, the highest in eight months. Meanwhile, applications for building permits in the same month also advanced 8.1% to an annual rate of 1.05 million, after drops of 3.1 percent in June and 5.1 percent in May. Notably the permits to build single-family homes, a segment that accounts for three quarters of the U.S. housing market, increased in July by 0.9% to an annualized figure of 640,000, the highest since December 2013. In addition, permits for units in buildings with five units or more rose 23.6% in July to an annual rate of 382,000, representing its highest growth rate since January 2006.
MADRID | The Corner | From the macroeconomic side, US data are showing a clear improvement in the economy, with the labor market growing at similar rates to those seen prior to the financial crisis and consumer confidence surging in July to the highest level since October 2007. The business results also show a positive trend with growth in earnings by 12.0% (ex-financials) and +10.0% inc. financials.
MADRID | By Fernando G. Urbaneja | Both the evolution of the GDP and employment in 2Q confirm that the Spanish recovery has arrived: it’s a weak, subject to uncertainty one, but undeniable. Official data released on Thursday were above expectations: 400,000 new employed, 310,000 less unemployed and a crucial piece of data: nearly 100,000 more occupied Spaniards. It’s the best data of the past 26 quarters, since mid-2007. But we should not forget the poor-quality contracts nor the 2 million long-duration jobless.
SINGAPORE/LONDON | By UBS analysts | Global growth has disappointed in the first half of this year. As a result, we have steadily marked down our forecasts for 2014. We now forecast global growth of 3.0% in 2014 and 3.3% in 2015 after 2.5% in 2013. At the turn of the year we forecasted 3.4% global growth for 2014 and 2015.
LONDON| By Stephane Deo and Ramin Nakisa at UBS | At the time of writing, the Treasury curve is telling the potential US GDP growth rate is very low – in the neighbourhood of 1%. The 30-year real yield is at 1.09% (but dipped below 1% recently), the 10-year real yield is at a frightening 0.36%, and the 5-year-in-5-year yield, a good proxy of where the market thinks long-term growth will settle, is at 1.05% (but also dipped below 1% recently).Taking those numbers at face value, we would have to conclude that the current recovery is doomed, and that growth will level off soon at a very disappointing level.
BRUSSELS | By Jacobo de Regoyos | The euro zone’s GDP is to grow by 1.2% in 2014 and by 1.7% in 2015, the European Commission forecasts, while the whole of the EU will do by 1.6% and 2%, respectively. Even if Brussels rather thinks recovery is firmly rooted and it must protect it from gloomy predictions, the truth is that last data are showing an economy that is not really taking-off.
MADRID | J.P. Marín Arrese | The EU seems an endless discussion on futile issues taking place in Brussels. We are all too aware that real decision-making lies in Berlin.