Post Tagged with: "Spain"
[Premium] Daily Commentary: On huge growth disparities in the developed economies
This will be a bronze level post. We see a number of data points in today’s links that point to economic growth and employment dynamics that vary widely across the developed economies
Markets Stabilizes but Tensions Remain High
Spanish 10-years yields continue to rise above those of Italy, and suggest that Spain may be the next country in the hot seat. Data released today confirms that the contraction in Spanish industrial production is still ongoing, with January IP falling -4.2% y/y compared with a decline of -3.5% in December. The spread between the two country’s bonds are now at 13 bp, a level not seen since August 2011, and up from a low of -202 bp in at the start of the year. In other news, ADP data today may offer some clues about Friday’s jobs report, but we suspect both reports will be overshadowed by euro zone concerns
On Homeric Similes And Spanish Debt
Spain is on a bad course, with recognised debt about to surge rapidly, while investor confidence in the current administration is slipping. Time for another “game changer” I think, since otherwise this car is about to crash
[Premium] On Spain’s missing its deficit targets
This is a silver level post. Spain is now fessing up that its going to miss 2012 targets as well as its 2011 deficit targets. For Credit Writedowns readers, this should come as no shock because I predicted this months ago. Here’s the question though: what does this mean for investors
The Tragedy that is Spain
The devolution in Spain is particularly troubling. The new fiscal compact had just been signed last week, which includes somewhat more rigorous fiscal rule and enforcement, when Spain’s PM Rajoy revealed that this year’s deficit would come in around 5.8% of GDP rather the 4.4% target. This of course follows last year’s 8.5% overshoot of the 6% target. The problem that for Spain is that the 4.4% target was based on forecasts for more than 2% growth this year. However, in late February, the EU cuts its forecast to a 1% contraction. This still seems optimistic. The IMF forecasts a 1.7% contraction, which the Spanish government now accepts
Euro below 1.322 as Spain total registered unemployed reaches 4.7 mln
Spain unemployment claims increased 112,269 in February, with total registered unemployed reaching 4.7 mln and the pace of claims picking up. This comes after a pretty ugly Q4 jobless rate of 22.9%, and points to further deterioration ahead. What is more important to us is that EU leaders have told “member states under scrutiny” that they should be ready to pursue other austerity measures if needed. In other words, despite recession risks in much of the euro zone, members are being told to tighten their belts again
Iceland upgrade sure makes default look palatable
A friend commented to me when he saw the story that Iceland had been upgraded by Fitch, the ratings agency, that this “sure makes default look palatable”. Obviously, Iceland is not out of the woods yet but their relative success says there are other ways to get it done
The Elephant in the Room Is Spain, Not Italy
The decision for Europe’s bosses is this: they must ultimately confront the consequences of their policy choices. They can destroy the eurozone by continuing with the same failed mix of policies or by salvaging it by adding what has been missing from the outset: a mechanism for shifting surpluses to the deficit regions in the form of productive investments (as opposed to handouts or loans)
An Update on Italian Sovereign Outperformance
Ahead of the next LTRO at the end of the month, Spanish and Italian bonds may begin consolidating after the large moves seen over the past month. The scope for Italian out performance in the month ahead appears somewhat more limited than over the past month. Indeed, the 5.5% yield level on the Italy’s 10-year generic bond may prove a bit sticky. It also corresponds to trend line on the weekly charts, drawn off the yield low of 3.7% in mid-Oct 2010. Spain’s 10-year yield decline is slowing as it slips through the 5% threshold
The Unlikely Bull Market
This is not the time to be fully invested but neither is it the time to be side lined. We are in a nervous market where great opportunities present themselves at regular intervals. We recommend holding 25-50% in cash or cash like instruments (depending on your risk profile) which can be deployed at short notice when those opportunities arise
Auerback: Austerity during recession is equivalent to medieval bloodletting
Here’s a good video performance by Marshall Auerback on BNN’s Business Day program. Marshall thinks the Greek default deal is actually a relatively good one. But sees a Portuguese default after the Greek default as a real possibility and envisions a scenario in which Portugal and Spain look to extract similar terms. Moreover, the quid pro quo for Greece is austerity – and that makes getting debt loads down harder when implemented during a downturn
Dollar Mixed as Spain raises 4.5 bn euros in bond auction
The dollar is currently mixed against the majors and EMs as asset markets consolidate near recent highs. Spain raised 4.5 bn euros in a bond auction the upper end of their desired range. On the data front, Australia’s December trade surplus exceeded expectations increasing to A$1.71bln in December from a revised A$1.34 bln in November (was A$1.38 bln). Chinese markets outperformed the region closing nearly 2% higher, but the news flow was mixed, and even slightly contradictory