Credit Writedowns » Spain

The Elephant in the Room Is Spain, Not Italy

Marshall Auerback — Tue, 07 Feb 2012 21:30:47 +0000

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)

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An Update on Italian Sovereign Outperformance

Marc Chandler — Mon, 06 Feb 2012 17:40:32 +0000

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

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The Unlikely Bull Market

Niels Jensen — Fri, 03 Feb 2012 16:30:46 +0000

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

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Auerback: Austerity during recession is equivalent to medieval bloodletting

Edward Harrison — Thu, 02 Feb 2012 15:30:27 +0000

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

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Dollar Mixed as Spain raises 4.5 bn euros in bond auction

BBH — Thu, 02 Feb 2012 12:30:28 +0000

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

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Dollar Pops Back

BBH — Mon, 30 Jan 2012 12:30:21 +0000

Dollar is broadly stronger against the majors and EM currencies after Greece rejected calls for direct budget control. Asian stocks fell, with the MSCI Asia Pacific index down 0.9%; EuroStoxx 600 is currently down 0.7%. Economic data saw Spanish Q4 GDP contract, EZ confidence rise less than expected; US personal income

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A Month In Spain That Didn’t Shake The World

Edward Hugh — Mon, 23 Jan 2012 13:00:00 +0000

Spain’s economic problems are very grave. The country is facing a decade long depression, and if enough young qualified people leave during this period then the country could enter a negative dynamic from which it will never properly recover. At the outset (2007) I and others argued for a 20% internal devaluation to shift resources over to the export sector. This did not happen, and virtually no one is interested in the idea. The main priorities are still reducing the deficit, and restructuring the financial sector without injecting any significant quantity of public money. Both these policies are contractionary in their impact. In addition the proposed labour market reform is timid, and won’t act quickly enough to stop the rot on the growth front

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Chart of the Day: Developed economies’ debt levels by sector

Edward Harrison — Fri, 20 Jan 2012 14:00:41 +0000

This is a great chart below via the Wall Street Journal. It shows the total debt to GDP ratios for the largest developed economies in the world broken down into four sectors: households, non-financial corporations, financial institutions and government

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Spanish government doubts it can achieve deficit target

Edward Harrison — Fri, 20 Jan 2012 13:14:05 +0000

I have been saying for a few months now that all of the periphery would miss their targets as depression took hold. Belgian newspaper De Standaard reports that the new Spanish government is fearful. My translation from Dutch below

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The Massendowngrade Effect

Edward Hugh — Mon, 16 Jan 2012 15:30:09 +0000

Perhaps the main point to take to heart from the events of the last week is the way the recent ECB liquidity measures have apparently been able to stabilise the debt crisis, at least for the time being, even while it is not clear that they will have the same success stabilising the deterioration in the respective real economies

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Willem Buiter: “We will certainly have a panic stage before the debt crisis is resolved” (part 2)

Edward Harrison — Sat, 14 Jan 2012 03:10:10 +0000

Continuing from part 1 of the Willem Buiter interview with het Financieele Dagblad

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Buiter: “The temporary pause in the European debt crisis is as deceptive as the frenzy before the New Year”

Edward Harrison — Sat, 14 Jan 2012 02:22:37 +0000

The countries of the eurozone will eventually emerge from the sovereign debt crisis -- with pain and difficulty

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Willem Buiter: “We will certainly have a panic stage before the debt crisis is resolved” (part 1)

Edward Harrison — Sat, 14 Jan 2012 02:10:57 +0000

The countries of the eurozone will eventually emerge from the sovereign debt crisis -- with pain and difficulty. That is what Citigroup chief economist Willem Buiter, on a visit to Amsterdam on Friday during a roadshow, expects. Spain and Italy will get their finances in order and the ECB will jump in when necessary. Deep integration of fiscal policy, according to him, is not necessarily required

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Successful Auctions Boost Tone in Europe

BBH — Thu, 12 Jan 2012 12:30:04 +0000

Better than expected reception to Spain and Italy’s debt auctions have spurred risk on; dollar softer. BoE, as expected, left policy unchanged, ECB expected to do the same; Japan’s current account shrinks. US advanced retail sales expected to rise to 0.3% from 0.2%; thoughts on the EM central bank outlook

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Thoughts Ahead of Spanish and Italian Bond Auctions

Marc Chandler — Wed, 11 Jan 2012 16:00:00 +0000

Spain and Italy begin this year's funding operations with bond auctions tomorrow and Friday. Although the euro is bouncing along its recent trough against not only the dollar, but against many of the other major currencies as well, there has been a modest improvement in some of the measures the market has focused on as metric of stress. Of course there are other signs that still show a high level of paralysis, including the fact that overnight deposits at the ECB continue to set record levels and are approaching 500 bln euros

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The fireworks will start with Spain or Italy

Edward Harrison — Sun, 08 Jan 2012 22:30:50 +0000

Here's what I had to say about Europe on Capital Account with Lauren Lyster on Thursday night. I'm not bullish on the real economy there (but I still expect relative share outperformance due to lower P/Es). The US is having a bit of a data surge to the upside: housing, employment, manufacturing, all of these numbers have been better of late

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Right Now the Debt Crisis is European, But the Problem is Global

Comstock Partners — Fri, 06 Jan 2012 01:00:27 +0000

In addition to the European economic recession exerting a drag on the rest of the world, the real threat of bankruptcy of a major financial institution can rapidly spread throughout the globe as a result of a run on the banks or the opaque interrelationships between European banks and financial institutions in other nations

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Why Spain may be More Worrisome than Italy

Marc Chandler — Thu, 05 Jan 2012 18:54:18 +0000

At the end of last year, Italian 10-year yields were more than 200 bp on top of Spain. The spread has narrowed in recent days, but is still well beyond the euro era average of about 10 bp and the late 2008 extreme near 65 bp. There is more room for Italy to outperform Spain

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The Rain In Spain Falls Mainly On The Journalists, It Seems

Edward Hugh — Mon, 02 Jan 2012 12:30:49 +0000

Nothing in Spain is exactly as it appears to be, and that few of the arguments politicians and so called “experts” advance are entirely innocent. Most “information” circulating in Spain is highly politicised. Really “independent” analysts are virtually unknown

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Euro Squeezed Higher, Takes Others With It, Positive Newstream

Marc Chandler — Tue, 20 Dec 2011 12:30:23 +0000

Successful Spanish and Greek bill auctions and better than expected German IFO caught the market wrong-footed, if the record net speculative short at the IMM is anything to go by. The euro has shot up to almost $1.3090 and pulled up the other major currencies and emerging market currencies in its wake

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Downgrades, Upgrades and US Inflation

BBH — Fri, 16 Dec 2011 12:30:57 +0000

The dollar is broadly weaker as news developments remain mostly positive, boosting sentiment. North American session sees US November inflation; euro likely supported today on short-covering rally. RBI left rates on hold at 8.5%, as expected; IDR rallies after Fitch upgraded it to investment grade

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Dollar Softer On Spain Auction, Firm Euro Zone PMI Readings

BBH — Thu, 15 Dec 2011 12:42:22 +0000

The dollar is broadly weaker as Spanish auction goes well, euro zone PMIs better than expected. SNB held policy steady with no change to EUR/CHF floor. China, Singapore data help boost sentiment; Hungary reaches deal with banks on CHF loans

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Full text: Moody’s reviews five Spanish covered bond programmes for downgrade

Edward Harrison — Tue, 13 Dec 2011 20:00:04 +0000

The following is the press release Moody's issued in putting the covered bonds of five Spanish banks on review for credit ratings downgrades

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News Links: Is Denmark on Verge of Icelandic Style Crash?

Edward Harrison — Thu, 08 Dec 2011 16:30:39 +0000

Financial news links for 8 December 2011 including stories on Denmark and Danish bank capital, the European sovereign debt crisis and Spanish banks

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Curbing Our Enthusiasm, Increasing Our Bet…

Global Macro Monitor — Wed, 07 Dec 2011 19:00:07 +0000

We could be wrong on this one and may have too much faith in the Eurocrats, but think of consequences if we are wrong? If the EU fails here, it will 1931 all over again and will put the “Great” in this rolling depression/recession. Therefore, we bet they’ll come up with just enough to let Super Mario do his thing. After that we’ll reassess and look at the long-term consequences, but hopefully 100 S&P points higher

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The European Troika to Watch

Global Macro Monitor — Tue, 06 Dec 2011 20:30:04 +0000

The “troika” – Italian, Spanish, and French bond yields - is acting pretty well even after the S&P downgrade. Italy is under 6 percent and that is what matters. We sense there will be tremendous pressure on the shorts and equity risk off crowd going into the EU Summit and believe the market moves higher even if it’s just a fig leaf to give the ECB cover. After that? All bets off going into 2012. Stay tuned

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Buiter: no politically feasible route to sustained growth for many years to come

Edward Harrison — Tue, 06 Dec 2011 15:21:10 +0000

In the aftermath of the emergence of a “reinforced ‘Stability and Growth Pact’”, Citigroup chief economist Willem Buiter is pessimistic about growth outcomes in the major developed economies because the political economy of the sovereign debt crisis will stymie any pro-growth policy solutions. While Buiter sees giving the ECB a green light to monetise euro area government debt as the genesis of the deal, he anticipates years (or decades) of low growth and he warns that ECB policy support will neither be “open-ended” or “unconditional”. On a positive front, Buiter says it “should allay concerns about disorderly sovereign defaults by Italy or Spain and about euro area break-up.”

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Foreign News: France and Germany are still miles apart on agreement

Edward Harrison — Thu, 01 Dec 2011 13:45:18 +0000

Foreign news for 1 December 2011 focuses on Europe, and in particular Spain

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Foreign news: Pour Encourager les Autres

Edward Harrison — Tue, 29 Nov 2011 18:56:50 +0000

Foreign financial news for 29 November

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Why the IMF thing works for the euro

Guest Author — Mon, 28 Nov 2011 15:12:28 +0000

Editor’s note: the IMF musings would be difficult politically, especially in the US. And any deal for Italy would also have to involve Spain too. However, Perhaps most important, operationally, the ECB lending to the IMF, which then lends to euro member nations, doesn’t count as ‘printing money’ in the Teutonic monetary bible

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On the alleged plans for a Spanish bailout

Edward Harrison — Sun, 27 Nov 2011 22:49:00 +0000

“It is categorically not true,” said a spokesman from the party, which is led by Mariano Rajoy. The spokesman was commenting on a report by Reuters on Friday that the PP had discussed plans to seek a rescue package. -Spain ‘will not apply for international aid’ – Telegraph There is an old saying that you

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News Links: Power to imprison civilians without charge or trial anywhere in the world

Edward Harrison — Sun, 27 Nov 2011 14:30:59 +0000

News links for 27 November

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Foreign news: Belgium gets austerity, EU prepares for Eurobonds, Netherlands says breakup inevitable, Spain to get IMF bailout

Edward Harrison — Sat, 26 Nov 2011 15:13:32 +0000

Foreign-language economic and finance links for 26 November

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Foreign News: Commerzbank capital, Portuguese bailout, Franco-Belgian problems

Edward Harrison — Wed, 23 Nov 2011 14:00:00 +0000

Here is the second version of this foreign news links post that I am starting. The feedback yesterday was good. You all said it makes sense to see what the press in country are saying in Europe since that is the locus of the sovereign debt crisis, so I will continue this

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News Links: Downgrade watch begins as debt panel concedes defeat

Edward Harrison — Tue, 22 Nov 2011 14:30:54 +0000

Downgrade watch begins as debt panel concedes defeat – The Hill’s On The Money Credit rating agencies reiterated Monday that the U.S. is at risk of a downgrade following the announcement that the supercommittee has failed. Standard & Poor’s warned lawmakers not to try and roll back the $1.2 trillion in automatic cuts set to

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News Links: Downgrade watch begins as debt panel concedes defeat originally appeared on Credit Writedowns

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Credit Writedowns Feed # abf0d081857b85fe6be494728740a4f1

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