Showing posts with label salvare euro. Show all posts
Showing posts with label salvare euro. Show all posts

Tuesday, December 20, 2016

The FTSE 100 index of Britain’s biggest stock market-listed companies has enjoyed its strongest year since 2009, jumping from 6,137 at the start of the year to touch nearly 7,000 this week. Wall Street’s S&P 500 has hit record highs, with British investors gaining even more in sterling terms because of the fall in the currency. This has meant that some of the biggest funds popular with small investors – such as M&G’s £6.3bn Global Dividend – have made gains of nearly 40% over the past year. But not everyone has shared in the party. The single biggest fund in the UK, Standard Life’s £26.3bn Global Absolute Return Strategies, has managed to lose money when almost everyone else has been coining it. The fund is down 3.3% over the past 12 months, compared with the 17% gain made by UK index-tracking funds over the same period. Star fund manager Neil Woodford has also had a poor year, making just 2.7% over the past 12 months for investors in his popular £9.2bn equity income fund.  The prize for the best performance of any fund in the UK goes to the little-known JFM Gold, which has given investors a return of 128% over the past year. Unfortunately, it’s only a £20m minnow, so we took a look at the big funds instead. M&G Global Dividend performed best, rising 39.4%, while Fundsmith Equity was up 28.2%. Both are heavily invested in Wall Street-listed stocks, which have rocketed in sterling terms. For example, Microsoft (a big holding in both funds) was trading at $54.80 at the start of the year and was $63.14 this week – a rise of 15%. But in sterling terms that translated into £37.27 at the beginning of the year, and £49 now – a rise of 31%. While the post-Brexit plunge in sterling will make holidays more expensive for everyone in 2017, it has turbo-charged returns for pension and Isa holders with investments in big US companies.

Monday, December 19, 2016

Banca italiană "Monte dei Paschi di Siena" va scoate la vânzare noi acţiuni în perioada 19-22 decembrie, într-o ultimă încercare de a-şi majora capitalul în acest an cu 5 miliarde de euro şi a evita în acest fel solicitarea unui ajutor din partea statului, transmite Reuters. "Monte dei Paschi" a anunţat că oferta adresată investitorilor instituţionali, care reprezintă 65% din total, se va încheia joi. Oferta rezervată acţionarilor actuali şi persoanelor fizice va avea loc până miercuri.  În încercarea de a atrage fonduri, "Monte dei Paschi" a prelungit o ofertă de schimb voluntar de obligaţiuni cu acţiuni, adresată investitorilor care deţin obligaţiuni junior ale băncii în valoare de 2,1 miliarde de euro. Oferta are loc în intervalul 16-21 decembrie. Guvernul italian este pregătit să susţină a treia mare bancă din ţară, dacă planul de atragere de fonduri nu va funcţiona. Potrivit noilor reglementări adoptate de Uniunea Europeană după criza financiară, investitorii într-o bancă cu probleme trebuie să suporte primii pierderile, înainte ca guvernul să intervină cu fonduri publice. O sursă apropiată situaţiei a declarat vineri că salvarea de către stat a "Monte dei Paschi" implică mai întâi conversia obligatorie în acţiuni a unor obligaţiuni subordonate în valoare de 4,1 miliarde de euro. 

Saturday, December 17, 2016

In the future, Romania may not receive funding from international organizations such as the IMF or the EU.  "There are no guarantees that the IMF, EU or other supra-national or international organizations will make available to Romania similar financing programs in the future. Both the current account and the budget deficit are rising. If these deficits are going to require the availability of future financing, Romania may pass additional measures that could hinder economic growth". NBR officials declined to comment on the statements included in the MedLife IPO prospectus. Last month, Lucian Croitoru, advisor to NBR governor Mugur Isărescu, warned that Romania was closer than one may think "either to an adjustment towards its potential, or towards recession", if the adjustments aren't made on time.  He wrote, on the NBR blog, that the monetary policy is more relaxes than intended, and the "relaxed fiscal policy has generated a fiscal impulse which stimulated the economy more than would have been implied by the negative amount of the GDP gap". This process whereby the VAT cuts and salary increases stimulate other countries' economies cannot last, and the inflation driven exclusively by demand will increase,  Mr. Croitoru said. He added: "In that context, the measures from 2016, to cut VAT by 4 percentage points together with the significant increase of wage expenditures, are not sustainable. They are putting pressures on the current account deficit and on inflation".  This year, NBR governor Mugur Isărescu has warned on several occasions against the fiscal relaxation measures passed together with salary increases in an electoral year. 

Sunday, September 11, 2016

Economists at major City investment banks have cancelled forecasts of a Brexit-inspired recession amid fresh data showing the economy performing more robustly than expected. Britain’s trade deficit narrowed significantly in July, as exports increased by £800m to £28.4bn, while imports fell by £300m to £36.6bn. Construction output was also steady in July, faring better than expected a month after the Brexit vote. Goldman Sachs, Morgan Stanley and Credit Suisse are among the major banks that have now withdrawn earlier predictions that Britain is likely to enter recession. Other major banks had forecast a “technical recession” with GDP possibly going negative for two quarters later this year or next. Morgan Stanley initially forecast the economy going negative by 0.4% in the third quarter of 2016, but this week changed that to expectations of 0.3% growth. It said: “We’ve ‘marked-to-market’ our growth forecast from a sharp slowdown and Brecession, to a lesser slowdown, which narrowly avoids a technical recession.”  In the days after the vote, Goldman Sachs slashed its growth forecast for the UK by 2.5% over two years. Its chief European economist, Huw Pill, said on 27 June that there would be “a steep fall in activity” as he predicted a “mild recession by early 2017”.  Pill said this week: “The downturn in the UK – while still substantial – is likely to be shallower than we thought in the immediate aftermath of the referendum.” Goldman Sachs is now pencilling in UK growth of 0.9% in 2017.

Saturday, September 10, 2016

Eurostat has issued a publication to inform regarding the unemployment rate in Euro area for July.The euro area (EA19) seasonally-adjusted unemployment rate was 10.1% in July 2016, stable compared to June 2016 and down from 10.8% in July 2015. This remains the lowest rate recorded in the euro area since July 2011. The EU28 unemployment rate was 8.6% in July 2016, stable compared to June 2016 and down from 9.4% in July 2015. This remains the lowest rate recorded in the EU28 since March 2009. These figures are published by Eurostat, the statistical office of the European Union.  Eurostat estimates that 21.063 million men and women in the EU28, of whom 16.307 million were in the euro area, were unemployed in July 2016. Compared with June 2016, the number of persons unemployed decreased by 29 000 in the EU28 and by 43 000 in the euro area. Compared with July 2015, unemployment fell by 1.688 million in the EU28 and by 1.034 million in the euro area.

Member States
Among the Member States, the lowest unemployment rates in July 2016 were recorded in Malta (3.9%) as well as in the Czech Republic and Germany (both 4.2%). The highest unemployment rates were observed in Greece (23.5% in May 2016) and Spain (19.6%).  Compared with a year ago, the unemployment rate in July 2016 fell in twenty-four Member States, remained stable in Denmark, while it increased in Estonia (from 6.1% to 7.0% between June 2015 and June 2016), Austria (from 5.7% to 6.0%) and Belgium (from 8.1% to 8.3%). The largest decreases were registered in Cyprus (from 15.0% to 11.6%), Croatia (from 16.5% to 13.2%) and Spain (from 21.9% to 19.6%). In July 2016, the unemployment rate in the United States was 4.9%, stable compared to June 2016 and down from 5.3% in July 2015.
eu-unemployment-rate
Youth unemployment
In July 2016, 4.276 million young persons (under 25) were unemployed in the EU28, of whom 2.969 million were in the euro area. Compared with July 2015, youth unemployment decreased by 310 000 in the EU28 and by 136 000 in the euro area. In July 2016, the youth unemployment rate was 18.8% in the EU28 and 21.1% in the euro area, compared with 20.2% and 22.1% respectively in July 2015. In July 2016, the lowest rates were observed in Malta (7.1%) and Germany (7.2%), and the highest in Greece (50.3% in May 2016), Spain (43.9%) and Italy (39.2%).
Geographical information
The euro area (EA19) includes Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland. The European Union (EU28) includes Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom.
Methods and definition
Eurostat produces harmonised unemployment rates for individual EU Member States, the euro area and the EU. These unemployment rates are based on the definition recommended by the International Labour Organisation (ILO). The measurement is based on a harmonised source, the European Union Labour Force Survey (LFS).
Based on the ILO definition, Eurostat defines unemployed persons as persons aged 15 to 74 who:
- are without work;
- are available to start work within the next two weeks;
- and have actively sought employment at some time during the previous four weeks.
The unemployment rate is the number of people unemployed as a percentage of the labour force. The labour force is the total number of people employed plus unemployed. In this news release unemployment rates are based on employment and unemployment data covering persons aged 15 to 74. The youth unemployment rate is the number of people aged 15 to 24 unemployed as a percentage of the labour force of the same age. Therefore, the youth unemployment rate should not be interpreted as the share of jobless people in the overall youth population.
Country notes
Germany, the Netherlands, Austria, Finland, Sweden and Iceland: the trend component is used instead of the more volatile seasonally adjusted data.  Denmark, Estonia, Hungary, Portugal, the United Kingdom and Norway: 3-month moving averages of LFS data are used instead of pure monthly indicators.

Thursday, September 8, 2016

 French president, Francois Hollande, will inaugurate the Airbus plant in Ghimbav on September 13th, according to sources close to the investors. According to Serge Durand, the CEO of Airbus Helicopters Industries, the first helicopter made in Ghimbav will only be delivered at the end of 2017, but starting with September 2016, the plant will become functional and operational. The company intends to bring in other projects to Braşov if the H215 project proves to be successful.   Serge Durand said: "For now, we have concluded a protocol with Romanian airlines- IAR Ghimbav, Aerostar, Aerotech and Turbomecanica - to become suppliers for the helicopter that will be manufactured in Romania, which will be entirely made out of parts manufactured in Romania".   Serge Durand also stated that Ghimbav will first of all manufacture the civilian version of H215, with production of the military version to be transferred in a few years from the factory in France to the one in Braşov. Moreover, in 2019, Durand hopes that over 30 Romanian engineers will be working on the design of the helicopters that will be manufactured in Ghimbav, with the company intending to develop an R&D center in Romania. The amount of the total investment in the new Airbus Helicopters project in Ghimbav is 55.7 million Euros, of which the aid of the Romanian state is a maximum of 5.2 million Euros. "We will reach 350 employees at the plant of in 2019, when we are going to start manufacturing 15 H215 helicopters a year", Durand further said.   Guillaume Faury, CEO Airbus Helicopters, said that in Ghimbav will be assembled the H215 helicopter, the latest member of the H aircraft family of the German French group, the "smaller" brother of H225. H215 is an advanced variant of the former AS332 Cie/L1e helicopter, which would be sold at "accessible prices", because "the costs are low".  Airbus Helicopters, a division of Airbus Group, offers solutions for civilian and military helicopters all over the world. The company has an operational fleet of approximately 12,000 helicopters operated by over 3,000 customers in approximately 154 countries. Airbus Helicopters has over 22,000 employees all over the world and has generated a revenue of 6.8 billion Euros in 2015. 

Tuesday, September 6, 2016

Wall Street drew two conclusions from the news that the US jobs engine shifted down into a lower gear last month. The first – that a September increase in interest rates is now a non-starter – was almost certainly right.  Putting up the cost of borrowing so close to the presidential election in early November always looked like an outside bet. It would have taken thunderously good figures for job creation to have persuaded the more dove-ish policymakers at the Federal Reserve to move, and the ones released on Friday were average at best.  To be sure, the August non-farm payrolls have come in worse than expected for the past decade, suggesting that there might be some problem with the way the raw data is seasonally adjusted. What’s more, the two previous months – June and July – saw strong increases in demand for labour, so the three-month average for non-farm payrolls is running at a healthy 200,000. That could persuade some of the hawks at the Fed to move, but they will not be able to muster a majority. The second conclusion drawn by Wall Street is more questionable. That is the assumption that the rate rise some analysts had pencilled in for September has now simply been put back to a later date. Some economists believe the Fed won’t waste any time once US voters have chosen who will be Barack Obama’s successor at the White House; some think the central bank will wait until March next year. There is, though, a different way of looking at the numbers. For most of this year, the strength of the US labour market has been at odds with data showing the economy growing only slowly. Sooner or later, the theory went, growth would accelerate and come into line with employment numbers, so justifying higher interest rates.

Sunday, September 4, 2016

Hiring in the US slowed in August following a summer surge in a sign that the Federal Reserve will hold off on raising interest rates this month. Employers added 151,000 staff to their payrolls last month, according to the US Labor Department. This was below the 180,000 expected by analysts, and down from an upwardly revised increase of 275,000 in July. The steady jobs growth kept the unemployment rate at 4.9pc. Economists expected the rate to fall to 4.8pc.  The dollar fell against the pound and the euro after the data were released, while traders reduced their bets on a September rate hike.  Financial markets now believe there is a 26pc that the Fed will raise rates this month, down from 34pc just before the jobs data were released.  The probability of a rate hike this year fell to 56pc, from 60pc.... Janet Yellen, the chairman of the Federal Reserve, said last week that she believed that the case for raising interest rates in the world’s largest economy was strengthening. Stanley Fischer, vice chairman of the Fed, signalled that two rate increases were possible, though Ms Yellen and Mr Fischer stressed that any move up from the current federal funds target of between 0.25pc and 0.5pc would depend on the data they saw. The average monthly jobs gain over the past 12 months has been 204,000.  Separate US data showed the trade deficit narrowed in July as exports rose to their highest level in 10 months.  This suggests economic growth picked up at the start of the third quarter following annualised growth of 1.1pc in the second quarter.

Friday, September 2, 2016

"It's simply incorrect to say that terrorism came only with the refugees," Merkel said.  "It was already here in myriad forms and with the various potential attackers that we have been watching,” she added, referring to the fact that most of the recent attacks in Europe had been perpetrated by EU nationals.  The chancellor’s mea culpa was issued on the one-year anniversary of her statement “wir schaffen das", or "we can do this”, which came to symbolise her open-door policy to migrants.  Germany last year took in almost 1 million people, prompting a political backlash against the government and rising support for anti-EU and anti-immigrant groups such as the AfD party and the Pegida movement.  Germany's top migration official Frank-Juergen Weise said last Sunday he expected the country to take in another 250,000 to 300,000 people this year.  Other EU leaders have also blamed Merkel’s policies for acting as a pull factor for refugees.  But her comments on how the problem had been initially mishandled could be aimed at central and eastern European leaders, who still reject migrant quotas, ahead of a summit on EU reform due in Bratislava later this month.  “It doesn’t work for some countries to say: ‘We don’t want to have Muslims at all, even if it’s necessary for humanitarian reasons’,” she told German broadcaster ARD on Sunday.

Wednesday, August 31, 2016

The leaders of the Czech Republic and Hungary say a "joint European army" is needed to bolster security in the EU.  They were speaking ahead of talks in Warsaw with German Chancellor Angela Merkel. They dislike her welcome for Muslim migrants from outside the EU.  Hungary's Prime Minister Viktor Orban said "we must give priority to security, so let's start setting up a joint European army".  The UK government has strongly opposed any such moves outside Nato's scope. The Czech, Hungarian, Polish and Slovak leaders are coordinating their foreign policy as the "Visegrad Group". Czech Prime Minister Bohuslav Sobotka said building a joint European army would not be easy, but he called for discussion to start on it.  The EU has joint defence capabilities in the form of 1,500-strong battle groups, but they have not been tested in combat yet.  Last year European Commission President Jean-Claude Juncker called for a European army to give the EU muscle in confronting threats from Russia or elsewhere.

Saturday, August 27, 2016

France has a host of home-grown economic woes that have nothing to do with the EU. The social model is funded by punitive taxes on employing labour, creating one of the worst 'tax wedges' in the world.  A quarter of French aged 60-64 are in work – compared with 40pc for the OECD average – due to early retirement incentives. The state consumes 56pc of GDP, a Nordic level without Nordic labour flexibility.  There are 360 separate taxes, some predating the revolution. Trade unions have a legal lockhold on companies with over 50 employees, yet command 7pc of membership. "It is an inferno that sadly lacks the poetry of Dante," says Prof Brigitte Granville, a french economist at Queen Mary University London.
Hard reforms were put off by leaders of all parties. They coasted through the boom years of the euro, and now it is too late. France is trapped within the straight-jacket of monetary union. The International Monetary Fund's health check in June said the 'real effective exchange rate' is up to 9pc overvalued. It is roughly 16pc overvalued against Germany. The only practical way France can claw back competitiveness is through deeper deflation than in the rest of the eurozone, but this would prolong the slump and play havoc with nominal GDP and debt dynamics. It would be self-defeating.
 

Friday, August 26, 2016

Oil has finally found a strong bull in Savita Subramanian, commodity strategist at BofA Merrill Lynch, who believes oil will rally to $54 a barrel by this year-end and continue its march higher to touch $69 a barrel by June of next year.  The commodity team led by Savita has upgraded the energy sector to outperform. The analysts have added Devon Energy to the firm’s US 1 list and raised ratings on four other stocks.  “Oil production continues to fall as global oil & gas investment has been cut by nearly $300bn (41%) and rig counts have dropped by 37% since the 2014 peak. In contrast, low oil prices continue to drive healthy demand growth, putting the oil market on pace to see its biggest supply-demand deficit since 2011,” the report noted. They estimate the shortfall to last through 2020, if prices remain below $80 a barrel.  The firm has raised the outlook for the energy sector from marketweight to overweight considering the following factors.

Thursday, August 25, 2016

List of stocks that have been upgraded by Merril Lynch
1. Marathon Oil Corp. (NYSE: MRO) to a buy from neutral, with a price target of $21, which is higher than the $18 consensus of various analysts. The new target price implies a gain of more than 33% from the current price of $15.7.
2. Noble Corporation PLC (NYSE: NE) from underweight to neutral. However, the target price of the stock is unchanged at $7.5, which is below the consensus target price of $8. The stock closed at $6.39 hitting a new multi-year low.
3. Patterson-UTI Energy Inc. (NASDAQ: PTEN) to neutral from underperform. The new target price on the stock is $22, whereas the consensus target price is also the same. The stock closed at $19.96.
4. Sasol LTD. (NYSE: SSL) to a buy from an earlier rating of neutral. While the consensus target price of the stock is $32.09, the stock closed the day at $27.71.
5. Devon Energy Corp. (NYSE: DVN) makes it to the US 1 list of top ideas for Merrill.
Notwithstanding, the valuations of the energy sector at 40 times its forward price-to-earnings (P/E) is more than double to the S&P 500’s forward P/E of 17, according to Yardeni Research.
Though the Merrill Lynch report agrees that “energy looks expensive on depressed earnings,” they believe that “higher oil prices should drive higher earnings estimates. Investors are still underweight the sector and the sector’s weight in the S&P 500 has fallen to historically bullish levels”.

Wednesday, August 24, 2016

Elderly Germans may have to keep working until the age of 69 if a Bundesbank proposal is adopted.
It says Berlin should consider raising the retirement age to that level by 2060, from around 65 at the moment.  The central bank says that otherwise the country may struggle to honour its pension commitments. It points out that the state pension system is in good financial health at present, but will come under pressure in coming decades. The Bundesbank says that as baby-boomers - those born in the post-World War Two period - retire, there will be fewer younger workers to replace them.. The retirement age for Germans is set to rise gradually to 67 by 2030.  However, the bank believes that from 2050 this increase will not be enough for the German government to keep state pensions at their target level of at least 43% of the average income.  It is therefore proposing pushing the retirement age up to 69.  "Further changes are unavoidable to secure the financial sustainability (of the state pension system)," the Bundesbank said in its monthly report.  But German government spokesman Steffen Seibert said they stood by retirement at 67.  "Retirement at 67 is a sensible and necessary measure given the demographic development in Germany. That's why we will implement it as we agreed - step by step," he added.

Tuesday, August 23, 2016

You can see the oil industry's woes for yourself, at anchor in the Firth of Forth. Very Large Crude Carriers are parked off the coast of East Lothian until the price rises, full of North Sea oil recently loaded through the Hound Point terminal.  Onshore storage facilities are full. You can see other tankers at rest and laden with the crude stuff off the coasts of Suffolk and Cornwall.   The gamble made by oil traders is that the cost of storing oil in these tankers - two million barrels in each of the larger ones - is less than the gain to be made out of waiting to sell it.  But industry hopes of a rise in the oil price have been dashed time and time again over the past two years.  Other consequences can be seen over the horizon, on Shell platforms, where Wood Group maintenance workers are back on strike this coming week, in protest at the sharp cut to their pay.  Others have protested at the change to rotas, shifting from two-week turnarounds to three-weeks. The consequences were also clear from another grim week for the oil and gas industry, as the majors unloaded their half year results.  The message was consistent, and no reassurance to those offshore workers facing diminished pay and conditions - the cost-cutting goes on.  As the results were published, the oil price fell yet again. Brent crude fell below $43, down 20% from a peak it reached in early June.  With global supply still buoyant, the short-term expectation is for a continued fall, even if those tankers at anchor in the Forth are a sign of expectations that the price will pick up again before too long.  In Britain, it is no compensation for the oil industry that the dollar value appear more attractive in pounds, following the weakening of sterling. The industry thinks, invests, accounts and reports in US dollars. The exchange rate becomes an issue when it reaches the customer.  That rise in the sterling price for a given dollar rate represents the increased cost, for those who earn and invest and buy their fuel in pounds - businesses and households alike.

Monday, August 22, 2016

Investors’ love for bonds continued in July, with intermediate-term bonds seeing an inflow of $15 billion for the month — the largest inflow of any Morningstar category. Intermediate-term bonds, which have gained 4.74% the past 12 months, have led Morningstar’s monthly report for the past five months. At the same time, investors — mainly with advisers at their sides — yanked $27.3 billion from U.S. stock funds and $5.3 billion from international stock funds. For the most part, investors seem to be driven by fear, not greed, said Todd Rosenbluth, director of ETF and mutual fund research at S&P Global Market Intelligence. “There’s a nervousness among investors, given that we’re in the 8th year of a bull market,” Mr. Rosenbluth said. Rotating into investment-grade corporates isn’t exactly a daring move. “Verizon, ATT, General Electric are all doing fine.” Investors also seem to be less convinced that passively managed fixed income funds are better than actively managed ones, Mr. Rosenbluth said, despite the fact that any supporting data for active management is “mixed at best.” Investors put $13.5 billion into actively managed bond funds, vs. $20.5 billion for passively managed once. In contrast, investors pulled $32.9 billion from actively managed stock funds and added $33.8 billion to actively managed stock funds. The big worry is whether investors are seeking riskier types of bonds in their search for yield. Unfortunately, the answer seems to be “yes.” High-yield bonds, which have returned an average 13.59% this year, saw a $3.2 billion inflow in July. Emerging-markets bond funds saw a $2.9 billion inflow. Those funds have gained 12.88% this year.  Rising interest rates could short-circuit any bond rally, although that doesn’t seem to be a danger in Europe, where the economy is still stagnant. But both high-yield funds and emerging-markets funds could take significant hits if the U.S. or world economy falls further.

Sunday, August 21, 2016

Oil charges into bull market territory on hopes of output freeze Brent crude charged into bull market territory, smashing $50 a-barrel, as the world’s biggest oil producers prepared to discuss a possible output freeze at next month’s Opec meeting in an attempt to curb the global supply glut.Since hitting a low of $41.69 on August 3, oil has rallied almost 22pc, touching an intraday high of $50.87 yesterday - its highest level since July 4 when it touched $51.29. The latest leg up in the black stuff is pinned on the hopes that Opec’s meeting in Algeria on September 26 to 28, which takes place on the sidelines of the International Energy Forum, will revive talks on freezing production levels to help bolster prices. It was also lifted by the weak dollar which makes commodities cheaper for other currency holders. However, the oil price bounce comes less than three weeks after it fell into bear market territory, having fallen by more than 20pc from June 8 to July 29 amid oversupply concerns and pressures about slowing economic growth. Joshua Mahony, of IG, cautioned: “Given that this market turned higher almost instantaneously after confirming a bear market earlier in the month, perhaps this definition should be something to worry about rather than drive enthusiasm.”
The return of the bulls prompted oil majors to make gains, BP rose 2.8p at 435.6p, Tullow Oil climbed 5.5p to 239.6p and Amec Foster Wheeler advanced 13.5p to 540.5p.

Thursday, August 18, 2016

IMF surveillance, intended to detect economic vulnerabilities and imbalances, was inadequate. While staff sometimes pointed to booming credit, gaping current-account deficits or stagnant productivity, they downplayed the implications. This reflected a tendency, conscious or not, to think that Europe was different. Its advanced economies did not display the same vulnerabilities as emerging markets. Strong institutions such as the European commission and the European Central Bank (ECB) had superior management skills. Monetary union, for some less-than-fully articulated reason, changed the rules of the game. Such self-serving claims were in the interest of European officials, but why was the IMF prepared to accept them? One answer is that European governments are large shareholders in the Fund. Another is that the IMF is a predominantly European institution, with a European managing director, a heavily European staff and a European culture.  Still on familiar ground, the report goes on to criticise the IMF for acquiescing to European resistance to debt restructuring by Greece in 2010; and for setting ambitious targets for fiscal consolidation – necessary if debt restructuring was to be avoided – but underestimating austerity’s damaging economic effects.  More interestingly, the report then asks how the IMF should coordinate its operations with regional bodies such as the European commission and the ECB, the other members of the so-called troika of Greece’s official creditors. The report rejects claims that the IMF was effectively a junior member of the troika, insisting that all decisions were made by consensus.

Tuesday, August 16, 2016

Perpetually weak growth has bedevilled attempts to tackle Greece’s chronic debt problem. Back in May 2010, when the European commission, the European Central Bank and the International Monetary Fund organised the first bailout, it was assumed that a rapid recovery and tight budget controls would see Greek national debt as a share of gross domestic product fall steadily. These forecasts proved to be wildly optimistic. As Greece sank deeper and deeper into recession, the debt ratio carried on rising, and now stands at about 180% of GDP.  Unfortunately, lessons have not been learned. The 2015 bailout package assumes that Greece will run a budget surplus, once debt interest payments are excluded, of 3.5% of GDP year in and year out. The IMF, which now has a more realistic assessment of Greece than the commission or the ECB, says few countries have managed to sustain budget surpluses of this size, and that Greece could do so only by further cutting wages and pensions. The IMF also thinks “it is no longer tenable” to imagine that Greece can move from having one of the eurozone’s weakest productivity growth rates to the highest. The IMF says that without debt relief, Greece’s debt could hit 250% of GDP by the middle of the century. Germany would prefer those discussions to be delayed until after its election in autumn next year. But the chances are that Greece will be back in the headlines before then.

Sunday, August 14, 2016

Italy's economy failed to grow between April and June as the country struggled with its creaking banking sector. GDP growth shrank to 0% in the second quarter compared to 0.3% in the first quarter.Germany's economy also slowed in the second quarter, albeit less markedly than had been expected.  Europe's largest economy expanded by 0.4%, down from 0.7% in the first quarter, but above forecasts of 0.2%. Overall, a second estimate of GDP across the eurozone confirmed that growth halved to 0.3% from 0.6% in the first three months of the year.GDP also fell across the 28-nation European Union to 0.4% from 0.5% between the first and second quarters.  In Italy, analysts had expected GDP to grow by between 0.1% and 0.3%.Italian Prime Minister Mario Renzi, is battling to reduce the bad debt in its banking sector, which is currently buried under €360bn worth of bad loans. Monte dei Paschi di Siena, Italy's third largest bank and the world's oldest lender, is saddled with €46.9bn of bad debt.  Alberto Bagnai, economic policy professor at the University of Chieti-Pescara, said: "There is no way to solve the banking problem without economic growth. If the whole nation doesn't start earning more it can't pay back its debts - public or private." The government expects the country to grow by 1.2% this year. However, the International Monetary Fund recently reduced its economic growth from 1.1% to 1%.The new data means that growth in the Eurozone's three biggest economies - Germany, France and Italy - has either slowed or completely stalled between the first and second quarters. France recorded no growth between April and June after GDP rose by 0.7% in the first quarter, boosted by business from the Euro 2016 football tournament.