Tag Archives: Spain

European Core Crisis

By Andrew Busch | Published: August 2, 2011

European Debt Crisis Surges:

Today, Spain’s CDS is at 425, the 10yr yield is 6.25%, and spread to German 10yr is 384. Today, Italy’s CDS is 365, the 10yr yield is 6.10% and spread to German 10yr is 368. Two debt crisis indicators are flashing bright red. When a country has its CDS above 400 and its 10 yr debt yield above 7%, these are seen as possible points of no return for a country. The CDS is seen as a leading indicator as investors/speculators buy insurance to protect against declining financial conditions. The 10yr yield is seen as a … …READ MORE

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EU Debt Negotiation Cacophony

By Andrew Busch | Published: July 12, 2011

Euro Zone finance ministers met yesterday and released a statement overnight that created these headlines:

• WE REAFFIRM COMMITMENT TO SAFEGUARD STABILITY IN EURO AREA
• WE STAND READY TO ADOPT FURTHER MEASURES TO IMPROVE EURO AREA SYSTEMIC CAPACITY TO RESIST CONTAGION
• THIS INCLUDES ENHANCING FLEXIBILITY AND SCOPE OF EFSF RESCUE FUND
• STEPS ALSO INCLUDE LENGTHENING MATURITIES OF LOANS AND LOWERING THE INTEREST RATE ON LOANS
• PROPOSALS TO THIS EFFECT WILL BE PRESENTED TO MINISTERS SHORTLY

Also, there have been a slew of comments coming from the individual finance ministers which have generated larger moves in the … …READ MORE

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Spaghetti Western for Markets

By Andrew Busch | Published: January 25, 2011

The Good: Unlike the rest of the world, Canadian inflation is flat.

The Bad: Spain’s bank plan is 70 billion short.

The Ugly: UK economy shrinks 0.5% in Q4 2010.

Canadian Inflation: Our Doug Porter writes, “Canadian consumer prices were flat in December, still enough to boost the headline inflation rate to 2.4% from 2.0% in the prior month. Core prices in turn fell 0.3%, although the yearly rate still rose to 1.5% from 1.4%, due to an even bigger slide in core prices last year….”

“The Bottom Line: Canadian underlying inflation trends remain muted, especially in the face of … …READ MORE

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US next in line to bailout out Europe?

By Andrew Busch | Published: January 11, 2011

Today, Japanese Finance Minister Noda said that Japan would use its existing euro foreign exchange reserves to buy a large portion of the bonds issued by the European Financial Stability Fund. “There is a plan for the euro zone to jointly issue a large amount of bonds late this month to raise funds to assist Ireland. It’s appropriate for Japan to make a contribution as a leading nation to increase trust in the deal. We want to buy more than 20 percent.”

Japan joins China in pledging to buy European debt to quell the uncertainty surrounding the sovereign debt and … …READ MORE

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European Fiscal Timeline

By Andrew Busch | Published: November 23, 2010

Nov 24: Ireland expected to unveil its 4-year fiscal plan (including austerity measures to be taken)

Nov 24 Irish bi-elections (coalition may lose seats)

Nov 26: Portugal’s Parliament votes on 2011 budget proposal

Dec 2: ECB meeting/Spain holds bond auction

Dec 3: Ireland releases tax receipts for Nov

Dec 7: Ireland set to unveil Budget/may vote on it

Dec 10: France vote on the 2011 budget

Dec 14: France vote of confidence (after Dec 10 budget vote)

Dec 16: Spain holds bond auction Dec 16-17: EU leaders summit (will work on draft of permanent crisis mechanism to replace expiring EFSF … …READ MORE

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Good Investment Cycle Spin

By Andrew Busch | Published: July 15, 2010

On Tuesday, I wrote about the investment cycle change that was occurring in the financial markets. The critical point was that we are now in a shift and that we needed additional positive newsflow to continue to push the direction. From an earnings standpoint, this has occurred with solid numbers coming our and upside surprises beating downside. Also, we’ve had a successful Greek debt auction, we’ve had a successful Spanish auction and we’ve seen 5 yr sovereign credit ease from a peak of 267 in June to 218 today. Lastly, we’ve had global economic data that has been mainly positive … …READ MORE

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The Rain in Spain

By Andrew Busch | Published: July 14, 2010

While the tech earnings and outlooks have been equity positive, the news out of Europe on Spain has taken the edge off the rally. First, Fitch downgraded yesterday Banco Popular Espanol from AA- to A. Next, we have a story out on Spain’s city councils stating that a third of them are in dire straights and may be forced to suspend payments by the end of the year. “Spain’s federation of regional governments said councils were heading for slow “asphyxiation”, with many facing a payroll cut-off next month,” according to the UK Telegraph. Also, the borrowing by Spanish banks from … …READ MORE

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Madrid, we have a problem

By Andrew Busch | Published: June 16, 2010

The 10 yr German-Spanish debt spread has widened to 218 pts after a reports have circulated regarding Spanish banks massive borrowing from the ECB and the potential for an IMF, EU and US led $250 billion loan to the country (later denied). Yesterday, the European Union warned Spain that it would have to be more aggressive with their austerity measures to cut their deficit 11.2% of GDP to 3% in 2013. Then the chairman of the country’s second largest bank BBVA, Francisco Gonzalez had this startling comment: “Financial markets have withdrawn their confidence in our country….For most Spanish companies and … …READ MORE

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ECB Supports Greece, but Market Asks,” Who’s Next”?

By Andrew Busch | Published: March 25, 2010

A couple of weeks ago, I attended the NABE conference in DC and had the chance to hear the ECB’s Juergen Stark speak. His topic was, “Is the Global Economy Headed for a Lost Decade. At that time, there was considerable uncertainty over whether there would be any help forthcoming to assist Greece with the debt and austerity program. On that morning, there appeared to be some agreement between France and Germany for assistance and this was seen as a breakthrough for discussions on a backstop lending program. At the luncheon for Stark, he specifically made clear how he felt … …READ MORE

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US Crisis Lesson For Europe

By Andrew Busch | Published: February 4, 2010

As expected, the Bank of England left rates unchanged at 0.5% and the European Central Bank left rates unchanged at 1.0%. The BOE also signaled that they would not be expanding their QE program, but left open the option to buy more down the road should conditions change. We’re awaiting ECB’s Trichet to comment on Greece and the rest of the PIIGS to see if more will be done to assist them. Two of Greece’s largest unions are setting strike dates for February 10th and February 24th to protest the austerity proposals proposed by the government.

Of course, Greece is … …READ MORE

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