Posted on July 31, 2012 by Giordano Lombardo
The situation in Spain deserves some attention. EU finance ministers have approved an aid package for its banks, but the number of Spain’s autonomous regions asking for financial assistance has grown by the day and may prompt the 4th largest economy in the European Monetary Union (EMU) to request a full bailout.
I asked my colleagues, Monica Defend, Head of Global Asset Allocation Research and Cosimo Marasciulo, Head of European Government Bonds and FX, to shed some light on the situation. A summary of their thoughts follows . . .
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Posted on July 27, 2012 by Giordano Lombardo
Investors welcomed the news when China’s recent GDP data confirmed a downward trend in growth.
I asked Pioneer’s Head of Emerging Markets, Mauro Ratto, to summarize his thoughts on the data and its implications for our clients. In response, he wrote an informative summary, which we’ve posted to our web site. I’ve included a few of the highlights here . . . (more…)
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Posted on July 25, 2012 by Ken Taubes
I had another interesting conversation with Greg Valliere the other day. Greg is the Chief Political Strategist for the Potomac Research Group and a frequent CNBC political commentator. He believes Congress’s inattention to the fiscal cliff is “breathtakingly irresponsible” for creating uncertainty among people, the economy and corporations. Who can disagree?
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Posted on July 23, 2012 by Ken Taubes
The first half of 2012 turned out to be pretty good for returns, despite the rollercoaster ride. We started out strong, had a fairly severe correction, but by the end of the second quarter, both the stock and bond markets were actually up. The S&P 500 finished the first half up more than 9%. It’s clear the U.S. economy lost the good momentum it had in the first quarter and seems to have stabilized at a lower level. Everyone is aware of the “fiscal cliff” in Europe. But while there are still many unresolved problems, I believe the bad news is pretty much priced into the market. Of course, if Spain defaults or another major unexpected event happens, it’s back to the drawing board. But, again, a lot of the tail risk is well known. So what now? (more…)
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Posted on July 19, 2012 by Mike Temple
The other day while sipping coffee, I began to reflect on the news coming out of the recent EU summit. I won’t go into the details of the summit agreements – you’ll find them in some recent commentary by our Global CIO, Giordano Lombardo. Suffice to say that they appear to have moved the needle a bit.
I will, however, point out that while debt “mutualization” was not agreed upon, there was an about-face on the subordination of existing bank debt in the Spanish bank bailout plan. But wait a minute . . .capital injections into Spanish banks without strings? As the saying goes, if it walks and talks like a duck…
Ultimately, whatever form debt mutualization takes, it is in essence a form of monetary accommodation.
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Posted on July 10, 2012 by Giordano Lombardo
The ECB has already made many efforts to boost the economy. What do the latest rate cuts mean? Are they just symbolic? Speaking with my colleague Cosimo Marasclulo, Pioneer’s Head of European Government Bonds, the move was largely expected and justified by the downside risks to the economy. However, he thinks it shouldn’t be seen as merely symbolic. For a start, the “reference” rate, as it is called, sets the cost that banks pay to borrow long-term funds from the ECB. More importantly, the ECB has lowered the closely-related deposit rate by a quarter-point, which is now zero. This may be taking the ECB into new territory. (more…)
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