Cyprus’s Banking Crisis: Testing the EU’s Problem-Solving Skills

Posted on April 3, 2013 by Giordano Lombardo

I had the opportunity to talk with Cosimo Maracsciulo, Pioneer’s Head of European Government Bonds and Foreign Exchange, on the latest issues with Cyprus’s banking crisis. A summary of his thoughts follows.

Why did Cyprus’s financial crisis spur the European Union into action?
There are a couple of reasons worth mentioning. The first is that these smaller countries have developed, at times, a banking industry whose assets under management outgrow GDP by several times: the ratio is above 7-to-1 for Cyprus. The second reason for watching Cyprus’s liquidity crisis closely is that it may provide the first severe test of the European Union’s (EU) ability to deal with the EMU debt crisis after the European Central Bank (ECB) pledged to save the euro from collapse.

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Currency and Emerging Markets: What Can We Expect?

Posted on March 28, 2013 by Giordano Lombardo

Currency markets are making headlines again after taking a low profile amid the crises and the turmoil in financial markets of the last five years or so. I asked Greg Saichin, Head of High Yield and Emerging Markets Fixed Income Portfolio Management here at Pioneer, to provide his views about what is going on, and what he sees as the drivers of investment flows into emerging markets.

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Taking Stock of the Greek Issue

Posted on January 18, 2013 by Giordano Lombardo

After a lot of discussion about imposing strict provisions to obtain new funds, the EU disbursed another loan for Greece with a few strings attached. I spoke with Monica Defend, Pioneer’s Head of Global Asset Allocation Research, to get her opinion on some questions asked.

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Italy: The Impending Elections

Posted on December 20, 2012 by Giordano Lombardo

As Italy’s technocratic party prepares to exit , I asked Cosimo Marasciulo, Pioneer’s Head of European Government Bonds and Foreign Exchange, for his thoughts on pending elections in 2013 and how they might affect investors. I’ll share a few of those thoughts with you here:

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Global Economic Conditions Should Improve in 2013

Posted on December 12, 2012 by Giordano Lombardo

At Pioneer Investments, we believe that global economic conditions are moving toward a phase of gradual improvement, thanks to a likely resolution of the “fiscal cliff” issue in the U.S., bottoming out of the Chinese economy, and stabilization of the euro zone. A summary of our thinking follows. For a more detailed discussion, see my 2013 Global Outlook.

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Some Hurdles to Clear before the ESM Starts Operations

Posted on October 25, 2012 by Giordano Lombardo

About a month ago I blogged on the German Constitutional Court’s decision not to block the European Stability Mechanism (ESM), and since then investors and the markets have responded positively. However, as has so often happened in this euro crisis, clearing one hurdle doesn’t always remove others. As things stand, there are some uncertainties about the real power of the ESM, including how and when it will be called into action.

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Hopes Renewed for the EMU and the Sovereign Debt Crisis

Posted on September 19, 2012 by Giordano Lombardo

Cosimo Marasclulo is Pioneer’s Head of European Government Bonds and Foreign Exchange. He shared with me his thoughts on the German High Court’s decision to ratify the constitutionality of the European Central Bank’s European Stability Mechanism, ESM, and what it means. Its new program called the Outright Monetary Transaction (OMT) will buy up the debt of troubled countries for those that ask.

The strings attached to the ruling look consistent with the Court’s past record and were actually widely expected. As in its previous finding on the current emergency fund, which is being replaced by the permanent European Stability Mechanism with a 500-billion euros capital, the Court identified the German Parliament’s central role as the people’s representative. It calls for the Parliament to be informed on any change to Germany’s agreed contribution to the ESM (the least one could expect). (more…)

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ECB’s New Efforts to Defend the Euro

Posted on August 22, 2012 by Giordano Lombardo

The markets were disappointed when ECB president Mario Draghi announced that ECB bond purchases to bring down peripheral government bond yields would be strictly conditional on governments moving first to buy bonds through existing operational means, and indicated no broad based funding intiative. We recommend caution, particularly after seeing the diverse reaction from financial markets to the council’s decisions.

Now that the dust has settled somewhat, we believe that the “open-market operations” are appropriate and should allay the concerns of Germany’s central bank regarding the ECB overstepping its mandate.  (more…)

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Euro Crisis Update: Spain Moves into the Spotlight

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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China’s Economy: Policy Stimulus in Action

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…)

Filed under: Giordano Lombardo, Macroeconomics | Leave a Comment »

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