Eurozone 2017 GDP 1.6% vs 1.5% prior. 2018 1.8% vs 1.7% prior
Eurozone inflation 2017 1.7% vs 1.4% prior. 2018 1.4% unch
Eurozone unemployment 2017 9.6% vs 10.0% in 2016. 2018 9.1%
Eurozone aggregate budget deficit 2017 1.4% vs 1.7% in 2016. 2018 1.4%
Eurozone government debt 2017 90.4% vs 91.5% in 2016. 2018 89.2%
They see every EU member state growing in 2016/17 & 18.
For some reason Reuters has specifically noted that the EC see UK growth this year at 1.5% vs 2.0% last year, and at 1.2% in 2018. Official UK forecasts are 2.0% & 1.6% for those periods. Is the EC trying to say something? 😉
German investment to slow to 2.1% in 2017 vs 2.5% in 2016. 2018 2.5%
France budget def 2.9% of GDP 2017 vs 3.3% 2016. To rise above EC target again in 2018
Spain budget def 3.5% 2017 vs 4.7% 2016. 2018 2.9%
In the shadow of Donald Trump’s spree of controversial actions, the European commission has quietly launched the next offensive in the war on cash. These unelected bureaucrats have boldly asserted their intention to crack down on paper transactions across the E.U. and solidify a trend that has been gaining momentum for years.
The financial uncertainty amplified by Brexit has incentivized governments throughout Europe to seize further control over their banking systems. France and Spain have already criminalized cash transactions above a certain limit, but now the commission has unilaterally established new regulations that will affect the entire union. The fear of physical money flowing out of the trade bloc has manifested a draconian response from the State.
The European Action Plan doesn’t mention a specific dollar amount for restrictions, but as expected, their reasoning for the move is to thwart money laundering and the financing of terrorism. Border checks between countries have already been bolstered to help implement these new standards on hard assets. Although these end goals are plausible, there are other clear motivations for governments to target paper money that aren’t as noble.
On Friday, the US Commerce Department announced its plans to raise import tariffs for the Chinese stainless steel products from 63 percent to 190 percent citing a probe that found they were selling on US market at dumping-level price.
“China is disappointed that the United States continued to launch high taxes on Chinese steel export products and calls into question the unfair way the US conducted its investigation,” Wang said, as quoted by the South China Morning Post newspaper.
The United States did not take into the account the evidence previously submitted by the Chinese steel manufacturers and avoided cooperation with the Chinese government, violating the rules of the World Trade Organisation (WTO), the Chinese official underlined.
This is a second blow for the Chinese steel importers in the recent months. The European Commission imposed in January anti-dumping duties on Chinese stainless steel tubes and pipe butt-welding fittings to protect its industry from steel overcapacity.
According the European Commission, Chinese imports will be taxed with duties ranging from 30.7 to 64.9 as its investigation commission confirmed that Chinese stainless steel products had been sold in Europe at dumping prices.
The Greek government has just three weeks to secure a deal with the European Commission, the European Central Bank and the International Monetary Fund, to avoid the possibility of a Greek exit from the EU and a fresh debt crisis. Radio Sputnik discussed this with Dr. Marina Prentoulis, a senior lecturer at the University of East Anglia.
When asked whether there was any chance of a compromise that would appease both creditors and Greece, Marina Prentoulis said that the situation hasn’t changed since the first round of negotiations.
“There are different political forces involved and the creditors insist on the implementation of additional austerity measures. One thing the IMF doesn’t want to understand is that these measures have already had a catastrophic effect on Greece and also on the future of the European Union,” she noted.
Meanwhile, it looks like the Greek government is taking advantage of the political instability in the EU to secure a better deal for itself, knowing that if the country enters another debt crisis it could destabilize the already fragile EU.
After two previous taxpayer funded bailouts, and nearly five months of foreplay since the third largest Italian bank failed the latest European stress test at the end of July, in which the Italian government in September vow that “bailout for Italian banks has been ‘absolutely’ ruled out”, a third bailout, as we previewed earlier today, is now imminent.
According to Reuters, which cites two sources, Italy is preparing to take a €2 billion controlling stake in Monte Paschi as the bank’s hopes of a private funding rescue have faded after a fruitless five month search to secure an anchor investor, following Prime Minister Matteo Renzi’s decision to quit.
The government, which is already the ailing bank’s single largest shareholder with a four percent share, is planning do a debt-for-equity swap, and buy junior bonds held by ordinary Italians to take the stake up to 40%, the sources said. The bonds would then be equitized, converting the government’s bond stake into pure equity ownership, a troubling approach as it would effectively wipe out the existing equity tranche and position the bank for a potential bankruptcy fight in court where the government faces off with the equity committee.
This transaction would make the government by far the biggest shareholder, meaning the Treasury would be able to control Italy’s third biggest bank and its shareholder meetings, or in other words, the bank would be nationalized.
The sources said a government decree authorizing the deal, which would see the state buy the subordinated bonds from retail investors and convert them into shares, could be rushed through as early as this weekend. Italy’s treasury would buy the bonds held by around 40,000 retail investors at face value, the sources said.
The European Commission warned today that eight euro area countries are at risk of missing targets for repairing their public finances, as it published assessments of governments’ draft 2017 budget plans.
Brussels said that Belgium, Italy, Cyprus, Lithuania, Slovenia, Finland, Spain and Portugal were all “at risk of non-compliance,” although it acknowledged mitigating circumstances in certain cases.
The Commission nevertheless noted that both Spain and Portugal have outlined steps to rein in their budget deficits since a clash earlier this year with EU authorities.
Reuters reporting that the announcement will be made at 10.00 GMT Thursday
Further to my earlier post where reader Biscotti and FXL gave you the heads up that a ruling could be made tomorrow.
Reuters now reporting a tweet from a lawyer sitting on the case
London’s High Court will deliver its verdict on Thursday on whether British lawmakers, rather than the government, must trigger the formal process of leaving the European Union, lawyers involved in the case said.
The court heard a challenge last month from campaigners who argue Prime Minister Theresa May and her ministers do not have the authority to invoke Article 50 of the EU Lisbon Treaty, the mechanism by which a nation can leave the bloc, without the explicit backing of parliament.
Nicely timed to hit the markets before we get the latest BOE decision.
Bring it on!
Meanwhile GBPUSD has blown up through to 1.2328 helped by softer US ADP data. Offers up there and more into 1.2350 Large option interest at 1.2360
Of the forces driving prices in the week ahead, events appear more important than economic reports. There are four such events that investors must navigate. The Bank of Canada and the European Central Bank meet. The UK High Court will deliver its ruling on the role of Parliament in Brexit. The rating agency DBRS updates its credit rating for Portugal.
The Bank of Canada is not going to change interest rates. Still, growth has disappointed, and price pressures appear to be ebbing. It will take longer than the BoC is currently anticipating to close the output gap. It may adjust its forecasts accordingly. In addition, the recent use of macro-prudential policies to address housing market activity eases one of the inhibitions for a rate cut. The market is currently pricing in about a one in 20 chance of this materializing next year.
The risk may be somewhat greater than that In part, there seems to be too much made of the trade-off between the fiscal stimulus and monetary easing. It is so pre-crisis. This week’s data is likely to show that CPI continues to moderate and, despite the launch of a new low-income family benefits program, retail sales like fell in August, and the risk is on the downside of the median forecast of -0.1%.
It does not appear that the ECB is prepared to announce a decision about whether it will extend its asset purchases after the current soft end date of March 2017, or about how it will address the potential scarcity of particular securities. Although we thought there was an opportunity to do so last month, it now seems more likely that the ECB will make its decision at the December meeting.
Fitch Ratings has become the latest major rating agency to say UK-based banks and financial services firms can cope with losing their much-cherished ability to “passport” their services in the EU following the Brexit vote.
Should British banks lose their ability to operate across the continent with an EU-wide passport – a “worst case outcome” – the agency said it would not provoke any major change on lenders’ ratings.
“We believe the costs and disruption are likely to be manageable in the context of banks’ overall credit profiles,” said James Longsdon at Fitch.
The findings follow a similar verdict from rival agency Moody’s, which has called the loss of passporting rights as broadly “manageable” for the sector.
In the event the passport is lost, both agencies have touted the possibility of British banks using incoming European market rules, known as Mifid II, as easing the process of doing business on the continent following the UK’s exit.
Apple expects to pay billions of dollars of extra taxes in the US next year when it brings home the offshore cash pile at the centre of its row with Brussels, the technology company’s chief executive said on Thursday.
Tim Cook told Ireland’s national broadcaster RTE that Apple had set aside “several billion dollars for the US for payment as soon as we repatriate” some or all of its $215bn in overseas cash.
“Right now, I would forecast that repatriation to occur next year,” he said. Mr Cook has previously said that returning those funds to the US was contingent on a new American president introducing corporate tax reform that would lower the current 35 per cent rate.
The row between Apple and Brussels over a €13bn tax penalty escalated on Thursday, as Mr Cook called the European Commission’s decision “invalid” and “crap” and urged the Irish government to appeal.
Dublin was ordered on Tuesday by the commission to claw back up to €13bn from Apple after its tax arrangements in Ireland were judged to constitute illegal state aid. Apple has said the funds will be paid into escrow until an appeal is heard.
Mr Cook lashed out at the commission’s claim that Apple paid only 0.005 per cent tax in Ireland in 2014, telling the Irish Independent newspaper that it was “total political crap”, adding: “They just picked a number from I don’t know where.”