Friday 23rd February 2018
February 23rd 2018: Michael van Dulken and Henry Croft at Accendo Markets report this morning that FTSE 100 Index called to open +15pts at 7310, still in a bearish rising wedge pattern, but at least now 7300, making a bullish challenge on 6/7 Feb highs of 7315 overnight, retracing more of that early month sell-off and breakdown. Bulls still need a break above 7325 overnight highs. Bears need to see 1-week rising support at 7300 in jeopardy. Watch levels: Bullish 7325, Bearish 7300. Calls for a positive start to the week come as Asian equities (excl. China and Hong Kong for Lunar New Year) built on last week’s global recovery, even if Wall St closed well off highs (Mueller Russia indictments) to close mixed on Friday into a long Presidents’ Day weekend that is likely to sap volumes today. FTSE is supported by the USD off three-year lows, helping GBP edge further from last week’s highs to offer less resistance for UK blue chips. Note Australia’s ASX higher, but miners in the red, as copper and gold trade off their highs, and despite oil trending higher -RWC Partners says Pierre Giannini will be joining the organisation as part of the ongoing growth RWC sees in Continental Europe. Giannini previously led Daiwa SB Investment’s business development efforts in Southern and Western Europe, where he focused on both institutional and wholesale channels - John Hardy, head of FX Strategy at Saxo Bank says in a client note this morning says, “The US treasury market faces an important test this week with three large auctions of 2-year, 5-year and 7-year treasuries on Tuesday through Thursday and the latest FOMC minutes on Wednesday. The big surprise many noted last week was the fresh highs in US yields failing to derail the ongoing equity market recovery. On the currency side, the narrative is that the US dollar can continue to fall as US interest rates rise because the rise in US yields reflects concerns on the US fiscal/current account balance sheet more than it reflects a strengthening US economy. The US 10-year benchmark came within hailing distance of the huge 3% level last week, widely considered a critical structural chart point – it is hard to believe, last week’s action notwithstanding, that a persistent rise above this level would be met with a shoulder shrug by asset markets, from equities to EM. The most interesting development this week would be strong US treasury auctions that see a sharp drop in US yields as a test of the recent weak USD trend - Aquaterra Energy, the offshore engineering solutions provider, has appointed Christian Berven as business development director, as it strengthens its EMEA operations by opening offices in Stavanger, Norway. Headquartered in Norwich, Aquaterra Energy UK, was the first to secure a multimillion pound investment from EV Private Equity, as part of its pledge last year to support fast-growing North Sea businesses. EV’s investment supports Aquaterra Energy’s global growth strategy and allows it to invest in capex. Berven joins the company following ten years as managing director of Norwegian oil service company, Toolserv - Alliance Etiquettes has merged with wine labeler Groupe Etienne. This is the sixth build-up for the Alliance Etiquettes “buy-and-build” platform created in 2015. Following the operation, Alliance Etiquettes will become the market leader in France of premium wine bottle labels, with turnover of €50m -- SendGold, a Gold-as-a-Service app that enables physical gold investment and payments in a digital environment, will launch its app in March in Singapore.. With the growing demand for gold across Asia, SendGold changes the way consumers can transact gold by allowing the user not only to buy and sell gold but also to send it as a payment or gift to friends or family members via their mobile devices, targeting the 2bn millennials who are in control of 16% of Asia Pacific's wealth -

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Patrick Artus

Patrick Artus

A graduate of Ecole Polytechnique, of Ecole Nationale de la Statistique et de l'Adminstration Economique and of Institut d'Etudes Politiques de Paris, Patrick Artus is today the Chief Economist at Natixis. He began his career in 1975 where his work included economic forecasting and modelisation. He then worked at the Economics Department of the OECD (1980), before becoming Head of Research at the ENSAE. Thereafter, Patrick taught seminars on research at Paris Dauphine (1982) and was Professor at a number of Universities (including Dauphine, ENSAE, Centre des Hautes Etudes de l'Armement, Ecole Nationale des Ponts et Chaussées and HEC Lausanne).

Patrick is now Professor of Economics at University Paris I Panthéon-Sorbonne. He combines these responsibilities with his research work at Natixis. Patrick was awarded "Best Economist of the year 1996" by the "Nouvel Economiste", and today is a member of the council of economic advisors to the French Prime Minister. He is also a board member at Total and Ipsos.

Website URL: http://cib.natixis.com/research/economic.aspx

Despite widely-held assertions that northern Europe (including Germany, France, Finland, the Netherlands, Austria and Belgium) has been the collective beacon of eurozone competitiveness, there is reason to suggest the south (i.e. Spain, Italy, Portugal Greece) is becoming a promising hub for growth.

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Any investor gauging the European Central Bank’s (ECB) monetary policy to optimise investment strategies can expect interest rates to remain low in the short-to-medium-term. Certainly, low growth, the fear of sustained deflation and high unemployment indicate that this is the case.

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The European Central Bank (ECB) has introduced some aggressive measures in an attempt to restore confidence and growth to the eurozone’s sluggish economy. But have the measures been sufficient? Our view is probably not.

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Europe is showing no signs of growth, outlook for investment remains subdued, with poor global trade resulting in weak exports – while wages continue to be dampened by low inflation. This suggests that the European Central Bank (ECB) will continue its expansionary monetary policy throughout 2016, with a likehood that this will also carry through to the first half of 2017. However, the pressing question is whether the ECB will be able to scale down its monetary policy in the medium term, or if their expansionary programme is irreversible. To assess this, we evaluate three possible scenarios.

 

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As we look towards 2016, growth in France is expected to be lower than in Germany, Spain and Italy, despite a recovery in demand and an improvement in corporate profitability. Unlike Germany, Spain and Italy, the French government has failed to implement vital reforms that would kick-start growth. Instead, French corporates have suffered a freeze on investment and hiring decisions, which can be largely attributed to “non-quantitative” supply factors – including the lack of progress in labour market reforms and insufficient competition.

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Tuesday, 27 October 2015 11:51

Is Europe’s low inflation dangerous?

Earlier this year, a genuine revival in the eurozone appeared to be under way. European equity markets were buoyant and consumers had become more confident. The recovery, which had been faltering and feeble since the spring of 2013, looked set to accelerate. However, that bout of optimism has proved fleeting as inflation levels remained low in the third quarter of 2015. Today, the pressing question is whether Europe is now in a dangerous situation.

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A depreciated euro and low oil prices have acted as main drivers of GDP growth in the eurozone. Research has revealed that economic performance in Germany, France and Italy in the first quarter of 2015 would have been feeble had it not been for the external shocks. As the unexpected champion, Spain has been the only country out of Europe’s four largest economies to show endogenous growth.

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Since the summer of 2014, the eurozone equity market has displayed high variability due to the expectations associated with the implementation of quantitative easing (QE), a rise in both inflation and long-term interest rates, and of course the effect of the Greek crisis. 

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