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Tag Archives: Europe

Liquidity Crunch Mangles UK Equity & Real Estate Funds

Exodus from funds with illiquid assets forces more funds to block redemptions. By Nick Corbishley, for WOLF STREET: Equity and property funds in the UK saw withdrawals of £2.5 billion in July, taking total outflows in 2019 so far to £12.4 billion, according to Morning Star data. Equity funds, with total assets of £691 billion, were down £1.6 billion in July and £10.6 billion so far this year. In a broad flight to safety, money market funds experienced their sixth consecutive month of...

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One of World’s Construction Giants Admits Using Risky Hidden-Debt Loophole “Across Group.” Australian Subsidiary Crushed

This “crack cocaine for CFOs” was also extensively used by Carillion until it collapsed. By Nick Corbishley, for WOLF STREET: The world’s seventh largest construction and services company (by sales), with subsidiaries around the globe, Grupo ACS, has revealed it is making extensive use of reverse factoring, a controversial financing technique that played a key role in the collapse of UK construction giant Carillion. In a conference call with analysts, ACS chairman, Florentino Perez,...

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Financial World Gone Nuts: $15 Trillion Negative Yielding Debt

12 countries with negative 10-year yields. A race to hell. Every day brings new indications that the financial world is going from already nuts to even nuttier. According to Bloomberg, the total amount of bonds outstanding globally that are trading with a negative yield exceed for the first time $15 trillion. This includes government and corporate debt, and also some euro junk bonds that have joined the elite group (click to enlarge): A chart like this, of markets and central banks...

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Investor Sentiment Goes to Heck After Draghi’s Easing Promise

Bitter irony: As Draghi’s term is about to end, investor expectations plunge to where they’d been when he made his “whatever it takes” speech in 2012. By Nick Corbishley, for WOLF STREET: The Sentix economic index, a gauge of investor sentiment in the Euro Area, fell 7.9 points in August 2019 to minus 13.7, its lowest level since October 2014. The index has been on a downward spiral since January 2018 but in recent months the trend line has sharply steepened. The index of investor...

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UK Auto Production Plunges to 7-Year Low on Slumping Global Demand & “No Deal” Brexit Fears

Investment in the auto sector grinds to a halt. By Nick Corbishley, for WOLF STREET: Production of vehicles in the UK plunged 20% in the first half of 2019, compared to the same period last year, as the fallout from sharply declining demand in key export markets such as Europe and China as well as fears of a no-deal Brexit took a heavy toll on the sector, according to the Society of Motor Manufacturers and Traders (SMMT). Engine manufacturing dropped 10% during the same period. And...

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ECB’s NIRP-Forever Policy “Destroys Banks’ Profitability Equation”: Bankia CEO. Spanish Banks Reel. Problems Stack Up

Spain’s Big Five banks (already down from the Big Six) could soon be four. By Nick Corbishley, for WOLF STREET: The ECB’s NIRP forever policy is crushing Eurozone banks’ ability to turn a profit, warned the CEO of Bankia, José Sevilla, on Monday. “It is clear that the current rate scenario is hurting the profitability of the banking business,” he said. “We think low rates are good and perhaps even desirable. But the same cannot be said of negative interest rates since they destroy...

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World Trade in Face of Tariffmageddon, Trade Wars & Manufacturing Slowdown

Consumers and companies keep plugging, the world has not come to an end. World trade volume – imports and exports of merchandise across the globe – increased 0.3% in May from April, after falling 0.6% in the prior month, according to the Merchandise World Trade Monitor, released today by CPB Netherlands Bureau for Economic Policy Analysis. On a year-over-year basis, the index fell 0.4%. And it is down 2.1% from the peak in October 2018. This isn’t exactly stellar, compared to 2017 and...

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Another UK Fund Just Slammed its Doors Shut on Investors

This time, a fund liquidity crisis traps institutional investors, including pension funds. By Nick Corbishley, for WOLF STREET: Less than a week after the Bank of England issued a warning about the systemic risks posed by illiquid investment funds, news has surfaced that another run-on-the-fund caused fund managers to suspend withdrawals: This time, it’s M&G Investments, the fund management arm of UK insurance giant Prudential, that has suspended withdrawals from one of its...

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London Housing Bust: Prices Fall, Sales Plunge to 2009 Level

Most other regions in the UK cling to price gains. Home prices in Greater London – all types of homes combined – dropped 4.4% in May compared to May last year, the biggest 12-month drop since August 2009, to £457,471 ($569,000), the lowest since January 2016, according to the UK government’s Office for National Statistics today. The average price has now fallen 6.4% from the peak in July 2017. The central areas of London have for years been among the most magnificent housing bubbles in...

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Not Helpful for Crushed European Bank Stocks: Stress Test a Sham, European Court of Auditors Warns

Just when European banks need to inspire confidence more than ever. By Nick Corbishley, for WOLF STREET: European bank stocks continue to get hammered near multi-decade lows by a slew of problems, including the ECB’s monetary policies, particularly its negative-interest-rate policy (NIRP), festering nonperforming loans, and a well-deserved lack of confidence by investors. This was just exacerbated by a scathing new report from the European Court of Auditors (ECA) highlighting a litany...

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