Multi-asset Macro/Emerging Markets Strategist

Virgil Fernandez Esguerra

Thematic (Sector/Industry)

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Executive summary: Our guide to this week’s global macro risk events and trading opportunities. 
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This week in trade ideas, we turn long EUR-USD on a strategic basis and stay engaged in long SPX and VIX where correlations recently moved strongly positive. We add long SGD-CNH to our watchlist.</li>
<li>
Monday: Markets will begin the week with US reports on core PCE deflator as well as consumer income and spending. Colombia’s BanRep meets.</li>
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Tuesday brings Trump’s State of the Union address, New Zealand trade…</li>
</ul>
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Executive summary: Our guide to this week’s global macro risk events and trading opportunities. 


This week in trade ideas, we turn long EUR-USD on a strategic basis and stay engaged in long SPX and VIX where correlations recently moved strongly positive. We add long SGD-CNH to our watchlist.

Monday: Markets will begin the week with US reports on core PCE deflator as well as consumer income and spending. Colombia’s BanRep meets.

Tuesday brings Trump’s State of the Union address, New Zealand trade…



Week Ahead in Global Macro: Last Yellen FOMC, US Treasury Funding, Eurozone GDP/CPI, US Jobs

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

* Economic Impact: Catalonia has amongst the largest public debts of Spain's regions, and could witness a 25%-30% economic contraction and its unemployment double on secession. Spain accounts for nearly one-third of Catalonia’s exports and could face a trade boycott along with increased tariffs. Already, the Spanish government has begun tightening some economic screws by withholding some funding and making it easier for businesses to relocate in an emergency.* Political Risk of Secession: The…

* Economic Impact: Catalonia has amongst the largest public debts of Spain's regions, and could witness a 25%-30% economic contraction and its unemployment double on secession. Spain accounts for nearly one-third of Catalonia’s exports and could face a trade boycott along with increased tariffs. Already, the Spanish government has begun tightening some economic screws by withholding some funding and making it easier for businesses to relocate in an emergency.* Political Risk of Secession: The…

Co-founder & Managing Director, Marketnomix 

Rajan Govil

Co-founder & Managing Director

Marketnomix 

Macroeconomics

Weakness in industrial production growth in May was seen across most major sectors and economies, which clearly shows that the Euro Zone industry is struggling to gain momentum which poses a risk to our GDP outlook of 1.3% for 2016 (lowered from 1.6% after the Brexit vote).Industrial Production (IPI) in the Eurozone slowed to 0.6% y-o-y in May 2016 after having recorded a growth of 2.1% y-o-y in April 2016 on a seasonally and working day adjusted (swda) basis. On a 3 month moving average (3mma)…

Weakness in industrial production growth in May was seen across most major sectors and economies, which clearly shows that the Euro Zone industry is struggling to gain momentum which poses a risk to our GDP outlook of 1.3% for 2016 (lowered from 1.6% after the Brexit vote).Industrial Production (IPI) in the Eurozone slowed to 0.6% y-o-y in May 2016 after having recorded a growth of 2.1% y-o-y in April 2016 on a seasonally and working day adjusted (swda) basis. On a 3 month moving average (3mma)…

EUROZONE: Industrial Production GROWTh Slows ACROSS SECTORS AND COUNTRIES

Bespoke Research on China and neighbouring regions, Bixmoor

Bixmoor

Bespoke Research on China and neighbouring regions

Bixmoor specialises in providing bespoke research to business, governments and the financial community on China and neighbouring regions. We seek to build long-term relationships with our clients, based on our expertise, our reliability and our determination to find the right solution.

High debt burdens are not just a developing world phenomenon. The growth of Quantitative Easing programs has resulted in significantly increased debt in many countries, including a good number in the European Union, whose debt levels are masked by accounting procedures.

High debt burdens are not just a developing world phenomenon. The growth of Quantitative Easing programs has resulted in significantly increased debt in many countries, including a good number in the European Union, whose debt levels are masked by accounting procedures.

The Potential for National Financial Default

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<a href="https://www.smartkarma.com/entities/caixabank-sa" target="_blank" data-smartkarma-citation="entities:21255:1" rel="noopener">CaixaBank SA (CABK SM)</a> and <a href="https://www.smartkarma.com/entities/bankia-sa" target="_blank" data-smartkarma-citation="entities:21252:1" rel="noopener">Bankia SA (BKIA SM)</a> will carry out this Friday 26 March, at market close, the exchange of shares by which this merger by absorption will materialise.
<ul>
<li>This is conditional on having all the regulatory authorizations (only that of the Ministry of Economy is missing).</li>
<li>The exchange ratio was set in September at 0.6845 CaixaBank shares for each Bankia share. This valuation implied a 20% premium for Bankia shareholders.</li>
</ul>
On 23 March, the Spanish anti-trust watchdog (CNMC) gave the green light to the creation of the largest entity in Spain, establishing a series of rules agreed with the banks to restrict for a time their power in the network of branches and ATMs, cards and other products.
Fluidra will take Bankia's place on the Ibex 35. The pool manufacturer rises 13.37% this year and capitalizes €4,646 mn. It will be ranked on the 25th place, between Enagás and Merlin Properties.
Most of the merger restructuring expenses will occur in 2021 and, therefore, CET1 ratio should reach 11.9% - 12.2% for 2021e. Post-merger, organic capital generation (after dividends) should amount to about 50 bps per year. CaixaBank expects to obtain annual cost synergies of c. €770 mn and additional annual income of around €290 mn.
The proposed €0.0268 DPS (1% yield) will be subject to merger execution, and complies with the ECB cap (maximum dividend 15% of net income). That dividend includes the consolidated pro forma results of CaixaBank and adjusted Bankia. Bankia posted a FY 2020 net income of €230 mn.
At market close of 24 March, the adjusted Bankia/CaixaBank spread is -0.02%, and therefore there is no arbitrage opportunity, in my view.
(The Insight is labelled bearish because the merger spread is almost nil)

CaixaBank SA (CABK SM) and Bankia SA (BKIA SM) will carry out this Friday 26 March, at market close, the exchange of shares by which this merger by absorption will materialise.

This is conditional on having all the regulatory authorizations (only that of the Ministry of Economy is missing).
The exchange ratio was set in September at 0.6845 CaixaBank shares for each Bankia share. This valuation implied a 20% premium for Bankia shareholders.

On 23 March, the Spanish anti-trust watchdog (CNMC) gave the green light to the creation of the largest entity in Spain, establishing a series of rules agreed with the banks to restrict for a time their power in the network of branches and ATMs, cards and other products.
Fluidra will take Bankia's place on the Ibex 35. The pool manufacturer rises 13.37% this year and capitalizes €4,646 mn. It will be ranked on the 25th place, between Enagás and Merlin Properties.
Most of the merger restructuring expenses will occur in 2021 and, therefore, CET1 ratio should reach 11.9% - 12.2% for 2021e. Post-merger, organic capital generation (after dividends) should amount to about 50 bps per year. CaixaBank expects to obtain annual cost synergies of c. €770 mn and additional annual income of around €290 mn.
The proposed €0.0268 DPS (1% yield) will be subject to merger execution, and complies with the ECB cap (maximum dividend 15% of net income). That dividend includes the consolidated pro forma results of CaixaBank and adjusted Bankia. Bankia posted a FY 2020 net income of €230 mn.
At market close of 24 March, the adjusted Bankia/CaixaBank spread is -0.02%, and therefore there is no arbitrage opportunity, in my view.
(The Insight is labelled bearish because the merger spread is almost nil)

Spain

Bankia, S.A. provides banking services. The Bank offers deposits, personal loans, e-banking, insurance, corporate finance, capital markets, asset management, and other banking services. Bankia serves customers in Spain.

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Bankia SA (BKIA SM)

Week Ahead in Global Macro: Last Yellen FOMC, US Treasury Funding, Eurozone GDP/CPI, US Jobs

Executive summary: Our guide to this week’s global macro risk events and trading opportunities. This week in trade ideas, we turn long EUR-USD...

Virgil Fernandez Esguerra

Catalonia Crisis – Break Away Republic

* Economic Impact: Catalonia has amongst the largest public debts of Spain's regions, and could witness a 25%-30% economic contraction and its...

Thomas J. Monaco

EUROZONE: Industrial Production GROWTh Slows ACROSS SECTORS AND COUNTRIES

Weakness in industrial production growth in May was seen across most major sectors and economies, which clearly shows that the Euro Zone industry...

Rajan Govil

The Potential for National Financial Default

High debt burdens are not just a developing world phenomenon. The growth of Quantitative Easing programs has resulted in significantly increased...

Bixmoor

Bye Bye Bankia

CABK SM and BKIA SM will carry out at close of 26 March the exchange of shares. The merger spread is -0.02%, and therefore there is no arbitrage...

Jesus Rodriguez Aguilar

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