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MNI Euro Insight

MNI Euro Insight is an invaluable resource for financial professionals who are responsible for researching and developing investment strategy. Drawing on MNI’s extensive network of contacts and relationships with senior European policy makers - in Brussels, at the ECB, and Eurozone national capitals - Euro Insight is relied on by economists, strategists and fund managers for its unique and dependable analysis.

Articles by MNI Euro Insight

MORNING DIGEST: July 18, 2016

July 18, 2016

EU foreign ministers gather in Brussels Monday, with the situation in Turkey set to top the discussions, along with the ongoing terrorism threats in Europe following the Nice attack. They will be joined by John Kerry, the US Secretary of State, to talk about EU-US relations and how to move forward with global foreign policy issues. Boris Johnson, recently appointed UK foreign secretary following the British vote to leave the EU, will make his first Council appearance at this meeting.
Arriving in Brussels, Johnson said he would reassure his EU counterparts that Britain would continue to cooperate closely with EU partners, eben following the eventual official departure from the bloc, Reuters reported. http://goo.gl/11hVhP
UK Prime Minister Theresa May travelled to Scotland over the weekend, pledging she will not trigger EU Article 50 before finding a nationwide approach to the issue. May wants to involve Scotland in the Brexit process to ensure the departure from the EU will not lead to the break-up of the UK.
However, according to Politico, European leaders are unlikely to support such a position, given that they want to remove political uncertainty and define the new EU-UK relationship as quickly as possible, although of course triggering A50 is entirely within the UK’s control. http://goo.

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MORNING DIGEST: July 15, 2016

July 15, 2016

At least 84 people were killed in Nice as a truck plowed into crowds gathered on the Promenade des Anglais to celebrate Bastille Day. French police shot the driver dead and found grenades and guns inside the truck, the BBC reported.

President Francois Hollande said the attack was of a “terrorist nature” and announced the that the country’s state of emergency would be extended  for another three months. Hollande also called on “operational reserves” to be deployed to support the security forces across the country.

European leaders, including European Commission President Jean-Claude Juncker and German Chancellor Angela Merkel condemned the attacks and pledged solidarity with France.

Italian authorities, meanwhile, have announced increased security measures because of the potential for terrorist attacks, Ansa reported. Angelino Alfano, Italy’s Minister of Interior, said Thursday there had been a “resurgence of jihadist threats” and that the new measures were preventive. http://goo.gl/eWlrLu

INVESTORS WILL BE INVOLVED IN SOLUTION FOR ITALIAN BANKS: As Euro insight reported Thursday, it is increasingly likely that investors will have to participate in the recapitalization process of Italian banks. In Brussels, officials said a possible solution could follow Spain’s bank bailout, where banks converted junior debt into equity and raised €13.6bn in capital on the market.

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Analysis: Vestager Comments Suggest Some Investor Bail-in if Italy’s Banks are Recapitalised

July 14, 2016

If you are a subscriber or a trialist, please click the login button below.You will be redirected to the Deutsche Börse login page to enter your username and password.Sign up for a free-30-day trial of MNI Euro Insight and you will get access to the most exclusive interviews, analysis and reports that Euro Insight has to offer.MNI Euro Insight draws from MNI’s extensive contacts and exceptional relationships with senior European policymakers in Brussels and major capitals to create timely, in-depth, insightful intelligence on the Eurozone economic and financial policy making process.Please click below to sign up.

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Analysis: Bank of England Easing Decision is Delayed, not Cancelled, While MPC Gathers Data

July 14, 2016

If you are a subscriber or a trialist, please click the login button below.You will be redirected to the Deutsche Börse login page to enter your username and password.Sign up for a free-30-day trial of MNI Euro Insight and you will get access to the most exclusive interviews, analysis and reports that Euro Insight has to offer.MNI Euro Insight draws from MNI’s extensive contacts and exceptional relationships with senior European policymakers in Brussels and major capitals to create timely, in-depth, insightful intelligence on the Eurozone economic and financial policy making process.Please click below to sign up.

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MORNING DIGEST: July 14, 2016

July 14, 2016

Britain’s new Prime Minister Theresa May unveiled her new cabinet on Wednesday, shocking many by putting former London mayor and Brexit campaigner Boris Johnson in charge of foreign policy.

David Davis, also a Leave supporter, will become the new "Brexit minister," in charge of negotiating Britain’s exit from the EU, while Phillip Hammond, who supported Remain, was named chancellor, replacing George Osborne. According to the Financial Times, Hammond “is not a natural fit” with the new prime minister’s aim to ease austerity but will bring business experience to the government table. 

Hammond told the BBC on Thursday that raising taxes was not the best way to boost consumer confidence and said there was no need for an emergency budget, as Osborne had claimed prior to the June 23 referendum.

The Bank of England Monetary Policy Committee meets Thursday and could announce the first cut in interest rates in more than seven years. Financial markets are expecting a reduction of 0.25% as the central bank attempts to boost the economy following the Brexit vote.

A survey of estate agents, conducted after the EU referendum, showed a “marked drop in activity in the housing market,” the Financial Times reported. People are inquiring less about home buying, mainly in London and south of England and a large number of estate agents believe that prices will drop over the next quarter.

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Euro Insight Poll: Brexit Crushes Hopes for Stronger Eurozone Recovery

July 13, 2016

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Analysis: NATO’s Troop Buildup Seeks to Contain Russian Expansion but Alliance is Split on Strategy

July 13, 2016

If you are a subscriber or a trialist, please click the login button below.You will be redirected to the Deutsche Börse login page to enter your username and password.Sign up for a free-30-day trial of MNI Euro Insight and you will get access to the most exclusive interviews, analysis and reports that Euro Insight has to offer.MNI Euro Insight draws from MNI’s extensive contacts and exceptional relationships with senior European policymakers in Brussels and major capitals to create timely, in-depth, insightful intelligence on the Eurozone economic and financial policy making process.Please click below to sign up.

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Analysis: New UK Prime Minister Eyes ‘Brexit-Lite’ as Post-Referendum Goal

July 13, 2016

If you are a subscriber or a trialist, please click the login button below.You will be redirected to the Deutsche Börse login page to enter your username and password.Sign up for a free-30-day trial of MNI Euro Insight and you will get access to the most exclusive interviews, analysis and reports that Euro Insight has to offer.MNI Euro Insight draws from MNI’s extensive contacts and exceptional relationships with senior European policymakers in Brussels and major capitals to create timely, in-depth, insightful intelligence on the Eurozone economic and financial policy making process.Please click below to sign up.

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MORNING DIGEST: July 13, 2016

July 13, 2016

British Prime Minister David Cameron is expected to hand his resignation to the Queen later on Wednesday. He will be replaced at 10 Downing Street by the new Conservative leader Theresa May.

The future of the EU-UK relationship is now in the hands of two women as May and German Chancellor Angela Merkel will play a determinant role, according to Reuters. Both agree that Britain has to leave the EU following the referendum, but  Merkel wants the UK to define its intentions as quickly as possible, while May will not rush to trigger the EU’s Article 50 and start negotiations. http://goo.gl/QnyOca

Meanwhile, Britain’s Labour Party executive has decided via secret ballot that Jeremy Corbyn’s name must feature on a ballot paper in the leadership contest where he is being challenged by Angela Eagle. http://goo.gl/sd8XZb 

Bank of England Governor Mark Carney has downplayed concerns that the UK might see a new financial-crisis-style credit crunch following its decision to leave the European Union, MNI reported.

According to the governor, British banks are well-capitalized and the central bank was already working on boosting lending capacity. Carney was criticized for a lack of independence from the central bank in the run-up to the referendum, but he told the Treasury Select Committee that all his comments were made to highlight the costs of the decision to leave the EU.

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Analysis: BOE, a Beacon of Authority amid Brexit Turmoil, Now Seen Supplying Fresh Stimulus

July 12, 2016

If you are a subscriber or a trialist, please click the login button below.You will be redirected to the Deutsche Börse login page to enter your username and password.Sign up for a free-30-day trial of MNI Euro Insight and you will get access to the most exclusive interviews, analysis and reports that Euro Insight has to offer.MNI Euro Insight draws from MNI’s extensive contacts and exceptional relationships with senior European policymakers in Brussels and major capitals to create timely, in-depth, insightful intelligence on the Eurozone economic and financial policy making process.Please click below to sign up.

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Analysis: ECB to Take a Dovish Stance after Brexit Stokes Economic Worries

July 12, 2016

If you are a subscriber or a trialist, please click the login button below.You will be redirected to the Deutsche Börse login page to enter your username and password.Sign up for a free-30-day trial of MNI Euro Insight and you will get access to the most exclusive interviews, analysis and reports that Euro Insight has to offer.MNI Euro Insight draws from MNI’s extensive contacts and exceptional relationships with senior European policymakers in Brussels and major capitals to create timely, in-depth, insightful intelligence on the Eurozone economic and financial policy making process.Please click below to sign up.

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IMF Report Raises Pressure on Italy to Cut High Stock of Banks’ Non-Performing Loans

July 12, 2016

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Op-Ed: Italy Seeks to Support Troubled Banks While Meeting EU Rules on State Aid

July 12, 2016

Public guarantee scheme risks being too little and too late
Since their troubled start of the year, Italy’s banks have come under pressure again after the recent UK referendum.

The current market concern about Italian banks is not surprising. Though they were resilient to the early phases of the global financial crisis, the banks have accumulated non-performing loans (NPLs) ever since, with no forceful countermeasure being taken. The solution adopted in 2016 foresees a public guarantee scheme for NPLs together with a bank-funded reserve that will buy junior NPL tranches and support banks’ capital raises, but it runs the serious risk of being too little and too late.

The European Banking Association stress tests due to be published at the end of July may renew the focus on Italian banks, revealing the need for further recapitalizations. The European Commission authorized Italy to issue public guarantees worth €150bn to banks raising liquidity from the market but there is much less clarity about how potential capital shortfalls should be tackled.

The point of contention is about the use of public funds, and it is especially relevant and delicate because it risks opening two Pandora’s boxes, one in Italy and one in Europe.

Under EU state-aid rules, additional capital requirements should in the first place be covered from the market and other private sources.

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Analysis: EU Nations’ Views Mixed on Economic Impact from UK Decision to Leave

July 12, 2016

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MORNING DIGEST: July 12, 2016

July 12, 2016

Oil prices firmed early Tuesday as crude production in Iraq was interrupted, Reuters reported. Brent crude rose to $46.39 per barrel while West Texas Intermediate climbed to $44.87, up 14 and 11 cents, respectively, from Monday’s close.

Shares on Wall Street rose to record highs on Monday, following upbeat economic data. The S&P 500 closed at a record 2,137.16. http://goo.gl/6Juwlk

UK Home Secretary Theresa May will become Britain’s next Prime Minister on Wednesday after David Cameron chairs is final cabinet meeting on Tuesday. May, who received wide support from Conservative Party legislators after rival Andrea Leadsom withdrew from the race to replace Cameron, said she plans to make Brexit “a success.”

Meanwhile, Angela Eagle has begun a bid to replace Jeremy Corbyn as the Labour party leader. According to the Financial Times, the bid marks the start of a "bitter battle" between the left-wing and more moderate factions of the party. Eagle, the former shadow business secretary, said she had no other option than to run for leader, as Britain risked becoming a "one-party Tory state." http://goo.gl/FkhEtK

German Chancellor Angela Merkel reiterated Monday that Britain would not have access to the EU single market without the so-called four freedoms, or free movement of goods, services, people and capital, Reuters reported.

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Post-Brexit Financial Volatility Spurs EU Debate on Public Support for Struggling Banks

July 11, 2016

If you are a subscriber or a trialist, please click the login button below.You will be redirected to the Deutsche Börse login page to enter your username and password.Sign up for a free-30-day trial of MNI Euro Insight and you will get access to the most exclusive interviews, analysis and reports that Euro Insight has to offer.MNI Euro Insight draws from MNI’s extensive contacts and exceptional relationships with senior European policymakers in Brussels and major capitals to create timely, in-depth, insightful intelligence on the Eurozone economic and financial policy making process.Please click below to sign up.

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Analysis: Brexit Turmoil Leads to Rising Public Approval of EU, Easing Fears of Domino Effect

July 11, 2016

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MORNING DIGEST: July 11, 2016

July 11, 2016

Eurozone finance ministers meet in Brussels Monday, in what will be their last meeting before the summer break. Surprisingly, Greece is not on the agenda, as the main focus will be on the impact of Brexit on the euro area.

In the UK the race to replace David Cameron as Conservative Party leader gathers pace. Theresa May, the favourite in the leadership contest, will lay out plans Monday to reform corporate governance rules, which, among other things will allow workers to be part of company boards and make shareholder votes on pay binding, Reuters reported. http://goo.gl/A14ZLf

UK Chancellor of the Exchequer George Osborne will meet Wall Street investors on Monday in an attempt to reassure them they do not need to change their investment strategies in the UK, despite the vote to leave the EU, Reuters reported. Despite the economic challenges, Osborne will argue that the UK aims to become the most attractive place in Europe to do business. http://goo.gl/QXVEaf

Gibraltar has called for a second UK referendum on EU membership, the FT reports. In an interview with the paper, Fabian Picardo, Gibraltar’s Prime Minister, said their shuld be a second vote once the new arrangements with the EU are clear following Article 50 triggered negotiations.

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Analysis: Commission’s Fiscal Critique of Portugal and Spain Raises Pressure on France

July 8, 2016

If you are a subscriber or a trialist, please click the login button below.You will be redirected to the Deutsche Börse login page to enter your username and password.Sign up for a free-30-day trial of MNI Euro Insight and you will get access to the most exclusive interviews, analysis and reports that Euro Insight has to offer.MNI Euro Insight draws from MNI’s extensive contacts and exceptional relationships with senior European policymakers in Brussels and major capitals to create timely, in-depth, insightful intelligence on the Eurozone economic and financial policy making process.Please click below to sign up.

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IMF’s Eurozone Report Highlights Economic and Political Challenges after Brexit Vote

July 8, 2016

If you are a subscriber or a trialist, please click the login button below.You will be redirected to the Deutsche Börse login page to enter your username and password.Sign up for a free-30-day trial of MNI Euro Insight and you will get access to the most exclusive interviews, analysis and reports that Euro Insight has to offer.MNI Euro Insight draws from MNI’s extensive contacts and exceptional relationships with senior European policymakers in Brussels and major capitals to create timely, in-depth, insightful intelligence on the Eurozone economic and financial policy making process.Please click below to sign up.

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MORNING DIGEST: July 8, 2016

July 8, 2016

Belgian Prime Minister Charles Michel told the Financial Times that he has never seen a democracy in such state (the UK), blaming British politicians for not having the courage to lead after campaigning for a Brexit vote. He added that the choice of the British people is “very negative” for the UK and despite the “friendship” between the two countries, he is not willing to pick up the bill. http://goo.gl/kPLBhv

Herman Van Rompuy, former president of the European Council, told The Guardian that Britain should not expect “special treatment” by having access to the single market without respecting freedom of movement. https://goo.gl/glrpWE

The UK Conservative Party chosen the two final contenders  to become the party’s leader: Theresa May, the home secretary, and Andrea Leadsom, the energy minister, eliminating Michael Gove, one of the most pro-Brexit campaigners, Reuters reported. The final decision, to be voted on by the 150,000 Conservative Party members, will be announced September 9, following a summer of campaigning.

Data released Friday showed that consumer confidence has dropped significantly in the wake of the British referendum. According to MNI, the GfK post-Brexit special survey showed the steepest monthly drop in consumer confidence since 1994. The June index decreased 8 points to -9.

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Commission Critique of Spain, Portugal Budgets Could Raise Borrowing Costs

July 7, 2016

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Analysis: Eurozone GDP Growth Forecasts Slashed By a Third After Brexit

July 7, 2016

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Morning Digest: July 7, 2016

July 7, 2016

Conservative MPs vote Thursday to choose the final two names to go before party members in the election to replace David Cameron as the party leader. Today’s ballot paper sees three remaining candidates: Theresa May, Andrea Leadsom and Michael Gove, MNI reported.

Sterling remained under pressure in Asian trade Thursday, hovering just above the 31-year lows seen Tuesday. The pound was trading at $1.2918 late in the Tokyo afternoon session, before rallying to trade around $1.2980 in early London activity. Investors are instead looking at the yen as a safer option, which has strengthened 5% on its trade weighted basis since the UK’s referendum vote, along with gold, which is trading at 27-month highs.

ECB Governing Council member Francois Villeroy de Galhau said Wednesday Brexit will not have a significant impact on the euro area, adding it would have a more significant effect on the UK. He told a conference that the UK vote was not a “game-changer” for the bloc but it underlined the need for further willingness to move ahead with European integration, MNI reported.

Germany’s industrial output fell unexpectedly in May, according to data from the country’s statistical office Destatis published Thursday, adding more evidence that the industrial sector in the euro area’s largest economy is facing headwinds. Production in the fifth month of the year shrunk by 1.

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Scotland Confronts Political and Economic Challenges in Seeking EU Membership Post-Brexit

July 6, 2016

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Analysis: EU Trade Policy Hobbled by Demands From Member States for a Bigger Say

July 6, 2016

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Analysis: EU Finance Ministers Weigh Fines for Missed Fiscal Targets Against Rising Euroscepticism

July 6, 2016

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MORNING DIGEST: July 6, 2016

July 6, 2016

Portugal’s prime minister Antonio Costa has said he is waiting calmly for the European Commission’s decision in reaction to deficit breaches, before reacting react accordingly, Expresso reported. http://goo.gl/bgqy1v In Spain, the caretaker prime minister, Mariano Rajoy, is expected to pressure the socialist opposition to approve the spending plans for 2017. http://goo.gl/efff8A

According to MNI, the commission will present their conclusions on both countries Thursday, recommending sanctions. However, there is no indication what the sanctions could be, with some suggestions they could even be reduced to 0% to avoid creating further economic woes for the southern economies.

The Commission’s final assessment has been delayed twice. The executive did not want to present the outcome Tuesday in order to avoid clashing with a parliamentary hearing for Vice President Valdis Dombrovskis, who is set to pick up the EU’s financial services brief following the resignation of British commissioner Jonathan Hill following the Brexit vote.

NEW BRITISH COMMISSIONER ON THE WAY: The British government is expected to announce that the new British commissioner will be Julian King, currently the country’s ambassador to France, Politico reported. He will replace Jonathan Hill, who will soon leave the Brussels executive, having resigned his brief following the British vote to leave the EU.

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EU Leaders Brace for Long Period Before Britain Begins Formal Process of Divorce

July 5, 2016

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MORNING DIGEST: July 5, 2016

July 5, 2016

The European Commission could move this week to sanction certain member states for running above target fiscal deficits. On the table are the 2015 fiscal misses of Portugal and Spain, which could ultimately lead to a fine as high as 0.2% of GDP.

As Euro Insight reported, the 28 EU commissioners will meet Tuesday to discuss the deficit issue informally, with expectations they will offer a written statement in coming days, but certainly before finance ministers gather in Brussels on July 12. These have the final say in whether Madrid and Lisbon should become the first countries to be penalized for their poor fiscal performances.

The timing is particularly sensitive given the British decision to leave the EU, the growing anti-EU sentiment in parts of the Continent and pressure from hard-line countries, such as Germany and the Netherlands, for a strict implementation of the budget rules. https://goo.gl/WMRQ44

Away from Europe, the The Reserve Bank of Australia has left its cash rate unchanged at 1.75% as widely expected, but surprised by issuing guidance that could point to more easing ahead, MNI reports. On the UK’s vote to leave the European Union, the RBA noted that financial markets have been volatile recently as investors re-priced assets after the referendum but most markets have continued to function effectively and funding costs for high-quality borrowers remain low.

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