Quote of the Day:
The expropriation is nothing more than a way of covering over the social and economic crisis facing Argentina right now.
Antonio Brufau – Repsol Chairman.
Macro Overview
Kicking Spain While She’s Down
- Poor old Spain, when it rains it pours. Just when you could not think anything could get worse, Argentina decide they want to nationalize an oil company YPF. So far so good… only YPF is controlled by the giant Spanish oil company, Repsol! A stake which, representing Spain’s largest private investment abroad, is by no means trivial. To put another twist on it, it was a stake that Repsol was hoping to monetize by selling it to Chinese oil giant Sinopec.
- Here is the FT on the matter:
Politicians and business leaders accuse Ms Fernández of kicking Spain while it is down. She is taking advantage, they say, of a Spanish economic recession and a eurozone sovereign debt crisis so grave that some analysts predict Madrid will follow Athens, Dublin and Lisbon in seeking an international financial bailout.
Worse, almost the only bright patch for the Spanish economy over the past four years of crisis has been the performance of its investments in emerging markets – especially Latin America.
- Today the war of words begins. Reuters quotes Spanish Industry Minister:
With this attitude, this hostility from the Argentine authorities, there will be consequences that we’ll see over the next few days. They will be in the diplomatic field, the industrial field, and on energy.
- Spanish Foreign Minister, Jose Manual, choosing not to mince his words, stating:
Argentina has shot itself in the foot.
- That’s fighting talk, which the popular and charismatic Argentine President, Cristina Fernandez, seems to be dismissing by saying:
This president isn’t going to respond to any threats … because I represent the Argentine people. I’m the head of state, not a thug…
- I’m not sure how long the war of words will last nor am I sure how long it will escalate, but I doubt we’ve heard the last of this.
Market Overview
Spanish Bond Auctions Set The Tone
- Well what a difference a day makes!
- The Spanish bond auctions went much better than most expected and, as a result, the markets were in buoyant mood today. Apple making back pretty much everything it lost yesterday!
- On the Latin theme I couldn’t help noticing the weakening Brazilian Real – that’s my Chart of the Day
Chart of the Day
USD-BRL (Source: Bloomberg)
Events
Macro Events:
Update:
- UK Inflation Numbers in line (and persistently high)
- Eurozone Inflation Numbers in line (and persistently high)
Alerts:
- Nothing Significant
Corporate Events:
Results:
- ASML [ASML NA], Blackrock [BLK], Ebay [EBAY], Marriott [MAR], Qualcom [QCOM],TaiwanMobile[3045 TT], Tesco [TSCO LN], Yum! Brands [YUM]
Dividends:
- BAE Systems [BA/ LN], Tullow Oil [TLW LN]
Reading, Links:
Nothing Significant
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Tags: Argentina, Brazilian Real, Economy, Europe, Macroeconomic News, oil, Politics, Spain, TIPSTER
Michael Kudrna
