IN SPAIN The Spanish economy declined by 0.5% in the first quarter of 2021, returning to negative values after having registered rates of 17.1% and 0.0%, respectively, in the third and final quarters of 2020.
The Corner | According to the advance National Accounts data published by the National Statistics Institute (INE), the Spanish economy fell by 0.5% between January and March due to the decline in consumption and investment.
This reflected the impact of the third wave of Covid and the Filomena storm. However, on a year-on-year basis, GDP declined in the first quarter at a much slower pace than it did in the fourth quarter of 2020. Specifically, the Spanish economy contracted by 4.3% year-on-year, com- pared with a fall of 8.9% in the previous quarter. With this year-on-year contraction of 4.3%, the smallest since the first quarter of 2020, there have now been five consecutive quarters of negative year-on-year rates. Domestic demand •••
Luís Pinheiro de Matos (Caixabank Research) | Headline inflation rebounded to 2.2% in April (1.3% in March). The figure is above CaixaBank Research’s forecast (1.6%). On the other hand, core inflation moderated to 0.0% (0.3% in March), a rate not seen since 2014.
The new high in inflation can be explained entirely by the performance of energy prices, while the underlying components have not yet shown signs of recovery. Although the details of the evolution of the inflation components are not yet known, it is worth flagging the generalised rise in energy components’ prices for the second consecutive month. This compares with the sharp declines observed a year ago, at the height of the first wave of the pandemic in Europe. If the data published this month is confirmed, electricity prices would pick up again, while fuel prices would continue the upward trend observed over the past six months. Headline inflation is expected to remain around 2% over the quarter. And from June onwards, as base effects fade away, a moderate decline in the index should be observed.•••
T.C. | A couple of weeks ago, the Spanish stock market closed at a twelve-month high, with the selective Ibex 35 index above 8,800 points (8.815).
The good results from some companies which have already presented their first quarter figures (Santander, Repsol, Naturgy, Indra, Viscofan…) pushed up the index. However, as Morgan Stanley analysts explain, “Spain continues to have negative EPS (Earnings Per Share) and DPS (Dividends Per Share) revisions relative to the market, although it continues to trade at a 30% discount to the MSCI Europe”, when “the historical average is 20%, making it one of the most undervalued •••
MORE • SPAIN
T.C. | According to data from Red Eléctrica de España (REE), the Spanish electricity system registered a record figure on Sunday 21 March at 13:37 hours: solar generation reached 10,255 megawatts of instantaneous production, which was able to cover 37.3% of peninsular demand. It should be remembered that last year •••
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IN EUROPE Being able to predict what peak inflation will finally be and how interest rates will move will be key to the evolution of assets in 2021. The data will be extreme.
Mutuactivos | Coronavirus, vaccines, interest rates, inflation… All these terms will continue to haunt managers and investors for the remainder of the year, one which is seen as having numerous uncertainties in the economic and financial sphere.
Mutuactivos expects the rest of the year to be volatile from a macroeconomic point of view. Below is a review of the main issues to keep in mind. Consensus anticipates that very high inflation data will be published in the US in April and May. Data wich will drop again but wich could lead to an interest rate hike. The Fed will have the hard task of convincing investors that rising rates will be •••
T.C. | The share of electricity generated from renewables in the EU energy mix (39%) exceeded the share of fossil fuels (36%) in 2020 for the first time ever and EU consumption of both electricity (-4%) and gas (-3%) fell from 2019 levels, but most of the drivers for this change (notably the COVID-19 pandemic) were exceptional, according to the latest Commission quarterly reports on gas and electricity markets published today.
Despite renewed COVID-19 restrictions in some countries, figures for the 4th quarter put consumption levels closer to “normal levels” than in the first three quarters of 2020. The electricity market report confirms that the combination of the pandemic demand
shock and favourable weather conditions for renewables substantially changed the structure of the mix over the course of 2020. Coal and lignite generation fell by 22% (-87 TWh) and nuclear output dropped by 11% (-79 TWh). Gas was less affected due to its favourable price, thereby supporting •••
T.C. | The German Constitutional Court has unblocked Germany’s ratification of the Next Generation EU Fund, the €750 billion European recovery fund with which the Union aims to boost the European economy.
The German TC has dismissed the appeal lodged by a group of German citizens because it considers that the consequences of the pre liminary blockage would be more serious if it were subsequently declared constitutional than if it were to go ahead and eventually be found to be unconstitutional.The German TC explains that delaying the coming into force of the plan would negatively affect the pursued economic policy objective and •••
IN THE WORLD
Fernando Alberca | Retail customers of hundreds of US banks will soon be able to buy, hold and sell bitcoins directly through their existing accounts at those banks. This will be made possible by a deal between cryptocurrency custody firm New Digital Investment Group and financial technology giant Fidelity National Information Services. •••
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