France in State of Economic Emergency
President Francois Hollande has publicly stated that the French economy is now in a state of “economic emergency”. He set out a €2bn job creation scheme in a desperate attempt to lift France out economic death spiral created by his socialistic policies that have raised taxes and chased out those who create wealth and jobs.
Hollande’s scheme he proposes will be a two-year plan where firms with less than 250 staff will get subsidies if they take on a young or unemployed persons for six months or more. In addition, Hollande says he will create 500,000 vocational training courses but that is pointless without firms hiring.
France’s unemployment rate is officially 10.6%, compared to a European Union average of 9.8% and 4.2% in Germany. However, this numbers are modest and do not properly reflect the students who cannot get a job to even start. He also says that this program will be paid “without any new taxes of any kind.” I suppose he is finally realizing that rising taxes shrinks the private sector and than means less jobs are available.
Market Talk – January 18th, 2016
The opening in Asia was the main discussion point for most dealers today. With Oil hitting its lowest price ($27.65) since 2003, the Nikkei trading down 2% in the first 30mins of trading and the Chinese raising the off-shore Yuan all helped to spook markets. However, finally the fears were short-lived and by Asia close markets had settled (admittedly lower) but helped Europe open on a better note. Whenever a core market holidays, dealers use it as an excuse to widen both spread and liquidity and today was no exception. Despite the firm opening markets soon eyed oil again and bids began to pull. By the close all core were down between 0.25 and 0.5%. Weekend rumours that the ECB is looking into European bank NPL’s (Non-performing Loans) shook the FTSE MIB (Italian Exchange) resulting in a 2.9% lose for the index. Portugal Indices also suffered the same fate closing the day down 3.9%, Athens closed down 4.15% and Warsaw -3.1%. US closed for Martin Luther King Day but the futures were last seen small negative.
As Asia opened the Brent contract saw heavy selling hitting the lowest recorded price for 12years of $27.65. Again, the weekend talk was about existing inventories and the Iranian proposed production increasing from 100Mln bpd (barrels per day) to a possible 400Mln. The Middle East stock Indices reflected this nervousness yesterday recording a 4.5% loss in UAE and Saudi Arabia a 5.75% decline.
Some of this nervousness was reflected within the Bond market but as the US was off volumes and trading was extremely thin. Bunds closed almost unchanged 10yr at 0.47% and Italy 1.57%. Portugal 10yr another 4bp wider to close 2.77%.
Currencies remained controlled but the negativity in the Oil price impacted the Russian Rouble which lost 2% against the USD today closing at 79.20.
Currencies remained controlled but the negativity in the Oil price impacted the Russian Rouble which lost 2% against the USD today closing at 79.20.
Expect a return to normal tomorrow (when the US returns) but also we have the release overnight of the Chinese Q4 GDP. Forecasts are for a 6.8% print with previous at 6.9%. We also see CPI in Germany and UK both expected small positive (0.3% and 0.1% respectively). ZEW in Ge
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