Take 5 and come back tomorrow (22/8/24) Markets Regional financing TLGO GRF Hotels

None of what follows is investment advice.

Market environment: Eyes on Jackson Hole – (Asia-Pacific markets rose with European futures mildly up and those for the US flat) – Asia-Pacific markets rose, with investors still focused on indication of a potential easing of Fed monetary policy. Futures for Europe are mildly up and those for the US flat.

Response to the crisis: The only truth is that lies will be involved – (The Treasury minister denies the creation of a regional financing system similar to that of the Basque Country (“concierto”) and starts a fire in relations with the pro-independence ERC party (Expansion p19) – After a long period of silence after the deal between PM Sanchez and the pro-independence ERC to give Catalonia what in effect is practical “taxation sovereignty”, the Treasury Minister has finally commented on the issue, but basically by avoiding it. The strategy, as in many things, consists of avoiding “taboo” words such as “concierto”, even if the practical consequences are the same. So, the main hope is that the PM lied when he promised ERC the equivalent of the “concierto” in order to obtain its backing for a Socialist Catalonia regional president. But the problem is that the PM needs ERC’s support on a continuing basis, if he is to stay in power. So, the only truth about the situation is that lies will be involved.

Talgo: If all else fails, lower your standards - The Government builds bridges with Hungary in order to unblock the bid for Talgo (Expansion p3) – The Government sending representatives to Budapest to inspect the Magyar Vagon installations and the details of the bid represents the first “non-hostile” gesture towards the Hungarian bid for Talgo. It is likely to prove legally difficult to block a bid by Magyar Vagon as it is an EU company, and several of the parties involved have already hinted at legal action. Additionally, the Government has reportedly failed in Its attempts to build alternative bids. So, the Government may have concluded that resistance is futile (at least the Talgo shareholders may hope so) and that if all else fails, lower your standards may have to be the only choice.

Grifols: It lives! - Brookfield negotiates refinancing Grifols debt after its acquisition (Expansion p5) – Despite the announcement that Brookfield and the founding family were looking at launching a bid for Grifols, the stock has nevertheless been buffeted by negative news regarding its transparency. This is probably due to fears that Brookfield may not have liked what it saw when it looked at the books. On this basis, the delay in any news regarding progress toward the bid has been a negative weighing on the stock. So, any indication, such as Brookfield engaging in negotiations to provide the financing for the deal (acquisition debt and renegotiation of Grifols debt due to change of control clauses), that hint at the deal still being alive has been well received.

Hotels: Endless summer - Hotel operators lengthen the summer boom to September (Expansion p6) – According to advance booking numbers September should continue to be a good month for the tourism sector, continuing the good performance seen during summer so far, despite the rise in prices. This is good news, but does not represent a significant change, as September is still part of the “summer period”, especially for foreign tourists. Nevertheless, any lengthening of the peak season would be good news, as this would help to maintain growth without further putting pressure on the resources of already crowded destinations.