Take 5 and come back tomorrow (5/8/24) Markets Taxes Employment Hotels Iberdrola

None of what follows is investment advice.

Market environment: Dive! Dive! Dive! – (Asia-Pacific markets fell sharply with futures for Europe and the US pointing down) – Asia-Pacific markets declined sharply on tech weakness and fears that the Fed is now behind the curve in its monetary policy. Futures for Europe and the US point sharply down.

Response to the crisis: Green revolution - Analysts call for the fiscal reform demanded by the EU to be based on the environment (Expansion p17) – Most analysts believe that the best way to reform Spain’s tax system, in order to boost collection in line with the agreement on which receipt of a further €7.2bn? in? European funds depends, is via environmental taxation, in line with the principle that he who pollutes pays. If the Government were to heed these recommendations it would be a plus, as its instinct is to raise direct taxes on high incomes/corporates, with negative impacts on productivity and investment.

Employment: Working holiday - July saw a 9,783 decline in number of Social Security affiliations while the number of registered unemployed workers fell by 10,840 (Cinco Dias Sat p22) - On a seasonally adjusted basis registered unemployment fell 12,378 vs. the -4,415 of June, the +4,485 of May and the -27,748 of April. However, focus is more likely to fall on Social Security affiliations (job creation) where the seasonally adjusted number grew only 1,335 vs. the +31,311of June, +62,505 of May and +40,677 of April, with the non-adjusted growth also comparing unfavourably with prior post-Covid years (2024 -9,783 vs. 2023 +21,945 and 2022 -7,366. The above would seem to point to a slowing jobs market.

Hotels: Show me the money - Spain received 9.3m foreign tourists in June +12.1% with expenditure of €12.373bn +16.6% (National Statistics Institute)/The vice president of the Exceltur tourism association says that Spain should not base the success of its tourism on beating tourist number records (Expansion p16) – The rise in number of tourists in June is in line with that of May (+11.5%), which is somewhat below that of prior months, and with below average contributions from the larger issuers (Germany -1.8%, UK +8.8%). On the other hand, the rate of growth in spending (+16.6%) was below that of May (+19.7%) and prior months, with the larger markets again below average (Germany +2.8%, UK +14.3%). The news for hotels is mixed as non-packaged tour spending rose 17.7%, with that on lodging up 21.9%, but with spending by tourists using hotel lodging rising only 12.7%.

Iberdrola: More British - Buys 88% of the British utility ENWL for €5bn in its biggest acquisition in 20 years (Expansion Sat p3) – The acquisition of ENWL (88% for €2.53bn, €5bn EV) will make the UK Iberdrola’s main distribution network market and provide a reinvestment opportunity for the cash raised via asset sales in Mexico, being fully in line with its strategy to grow in regulated businesses in countries with stable legal frameworks. The acquisition provides synergy potential via a future merger with Scottish Power.