Take 5 and come back tomorrow

First of all, let’s be clear. The following is not investment research/advice.?And, as such, it involves no investment recommendations. These are my thoughts on Spanish equity issues, which I find relevant. I share them freely (and not just as regards price). As always, I am only trying to help. Please read the rest of the “discomplainer (*)” at the end of the article.

Market environment: The name is Bond, Long Bond - (Asia-Pacific markets declined with futures for Europe and US mildly down) – Asia-Pacific markets declined following the US where worries over interest rates led to higher bond yields and a tech sell-off. Futures for Europe and the US are mildly down.

Response to the Covid-19 crisis: If you do not like my pinciples, I’ve got others - (December closes with 240,000 sick leaves due to Covid, triple the November level) – The impact of Omicron is being felt via loss of workers due to sick leave/quarantines rather than pressure on the health system. Although the sick leave/quarantine period is lower than in previous waves, this is making it difficult for businesses to organise their activity. So far governments are reacting in a pro-business way, by lowering the required quarantine periods, but doing so without a clear scientific explanation does not help with government/science credibility.

Hotels: Making forecasts is difficult, especially about the future - (Spain received in November over 3.3m foreign tourists +633% YoY, with expenditure of €3.746bn +677.6%) – The November foreign tourist numbers are positive, although it should be pointed out that they refer largely to the “pre-Omicron” period, with the Ministry of Tourism warning of a weakening of later numbers. This said, spending by tourists using hotel accommodation rose 709.5% and that by those not using packaged tours +674.1%. The worst part is the uncertainty.

Iberdrola: How to win friends and influence people - (Maintains the fight for PNM and gives itself until 2023 to achieve its acquisition) – Iberdrola appealing the decision by the New Mexico regulator to block the merger of its US Avangrid unit with PNM makes sense from the point of view of future deals. Having the transaction blocked at least partly con concerns regarding Iberdrola’s corporate reputation/governance should not be helpful when trying to have futures deals cleared by in other states. This said, even if the appeal works, it is not usually a good idea to be confrontational with the regulator.

Macro: Still running out of steam - (Registered unemployment falls 76,782 workers in December, while Social Security adds 70,814 affiliates in the same month) – The December registered employment figures sound very good in absolute terms. However, the fall in unemployment slows to -40,832 in seasonally adjusted terms, significantly below the -98,061 of November and the -80,065 of October. The same is true for Social Security affiliations (+72,553 on a non-adjusted basis), as the December increase (+70,814) was the weakest since May (+45,434), and significantly lower than the +109,451 of November and the +102,474 of October. It is also worth noting that the increase is almost entirely due to Agriculture (+30,805), Health (+29,182), Public Administration (+7,792) and education (+2,984). Employment is rising but seems supported by public sector hiring and running out of steam.

*The above information has been read/understood/summarised/evaluated/copied as well as I could to provide a guide to Spanish equities, given available timing/intellectual constraints, and I accept no liability for misreading and/or mistranslating the original copy as set out in my previous article (which I urge you to check, as I am only trying to point you in the right direction, I hope). As for what you may decide to do, after reading the above, please contact your legally approved provider of investment advice on Spanish equities.?