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: Here we go again - (Asia-Pacific markets rose with futures for Europe and the US flat) – Asia-Pacific markets rose on increased China optimism while futures for Europe and the US were flat.

Response to the crisis: Someone else’s problem - (The Eurogroup agrees the start of a “decided, gradual and realistic” fiscal adjustment (Expansion p23) – I would emphasize “gradual and realistic” over decided (unless you mean decidedly “gradual and realistic”). I completely agree that austerity in a crisis may not be a good idea. But, in theory, (and as far as the Government’s election campaign is concerned) we are no longer in a crisis. It is complicated. But the main conclusion is that “austerity” should be someone else’s problem (especially of the elections).

Banks: We hold these beliefs to be self-evident - (Historically low competition allows avoiding remuneration of deposits (El Economista p5) – This seems to be self-evident conclusion. And it does not only apply to Spain. The ever-increasing concentration of the banking sector makes it relatively easy to not offer competitive remuneration of deposits. Plus, this helps the ECB (the point of tightening monetary policy is to destroy demand, higher rates for loans but not equivalent rates for deposits). The only thing that does not help is the idea that market concentration is not furthering the interests the consumer.

Hotels: As always, it is not the top line but the bottom line that counts - (Tourism companies improve revenues by 11% but margins suffer due to inflation (Expansion p22) – The key to most of the economy is whether inflation is your friend. It does wonders for the top-line, but maybe not for margins. In tourism, the problem is that a significant part of the rise of travel spending is due to the higher cost of international travel and energy/labour costs. And it is not clear to what an extent the international consumer will be able to bear the cost.

Construction/motorways: You pay your money, and you make your choice - (The Government’s director general for traffic confirms that there will be tolls charged in government owned motorways in 2024 (Expansion p25) – This is quite fun, as the PM in the “only” face to face debate with the leader of the opposition denied that such an introduction of tolls would take place. And then have his traffic Czar clearly state that tolls would be introduced, although only due to pressure from “Brussels”. To be specific it was not “pressure” from “Brussels” it was one of the choices made by Spain’s government when deciding what to offer in return for Next Generation funds. The construction/motorways companies are not likely to object. ?

*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.?

*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.?