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: Fed up? - (Asia-Pacific markets declined with European futures pointing down and those for the US steady) – Asia-Pacific markets declined with investors focused on the potential Fed message at the Jackson Hole meeting. Futures for Europe are down and those for the US steady.

Response to the crisis: Economic success, Spaniards have more jobs than ever before - (A record c.6000,000 workers have more than one job in Spain (Expansion p19) – The Government has been criticised for “spreading the work” among a larger number of workers rather than creating full time jobs due to the rise in jobs with fewer hours worked. However, this spreading of the work has a limit as it does not provide jobs with sufficient income, especially in view of recent loss of purchasing power. So now we have a combination of short hours/low paying jobs and workers holding down several jobs. This is economic success; Spaniards have never had so many jobs before.

Government financing: Still dependent - (Spain is the large European economy with the highest growth in local ownership of sovereign bonds (Cinco Dias p17) – The rise in domestic holdings of Spanish government bonds seems related to the rise in interest rates, with even retail investors increasing heir holdings due to low bank deposit remunerations. However, at 62% of total domestic ownership is relatively low (compared say to Italy’s 72.4%) which makes Spain still very dependent on non-domestic financing.

BBVA: Surprise! - (Turkey raises rates to 25% and Garanti BBVA sees its share price rise 10% (Expansion p10) – A return to orthodoxy in Turkey should be positive for BBVA both from the point of view of the reported earnings of its Garanti subsidiary and the behaviour of the currency. This time we had a positive surprise, but it would be best if the situation evolved into one with a lack of surprises.

Macro: All good things come to an end - (Fossil fuel prices rise sharply and boost inflation (Expansion p17) – The rise in gasoline/diesel/other fossil fuel prices is due mostly to the rise in the price of crude oil. If maintained this should have a negative impact on inflation, bearing in mind that the trend at the end of last year was the opposite. Oil fueled inflation should also be boosted by pressure on food prices. Perhaps the 1.9% June inflation was a low point.

*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.?