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: Up and away - (Asia-Pacific markets rose as do European ones with US futures up) – Asia-Pacific markets rose on bet on Fed cutting rates next year. European markets and US futures are up.

Response to the crisis: I don’t think so - (The Independent financial authority (Airef) expects an €8.5bn annual adjustment in government spending in order to comply with the fiscal rules (Expansion p28) – The first point here is that it is not clear what the EU fiscal rules will really be, as Spain is not the only country in trouble. nbsp;But the parliamentary support for the Government is likely to lead to the need for higher spending. This is not an environment where spending is likely to be cut.

Banks: Muddle through - (The Government pressures the bank to increase aid to mortgage holders in trouble (Cinco Dias p3) – I have said this before, but banks have no interest in customers not paying. They would rather find an accommodation that allow them to pay what they can, and muddle through. Going beyond that is not a good idea.

Pensions: Higher taxes - (According to the OECD pension reform will increase the budget deficit (Expansion p28) – The pension system has a deficit as payroll tax does not cover payments. So,, by definition this leads to the deficit being covered by the national budget. Cutting pensions is not an option, so this means higher taxes.

Macro: Large drop - (Large company sales fell 0.7% in October after two months of stagnation (Cinco Dias p22) – The fall in large company sales is not in any way positive. The only thing to point out is that it was exports that suffered, with domestic sales holing up relatively well. But it remains to be seen how long that can continue.

*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.