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The Corner contextualizes the EU’s economy from Spain with exclusive analysis from market leaders.

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Is austerity losing the battle in Europe?

In Europe

BERLIN | By Alberto Lozano | The different measures implemented in Europe in order to boost growth through increased monetary action, investment and structural reforms have replaced austerity as the new dominant dogma. While Angela Merkel is adapting to the new situation, Bundesbank president Jens Weidmann disagrees with more budget flexibility and a possible QE by the ECB in 2015. (Cartoon: Horsch / La Repubblica).

In Europe

Russia represents 1.1% of Spanish exports

MADRID | The Corner | The Russian market represents a low proportion of the Eurozone’s goods exports: below 3% for the major economies. In the case of Spain, the percentage is just 1.1%. According to experts at Afi, a decrease in the amount of Russian tourists arriving in Spain could have an impact on the Spanish economy. After all, its current contribution to the sector is just (2.4%), but before last summer, Russian tourism was a spur to Spanish tourism. 

Russian 1000-rouble banknotes, 50 and 10 kopeck coins are seen at a private company's office in Krasnoyarsk
World economy

Fed’s baby steps towards tightening

MADRID | The Corner | Janet Yellen spoke about patience in judging when to raise rates on Wednesday, which means no hikes for at least two meetings. The change in guidance was played down by the FOMC statement. BNP Paribas analysts thinks the US central bank wants to prepare markets for hikes but at the same time reassure them. They call for the first hike in September. 

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World economy

A buying opportunity in EM equities?

ZURICH | UBS analysts | It is too early to buy Russian equities in our view. The failure of the Russian Central Bank to ‘back up’ yesterday’s aggressive rate hike with enough intervention to stabilize the Ruble means currency and market risk is likely not over. The Russian market needs the oil price and the Ruble to bottom out for a sustained rally to begin. MSCI Russia trades at just over 3x forward earnings (v. a long term average of 7.2x), but this is based on a consensus EPS forecast for 2015 of -1% – almost certainly far too high.

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In Europe

Greece: Where did it all go wrong?

ATHENS | By Nick Malkoutzis via MacroPolisWhen Greece returned to international bond markets in April this year after a four-year exile, it was trumpeted by Prime Minister Antonis Samaras as another step towards the crisis exit door. “Confidence in our country was confirmed by the most objective judge – the markets,” he said after investors snapped up three billion euros of five-year bonds with a coupon of 4.75 percent. Exactly seven months later, though, the yield on those bonds shot up to almost 10 percent. Suddenly, the markets do not seem so confident. So, what went wrong? 

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Markets

Less than 300 people to resolve major eurozone banks’ concerns

BRUSSELS | By Alexandre Mato | Just 15 people will supervise the restructuring and liquidation of financial institutions from the beginning of 2015. The Single Resolution Board (SRB) will be composed of around 50 staff for this important task when it undertakes the remit in the spring.

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World economy

The Fed will almost certainly fail the next QE

SAO PAULO | By Benjamin Cole via Marcus Nunes’s Historinhas | The results are in, and it appears the Fed’s use of QE—faltering, dithering, at times mindlessly circumscribed in advance—was moderately successful in helping the U.S. climb out of recession. Europe is still mired in econo-gloom, courtesy of the ECB’s monetary noose around its neck. Japan may only now be fighting its way out of perma-gloom by way of aggressive QE. The U.S., in contrast, has posted slow growth since the end of the 2008-09 “great recession”.

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