He walked into my office and threw the manuscript on my desk with a thud.
“It’s called Thankful For Zombies. A zombie story where…”
“Nope,” I said.
His face deflated like a balloon. “But I didn’t even…”
“Zombies are overdone,” I said.
“But this is a zombie story with a twist!”
“Zombie stories with twists are super overdone.”
- Scott Alexander, Dec 7
And he has a point. BUT he didn’t mention the French corporate sector. A large mistake exposed by BofAML’s Gilles Moec, who revels in the narrative freedom that mistake implies. Read more
Take a good long look at this map:
You judge. Here’s Andy Street, managing director of John Lewis, picking up his World Retail Congress trophy in Paris this week.
A brief follow-up to this morning’s post in response to a question we received on Twitter…
Below is a chart showing the full history of French household indebtedness data. It only goes back to 1996 but provides some additional context about the changes that occurred after the introduction of the euro: Read more
With a hat-tip to our friends at CreditSights, check out the starkly different paths of household indebtedness in France and Germany since the introduction of the euro:
(Sources: Bundesbank 1 and 2, Banque de France) Read more
Germany shrank, and France stagnated in the second quarter. Italy we’ve all agreed not to talk about until Matteo Renzi waves his magic liberalisation wand, right? Here’s the FT:
The data from the currency bloc’s two largest economies came as the embattled French government said the disappointing growth meant it would miss its budget deficit this year and halved its gross domestic product forecast for 2014.
Germany’s economy, which provides more than a quarter of the euro area’s output, shrank 0.2 per cent between April and June, according to official figures. The French economy recorded zero growth during the period.
According to the latest bi-annual European repo survey by ICMA, released on Wednesday, the market for repo in Europe shrunk to €5.5tn in December 2013 from €6tn in June 2013 — a sharp decline by any means.
As the ICMA press release notes: Read more
Worth reading — the letter from TCI telling Tom Enders to flog the EADS stake in Dassault Aviation. This would likely have to be sold over the objections of the French government:
Quelle blague with the pari passu saga, sometimes.
You go to all this effort to scare off the IMF from so much as bleating some tame reservations to the Supreme Court about how a ratable payment of holdouts by Argentina might hurt global ‘policy’ on sovereign debt restructuring. Despite ‘policy’ being something many expected the fund to look at.
Then you watch the French swoop in anyway. And they’re much fiercer than the IMF was going to be. Read more
Bond yields in the eurozone are hitting new lows not seen since 2010…
Depressing eurozone and German prints below. The eurozone composite was bleakly steady at 46.5 while the German comp hit 48.8 from 50.6 in March — its worst level in six months. The only real good news is that this might increase the chances of an ECB refi cut in the near future.
But since France came out first…. Read more
From Credit Suisse on Thursday morning:
BREAKING NEWS: Stronger-than-expected euro area flash PMIs in January – except for France
Not many people seem bothered by France’s overnight downgrade by Moody’s. The euro shrugged and French bond yields crept upwards at a snail’s pace.
But one place the downgrade might have a real and lasting impact is within the Swiss National Bank. They have a predilection for core eurozone bonds and the downgrade might just prompt them to ditch what holdings they have and/or stop loading up on French debt.
As expected, the eurozone economy shrunk in the third quarter. But, fortunately, not by quite as much as expected.
Thursday’s data did, however, confirm that the debt crisis in southern Europe is hitting the ‘core’ economies in northern Europe, and analysts seem in agreement that it’s going to get significantly worse. Read more
Compétitivité is a big deal in France right now.
The country’s loss of competitiveness is a serious issue, especially as its crisis-struck neighbours push on with wage cuts and labour reform.
On Monday, Louis Gallois, former head of EADS, is going to publish his report on the issue, and he’s expected to call for a “competitiveness shock”. He’s already said that he wants to see somewhere between €30bn-€50bn of taxes from the payrolls transferred to broader-based taxes, such as VAT, much to the delight of business leaders. Read more
Another day, and another confirmation that the eurozone economy is struggling to gain traction. And it’s not just the small peripheral economies that are seeing factory activity slowing.
Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) fell to 45.4 in October from September’s 46.1. The October figure was just up from an earlier reported flash reading of 45.3. The index has been below the 50 mark that divides growth from contraction since August 2011.
George W. Bush famously (and reportedly) opined that:
“The problem with the French is that they don’t have a word for entrepreneur” Read more
That’s the FTSE 100 down 1.2 per cent:
Let’s start on a positive note on the volley of Markit PMI released Monday.
Spain’s PMI rose during August to 44, versus 42.3 in July… Read more
Germany and France both beat expectations for GDP growth in the second quarter, while the eurozone and wider group of 27 European countries saw an anticipated quarter-on-quarter contraction of 0.2 per cent.
The figures, released on Tuesday morning, revealed some resilience in the German economy, with 0.3 per cent growth. Economists had expected the quarter-on-quarter figure to come in at 0.1 per cent. Read more
Is France facing a future Greece-style debt crisis? Er, maybe — so long as you ignore the difference in their government bond yields and just use debt-to-GDP projections made in a working paper from 2010. But we’ll get to that later. For now, it’s over to John Mauldin of Mauldin Economics in his weekly newsletter who’s going to tell us why France is a ticking time bomb
run for your lives:
Don’t look now, but the lion that lies hidden in the grass is France. Yes, the France that is supposedly a big part of the solution to eurozone woes and Germany’s stalwart partner in guaranteeing all that debt. AAA France. Rated that way by the same people who turned the nuclear waste of subprime CDO squareds, composed 100% of the worst sort of BBB junk, into gold. Read more
The latest sovereign to borrow at negative yields — France.
We take our headline from Sharon Bowles MEP.
The Member of the European Parliament was talking to Public Service Europe about this ominous move in transparent sovereign accounting: Read more
We were having problems confirming this at pixel time (all enquiries were directed to a fax machine) , but it seems a shame not to share it given the ‘usually knowledgeable’ status of the source… Read more
It’s a Bank Holiday Monday in the UK so analysis is pretty thin on the ground. But here’s the best of what we have so far. A quick recap: François Hollande won the French election, while the Greeks rejected the country’s main austerity focused parties, opening the country to political uncertainty.
From Kit Juckes at Societe Generale: Read more
Both Spain and France managed to get decent debt sales away this morning and although yields did jump in Spain there was at least some solid demand to provide solace. Not bad considering it was Spain’s first auction since the country’s rating got cut by S&P last week. The steady demand will also provide reassurance as the ECB’s LTRO effects start to wane.
French borrowing costs actually fell! Interest rates on the €1.6bn of nine-year paper sold fell from 3.29 per cent previously to 2.85 per cent while those on the €3.3bn of 10-year bonds dropped by 2 basis points to 2.96 per cent. Read more
On Friday morning when a report landed in FT Alphaville’s inbox with the headline “Lagging Corporate France… The French – at least their brands are popular”, our interest was piqued. It’s a one-pager from independent equity research firm AlphaValue. It contains interesting snippets about how French companies have a lot of goodwill booked on their balance sheets when compared to their European peers.
As Investopedia tells us: Read more
Just in case anyone thought we’d gone soft on Sarko…
From Andrew Garthwaite at Credit Suisse on Wednesday: Read more