Daily Insight
Group Economics Macro & Financial Markets Research
15 April 2016
Spain’s last chance for a left-wing government Aline Schuiling
Senior Economist Tel: +31 20 343 5606 aline.schuiling@nl.abnamro.com Maritza Cabezas Senior Economist
Spain’s Podemos party is holding a referendum about joining a left-wing coalition …
… a ‘no’ will likely result in new elections by the end of June
Modest inflation pressure in the US…
…Fed to remain cautious, until inflation picks up with a steady pace
Tel: +31 20 343 5618 maritza.cabezas @nl.abnamro.com
Spain’s Podemos holds referendum on whether to join a left-wing government In a last attempt to form a new left-wing government after the 21 December 2015 general election, Spain’s left-wing anti-austerity Podemos party will hold a referendum on 14-16 April. The results are expected to be published on Monday 18 April. The members of Podemos will vote on whether the party should join a coalition of the centre-left PSOE and the centrist Ciudadanos, which would have a total of 199 of the 350 seats in Parliament. Meanwhile, the leaders of PSOE, Ciudadanos and Podemos failed to reach agreement last week and Podemos leader Pablo Iglesias is against a coalition that would include the centrist Ciudadanos. Therefore, the chance of a ‘no’ vote by the Podemos party seems very high. That said, even in the unlikely event of a ‘yes’ the coalition would probably be very unstable, as there is a broad range of ideological differences between the three parties involved and the policy plans seem irreconcilable. New elections very likely In the likely event of a ‘no’ result in the Podemos referendum, a new general election seems very likely. Following the fragmented results of the December elections, several attempts to form either a centre-right or centre-left government have failed. In theory, all parties still have until 2 May to form a government, but all options seem to have been explored without success. Implying that any last-minute deal would probably result in a very unstable government. In case new elections will be held, 26 June is a likely date. Meanwhile, polls show that the results of new elections might not differ dramatically from the December results, meaning that the political landscape would remain fragmented.
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Daily Insight – Spain’s last chance for a left-wing government– 14 April 2016
Modest inflation pressure in the US % yoy
6 5 4 3 2 1 0 -1 -2 05
06
07
08
09
CPI - all items
10
11
12
CPI - core
13
14
15
16
PCE - core
Source: Thomson Reuters Datastream
Modest inflation pressure in the US… US consumer prices rose by a modest 0.1% mom in March, after a decline of 0.2% the previous month. This was mainly the result of rising oil prices. Meanwhile core inflation rose by 0.1% a slowdown from 0.3% in February. Prices of medical care increased at a slower pace than the previous month. As for, shelter costs, which have been supporting the rise in core inflation these edged down, but remain firm. On a year on year basis, US consumer prices edged down to 0.9% in March from 1% the previous month. Core inflation ex food and energy slowed to 2.2% from 2.3% in the previous month. …Fed to remain cautious until inflation picks up with a steady pace
The view on inflation of Fed officials is still divided. In the most recent FOMC minutes, some Fed members mentioned that they are seeing a firmer trend in inflation building up, while others including the Chair of the Fed, think that the increase is unlikely to be sustained, since it is related to increases in prices that were volatile in the past, including medical costs, while inflation pressures from abroad are also subdued. On top of this, wage pressures are limited. All this means that the Fed is not under pressure to raise interest rates.
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Daily Insight – Spain’s last chance for a left-wing government– 14 April 2016
Day
Date
Time
Country
Monday Monday Monday Monday Monday
11/04/2016 11/04/2016 11/04/2016 11/04/2016 11/04/2016
01:50:00 03:30:00 03:30:00 15:25:00 19:00:00
JP CN CN US US
Machinery orders private sector - % mom CPI - % yoy PPI - % yoy Fed's Dudley (voter) speaks in NY Fed's Kaplan (non-voter) in Louisana
Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday
12/04/2016 12/04/2016 12/04/2016 12/04/2016 12/04/2016 12/04/2016 12/04/2016
10:30:00 12:00:00 14:00:00 15:00:00 21:00:00 22:00:00
DE GB US IN US US US
CPI - % yoy CPI - % yoy NFIB small business optimisme - index CPI - % yoy Fed's Harker (non-voter) speaks on Economic Outlook Fed's Williams (non-voter) speaks Fed's Lacker (non-voter) speaks
Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday
13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016
15/04/2016 15/04/2016 15/04/2016
CN CN CN CN CN EC EC US US US CA US US
New loans - CNY bn Aggregate financing - CNY bn M2 money growth - % yoy Exports - % yoy Imports - % yoy ECB's Knot in Dutch Parliament to discuss ECB Monetary Policy Industrial production - % mom Retail sales - % mom Prod. prices index excl food and energy - % mom Prod. prices index - % mom Policy rate - % Business inventories - % mom Fed's Beige Book
Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday
14/04/2016 14/04/2016 14/04/2016 14/04/2016 14/04/2016 14/04/2016 14/04/2016 14/04/2016 14/04/2016
11:00:00 13:00:00
EC GB GB US US US US US US
Friday Friday Friday Friday Friday Friday Friday Friday Friday Friday
15/04/2016 15/04/2016 15/04/2016 15/04/2016 15/04/2016 15/04/2016 15/04/2016 15/04/2016 15/04/2016 15/04/2016
CN CN CN CN JP EC US US US US
10:00:00 11:00:00 14:30:00 14:30:00 14:30:00 16:00:00 16:00:00 20:00:00
14:30:00 14:30:00 14:30:00 14:30:00 16:00:00 16:00:00 04:00:00 04:00:00 04:00:00 04:00:00 11:00:00 14:30:00 15:15:00 16:00:00 18:30:00
Key Economic Indicators and Events
Period
Latest outcome
Consensus
Feb Mar Mar
-9.2 2.3 -4.3
-11.9 2.4 -4.6
Mar F Mar Mar Mar
0.3 0.5 92.6 4.8
0.3 0.4
Mar Mar Mar Mar Mar
726.6 780.2 13.3 11.5 -7.6
1100.0 1400.0 13.5 10.0 -10.1
Feb Mar Mar Mar Apr 13 Feb
-0.8 0.2 -0.1 -0.1 0.5 -0.1
-0.6 0.2 0.1 0.3 0.5 0.0
Core inflation - % yoy Policy rate - % BoE size of asset purchase programme - GBP bn Inflation excl food and energy - % mom Inflation excl food and energy - % yoy Inflation (CPI) - % mom Inflation (CPI) - % yoy Fed's Lockhart (non-voter) speaks Fed's Powell (voter) appears before Senate Banking Committee
Mar F Apr 14 Apr Mar Mar Mar Mar
1.0 0.5 375.0 0.1 2.2 0.1 0.9
1.0 0.5 375.0 0.2 2.3 0.3 1.1
0.2 2.3 0.3 1.1
Retail sales - % yoy Industrial production - % yoy Fixed investments - % yoy GDP - % yoy Industrial production - % mom Trade balance external EU - EUR bn Empire State PMI - Manuf. general business conditions - index Industrial production - % mom Univ. of Michigan cons. confidence - index Fed's Evans (non-voter) speaks on Economy and Policy
Mar Mar Mar 1Q Feb F Feb Apr Mar Apr P Apr P
10.2 5.4 10.2 6.8 -6.2 21221.2 0.6 -0.5 91.0 91.0
10.4 6.0 10.4 6.7
6.7
1.3 -0.1 92.2 92.2
-0.2 93.0 93.0
ABN AMRO
5.0
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
Find out more about Group Economics at: https://insights.abnamro.nl/en/
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