Take5 and come back tomorrow (9/1/25) Markets Working week BBVA SAB Renewables Wages
None of what follows is investment advice.
Market environment: Rinse, repeat – (Asia-Pacific markets declined with European equities flat and US futures mildly down) – Asia-Pacific markets declined due to fears of deflation in China, although demand returned for US bonds. European markets were mostly unchanged with futures for the US moderately down.
Response to the crisis: Do no evil – (The “war” between the ministers of Labour and the Economy over the reduction of the working week intensifies (Expansion p23) – Signs of “government paralysis”, as Podemos claims is the case, is usually a negative, except that in Spain this is one the main ingredients in the country’s “success story”. The fight over the reduction in the working week (without any compensatory cut in pay) is a good example of this. It would be good if the opposition by the Minister for the Economy were entirely due to worries about the impact of such an adjustment on competitivity, but there is also the niggling doubt that it might be due to the desire to deny the Minister for Labour (the main representative of the junior partner in the coalition government) the corresponding trophy.
BBVA/Sabadell: Time is not your friend – (The BBVA Chairman lowers by 66% the negative goodwill estimated from the potential acquisition of Sabadell (El Economista p11) – Time (and relative stock performance) is not the friend of BBVA in the bid for Sabadell as the estimate of the negative goodwill that would be generated by the acquisition of the latter has declined from an initial estimate of €2.134bn to €730m. The negative goodwill is a key factor to pay for the merger costs, so its reduction, at a time when political opposition to the deal points to reduced potential synergies is not a positive, which could lead to a reduced likelihood of a successful deal and, ironically, may unwind the reasons behind the reduction in potential negative goodwill.
Renewables: All the virtue you can afford – (Spanish renewables already feel the impact of the Trump victory in their US businesses (Cinco Dias p5)/The heads of the Stock Exchange Commission (CNMV) give priority to the fight against Climate Change despite the decline in green investment (OK Diario) – One of the reasons Europe is falling behind the US is the excess regulatory zeal in the former. This is not negative for renewables, which to a large extent still rely on regulatory support. The main problem, however, is that if the regulatory divide becomes too large in a competitive world, the ability of European economies to afford green investment may be compromised. That is where we are at. But the authorities do not seem to understand.
Wages: Some are more equal than others – (The Bildu pro-independence Basque party pressures the PM to obtain a separate minimum wage for the Basque Country and Navarre (Expansion p26) – The rise in the minimum wage is good for those that have a stable job but not for the creation of new jobs for unskilled workers (mostly the young). This is why having a single minimum wage for all of Spain does not make much sense, as the volume of skilled jobs (which could cover the cost) and the cost of living is not the same in all regions. The Government’s need for support from regional parties might be what is needed to overcome the ideological commitment to equality.