Europe Reacts To Obama-rouhani Phone Call With Optimism
Europe’s plan to address weak banks risks unraveling
“(It’s) crunch time for Berlusconi,” he said. “He knows over the next three or four weeks that it is basically the last phase of his political battle.” U.S. stocks were sharply lower Friday, with major averages poised to finish lower for the week, following the latest consumer sentiment report and as mounting concerns of a potential government shutdown weighed on markets. Congress must reach an agreement on the budget before October 1, next Tuesday, to prevent a government shutdown that could result in federal employees taking unpaid temporary leave and a delay in the payment of military personnel. Reuters reported on Wednesday that Senior Republican Jeff Sessions said there will be no shutdown or government default. House speaker John Boehner said a Republican proposal is coming that will tie federal government spending cuts to a U.S. debt limit increase. (Read More: Brawl in US Congressshould the world care? ) On the data front, the European Commission released figures on Friday showing that euro zone confidence picked up in September. An economic sentiment index, that gauges both businesses and consumers, rose to 96.9 in September from 95.3 in August, reaching its best level for two years. Nationwide released its house price index for the U.K. which showed a 5 percent (year-on-year) rise amid growing concerns that stimulus in the country is fueling a bubble in prices. House builder Persimmon led Britain’s FTSE lower on the prospect of less stimulus from the Bank of England and signs that politicians are fearful of a property bubble. Persimmon shed 4.3 percent by the day’s close. The FTSE 100 closed the day down 0.9 percent, ending the whole week lower by 1.31 percent.
Iran has repeatedly said its nuclear program is intended only for energy. The call followed a meeting between Secretary of State John Kerry and his Iranian counterpart Mohammad Javad Zarif on Thursday at the United Nations. On Monday, President Obama will meet with Israeli Prime Minister Benjamin Netanyahu. Israel is deeply concerned over the call and questions Iran’s motives. “The smile offensive conducted by Iran’s President Hassan Rouhani at the U.N. has not been greeted with smiles in Israel,” said Michael Herzog, a retired brigadier general in the Israel Defense Forces in an opinion piece in the British newspaper, The Guardian. “Iran’s history of deceit on this issue calls for rephrasing President Reagan’s famous reference to the Soviet Union: ‘Do not trust, but verify.’ Give Rouhani a chance, but test him by his deeds. Israel neither trusts Rouhani nor fully relies on President Obama’s resolve,” Herzog writes. France, also skeptical, called on Rouhani to shorten the time period to implement a nuclear agreement over concerns that the longer negotiations go on, the more progress Iran could make in its atomic capabilities. Zarif said last week that the implantation could take a year, while Rouhani contradicted him by saying it would take three to six months. European and Arab leaders are concerned that Rouhani is only playing for concessions regarding sanctions that have taken a steep toll on the Iranian economy.
Moreover, Italy is expected to remain the fastest growing market in Western Europe. Cross-border B2C E-Commerce is popular in Spain; consumers there shop online from overseas websites and Spanish online shops sell abroad. In Central Europe Germany shows double-digit growth in B2C E-Commerce. In Germany, B2C E-Commerce sales reached several tens of billions of euros in 2012 and showed double digit growth over 2011. As a share of total retail sales, B2C E-Commerce accounted for several percentage points less than 10% in 2012, and the share is expected to increase by one percentage point in 2013. The most used payment methods for online shopping in Germany are invoice and PayPal, a contrast with many other European E-Commerce markets where bank cards are the most popular payment method. US based mass-merchant Amazon is the largest E-Commerce player, while the Germany based Otto Group continues expansion into domestic as well as international B2C E-Commerce. German online retailers benefit from popularity with shoppers in neighboring Austria. Eastern Europe sees higher rate of growth in online sales. B2C E-Commerce in Russia grew by over a quarter in 2012, reaching a double digit figure in billions of euros. Further expansion in the online retail market is expected. Some product categories, such as household goods, cosmetics and auto parts have shown recent growth of over 50%.
Research and Markets: Europe B2C E-Commerce Report 2013
“If you don’t have this, then we might have to lie to ourselves again and say there is no problem because we couldn’t afford to fund the problem.” CONFIDENCE OR COMPROMISE The ECB wants to check the health of big banks, under a so-called Asset Quality Review (AQR), before taking over their supervision. This will also help shape wider testing of banks outside the euro zone, overseen by the European Banking Authority (EBA). In Frankfurt, home of the ECB, there is growing resignation that a pan-euro-zone backstop is unlikely and that countries may be left to prop up their banks alone, as they were when the financial crisis struck. “We’ll have to have national backstops in place,” ECB President Mario Draghi told the European Parliament earlier this week. “If it (single resolution scheme) is not there in place, it will be up to the national authorities … which is suboptimal, of course.” Such a compromise exasperates bankers, who want confidence restored to the sector so their cost of funding drops. “The ECB, EBA and EU are all saying that the AQR and stress tests will be stringent,” said a credit banker at a large London-based investment bank. “It’s easy for those to say that; they don’t have to come up with the money. “It’s the government I want to hear it from. I want to hear from the government what happens if banks fail.” With confidence in European banks still low, the sector is valued at a significant discount to U.S. peers, trading at around par with the book value of its tangible assets compared with around 1.7 times for the United States, according to an analysis by KBW. Europe’s top 42 banks are already about 70 billion euros short of meeting new international capital norms, even before taking into account that they have often set aside too little to cover unpaid loans or an economic slump. “We see a problem primarily in Spain and Italy, because that’s where you have a housing market that’s still in freefall,” said Jon Peace, an analyst with Nomura.