Goldman Sachs seem to have found a new wonder-boy, and perhaps a heir to chief economist Jan Hatzius, in its new Europe analyst Erik Nielsen. At least he got style, a sense of humor and is just as crazy about soccer as most Europeans. He also show some profound insight on the diversified European economy. Here’s Mr. Nielsen’s thoughts on Europe on a fine Saturday evening in Chiswick.
“With no particular reference to Denmark’s fine victory this evening, I am just wondering what European football would look like had it not been for the smaller countries.”
Erik F. Nielsen
“With no particular reference to Denmark’s fine victory this evening, I am just wondering what European football would look like had it not been for the smaller countries – be it Denmark, the Netherlands, Switzerland, or Serbia … Its certainly difficult to see much hope in England, France, Spain or Italy – or in Germany after that last performance.”
Away from football, these are my thoughts on Europe on this fine evening in Chiswick:
• We are through another week of good real-economy data releases and (grudgingly) improving markets.
• The EFSF has been formally established. Along with the Commission’s and IMF money, I think it’s a serious defence mechanism which ought to help further stabilise markets.
• Stress tests for the banking system will be published next month. Good, because that’s what the market demands, but I worry we might be heading into a disappointment because markets might expect testing against extreme tail-end risks considered as absurd by policymakers.
• The ECB has now bought €47bn worth of sovereign debt – still peanuts in any reasonable comparison, but I think they may be looking to wind down the purchases once the EFSF is up and running in July.
• The IMF spoke this past week on Greece (okay with program); Spain (happy with policy reforms); and France (marginally critical on fiscal – too polite).
• G20 meeting this coming week; I wonder if the heat will turn on Germany now that China has announced a re-introduction of some FX flexibility.
• We are heading into PMI-week in the Euro-zone; we are looking for slight improvements.
• The UK will see the government’s emergency budget on Tuesday; big budget cuts on their way.
• The Swiss National Bank will publish its May balance sheet this week confirming their huge FX-interventions.
• In Sweden we’ll get the key KI/NIER economic tendency survey on Wednesday. It’s already at its highest level since August 2007, but we remain shamelessly optimistic.
• Poland holds presidential elections tomorrow with a likely second round on July 4. Outcome very important for policies.
• The central banks in Norway, Hungary and the Czech Republic will all meet this week to consider their interest rates; we expect all three to leave rates unchanged.
• The IMF arrives back in Ukraine on Monday for a week’s talk on how to restart the program. We do not expect agreement this week.
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