Uncertainty in European stock markets: The Ibex loses 8,000 points

Bearish session on Wednesday in the European stock markets, which fall around 0.5% on average because of fears about the political and economic uncertainty in the European Union (EU) generated by the Brexit vote. The Ibex falls more than 1%, which makes it lose 8,000 points.

The growing anxiety over the consequences of the UK decision to leave the EU has continued to affect markets. Asian stocks have fallen overnight with investors seeking refuge in safe haven values, which has led to bonds at historic lows.

Investors have begun to look at safer assets, such as US Treasury bonds. The stock market crash began on Tuesday, as investors have begun to look at safer assets , such as US Treasuries, the yen and the dollar after the Bank of England relaxed the regulations to encourage investors. Banks to lend more money.

Concern over the polarization of the vote and growth dragged the US stocks to close down on Tuesday, reaching the minimum historical 10-year Treasury bonds.

On the other hand, the UK’s Minister of the Interior, Theresa May, has taken the lead in the race to find a new leader for the Conservative Party and for the British Prime Minister. May took advantage in a first round of voting on Tuesday against Liam Fox, who was eliminated from the race with the least amount of votes and Stephen Crabb who withdrew from the dispute, leaving Andrea Leadsom and Michael Gove and Theresa May to wait of another round of voting this Thursday.

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Italian banks remain the target of investors. The shares of Banca Monte dei Paschi di Siena were suspended after the European Central Bank asked the bank to cut its bad debt by 40% over the next three years, according to Reuters. On the other hand, Italian regulators have temporarily banned short trading on the stock market.

At the macroeconomic level, the words of Mario Draghi, who speaks at 09:00, Madrid time, are particularly relevant. Data on non-farm ADP employment, service PMI, non-manufacturing PMI of the ISM and minutes of the Federal Reserve (Fed) meeting in the US are also presented.

Trade war – Europe must rely on free trade

Trade dispute Those who want wealth need free trade

The US imposed billions in punitive tariffs on Chinese goods on Friday. China imposed retaliatory duties of similar proportions shortly thereafter. Thus the trade war reaches a new dimension. Previously, the climate has already deteriorated between Europe and the US, the US punitive tariffs on steel and aluminum will be repaid by the EU with new tariffs. From the European side, US President Donald Trump is identified as vicious and guilty of such a war. Instead of reacting to punishments with retaliation, it would be better to look for a solution for the benefit of all. This solution is obvious: free trade is the best for EU and US citizens in the long term.

If “America First” aims to improve the lives of Americans and ensure that they can afford even more consumer goods, US President Trump should bet on free trade. Protectionism will not make the US top-notch again. In fact, the first negative effects of US punitive tariffs on the steel and aluminum processing industry in the US, whose costs have risen due to customs duties, are already apparent. In the end, these costs will be felt by US citizens because their consumption options are becoming less diverse and more expensive. The average, non-weighted EU tariffs are slightly higher than those of the US. Tariffs lead to lower trade flows, which makes a fair weighting scientifically difficult and already fills specialized books.

Trade conflict between Trump and China escalates

The US imposes the threatened punitive tariffs on Chinese goods valued at $ 34 billion. China reacts with counter-tariffs – and speaks of the “biggest trade war in economic history”. By Jan Schmidbauer more.

Both the US and the EU are pursuing a mutually costly protectionism. Tariffs, technical trade barriers and even subsidy measures for companies, for example to the US aircraft manufacturer Boeing and its European competitor Airbus, have been and are used by both sides. In this sense, the often described as narcissistic US President is only a mirror for the decision-makers in the EU, in which they prefer not to recognize.

Of course, tariffs and other trade barriers in the EU have not arisen because of malice against the US. Rather, they are the result of the particular interests of certain political actors in EU countries. Thus, current EU tariffs are by no means a welfare optimum for EU citizens. Rather, the current barriers to trade on the part of the EU are a political-economic balance of organized stakeholders in Brussels. They represent the degree of limited openness that the EU has granted to others through multilateral agreements. In other words, more openness was not possible in multilateral negotiations so far. A genuine policy of the “Europe First” would try to take less account of the existing particular interests for the benefit of the people and therefore rely on free trade with the USA and with other partners. Free trade means competition, lower prices, more variety and often better quality.

One could also muster understanding for Trump

Unfortunately, bilateral trade negotiations have also been less successful in the recent past. They have not led to a reduction of trade barriers between the EU and the US. Given the higher tariffs of the EU, one may take a new view and understand the action of the US President as a reaction, punishment and lesson for Brussels: the EU should dismantle its trade barriers with the US. If you look at Twitter, the preferred communication channel of the US president, then he gets upset about comparatively high barriers to trade, sometimes pleads for free trade, calls for the abolition of barriers and a stop subsidies. He seems to know and to reproduce the basic knowledge of a broad economic literature. The US ambassador to Germany, Richard Grenell, expressed similar opinion, saying that he had at least made a complete renunciation of car tolls in the automotive sector, even if Europe did not want to do so.

The new US tariffs are formally juristically justified with the argument that national security would be endangered. That’s ridiculous, of course. The truth is that the customs policy of the EU, which is not explicitly malicious but harmful to the US, should probably be punished. The term used “punitive tariffs” is a proof of this. In that sense, one might consider the US punitive action as a “Like me, I see you” strategy. Historically higher EU tariffs will be compensated – at a later date – with US tariffs. That is unattractive and unfair because the US has so far accepted the EU trade barriers. Above all, Trump blames his predecessors for not achieving good negotiating results. Now he wants to change that and introduces punitive tariffs to persuade the EU to make new deals. Some understanding of this late punitive action could be found, especially because of the past failure of bilateral negotiations for further mutual trade opening.

Consequences of the departure of the European Union. The Brexit

The Brexit

It rains in England … and today more than ever. As a result of the departure of the European Union from the United Kingdom we want to tell you all that this entails, as has been the process, why this situation has been reached and consequences of the departure of the European Union from the United Kingdom.

What fostered the Brexit?

Many of the inhabitants of the United Kingdom have the belief that, since they are part of the European Union, the United Kingdom has not been the same, longing to make their own decisions regarding their country and not depend on a Union of countries . On the other hand, those in favor of permanence, most of them young, supported continuity in Europe by having opinions such as “together we are better” and “this is how progress is supported”. In summary, a country totally divided.


To keep in mind with the law in hand

“The Treaty of Lisbon configures the right of withdrawal as a” unilateral right “of all the Member States of the Union. This is so, firstly, because the state interested in withdrawing from the Union does not request, but rather notifies the European Council of its willingness to cease to belong to the Union as a Member State. Second, because the withdrawal is not subject to any type of condition. And, third, because the withdrawal is not conditioned to the fulfillment of any requirement. “


The result of the referendum

After the vote of the British, with a very tight result, the Brexit has won, after an optimistic attitude on the part of all Europe just before preserving again and again a victory of the permanence, although it always adjusts. The exit of the European Union, voted by only 51.9% of the voters, with a difference of more than one million votes, makes the highest participation of the last 2 years. In short, a divided country, a very tight result and that hints at a period of great uncertainty for the United Kingdom and the entire European Union.


Has the entire UK voted against continuing in the European Union?

No, Scotland and Northern Ireland have voted in favor of permanency with 62% and 55.8% respectively. Like the city of London that has also voted in favor of permanence. The leader of the Scottish nationalist party announced, if the result was the exit of the Union, that it would organize an internal referendum again. We’ll see what happens.

As a result of the result of the referendum, David Cameron has announced his resignation this morning as Prime Minister of the United Kingdom that will be effective from October after the congress of his party.


And now that?

Now they touch on the long negotiations with the European Union to mark the conditions for the exit of the Union. Therefore, it will not be an immediate exit, there is even talk of a period of 2 years until the exit of the European Union is effective.

Right now the markets are reeling from the situation of uncertainty and both the Pound, the Euro, and the IBEX fall.

From the moment that the United Kingdom leaves the European Union, it would no longer have a free movement of goods, therefore, both British companies that sell abroad and other companies from other countries that sell in the United Kingdom would be harmed. As of that moment they will be affected by a tariff.


Concerns of the Spanish

Other questions that we raise more Spaniards is what will happen to all Spaniards who are working in England, which is estimated to be about 200,000 people. It is expected that in the medium term they will have to apply for a work permit.

Another concern that touches the Spanish closer is what will be the situation in Gibraltar, where it has gained permanence by almost 96%, and where is the concern of the Spanish working in Gibraltar, as vice versa.

All these questions will be clarified with time. There will be things that will change, we will see and we can only say time to time.