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Biden, 81, pulls out of presidential race, will serve out term

La oferta de vivienda cae más del 15% en Madrid y Barcelona: nuevo impulso a los precios

En un año, se ha reducido en un 6% el número de viviendas en venta en España. La pérdida, que es más grave en las grandes capitales, tensiona los precios hacia máximos históricos.

El mercado de la vivienda experimentó una desaceleración en 2023 que se prolongará, al menos, hasta mediados de este año, a las puertas de lo que algunos expertos prevén que será un momento de nuevo boom. La responsable principal fue la demanda, reacia a comprar vivienda debido a la subida de tipos de interés, que encareció bastante las hipotecas, y a las subidas de precios. Pese a esta ligera moderación del mercado, hay una realidad inmobiliaria muy compleja, con una oferta estrangulada, incapaz de seguirle el ritmo a la demanda.

Solo así se entiende la constante sangría de oferta de vivienda en venta, lo que se conoce como stock: en el segundo trimestre de este año, esta oferta fue un 6% inferior al mismo periodo de 2023, según datos del portal inmobiliario Idealista. Además, esta es solo una de tantas caídas de la oferta que se han ido produciendo en los últimos años. En el primer trimestre del año pasado, la caída interanual fue del 12%, y los números negativos se han venido sucediendo desde entonces.



Además, el problema tiene una dimensión aún mayor en las grandes capitales, las zonas más demandadas al ser los principales puntos de creación de empleo. En Valencia cayó un 21%, en Barcelona un 17%, igual que en Zaragoza, y en Madrid un 15%. Además, el descenso de oferta en la Comunidad de Madrid al completo también es intenso. Una combinación de los altos precios de la capital y de su falta de oferta ha llevado a los compradores interesados a adquirir vivienda en la periferia, provocando de esta forma un descenso generalizado en la región.

Los efectos de una oferta anémica son devastadores, porque aunque la demanda ha bajado en los últimos meses, lo ha hecho en mucha menor medida. Esta diferencia entre oferta y demanda provoca una tensión al alza en los precios, en un momento en el que a las rentas más bajas les cuesta entrar en el mercado de compra de vivienda. Las previsiones, eso sí, invitan a ser optimistas, puesto que el fin de las subidas de tipos relajará los préstamos hipotecarios, haciéndolos más accesibles y con menores intereses. Según datos del mismo portal inmobiliario, el precio de la vivienda en venta en España se encuentra en su máximo histórico, al llegar a los 2.138 euros por metro cuadrado.

Conviene hacer una distinción y es que estos datos hacen referencia exclusivamente a la vivienda de segunda mano, pero aun así son unos datos lo suficientemente significativos: cuatro de cada cinco operaciones de compraventa que se firman en España son de vivienda usada. Unos datos que difieren mucho de los de hace quince años, cuando el gran ritmo promotor hacía que la obra nueva estuviera muy cerca en cuanto a compraventas de la de segunda mano. Por supuesto, la exigua promoción inmobiliaria actual tiene que ver también con este descenso en el stock. El comprador suele preferir adquirir vivienda nueva, pero hay tan poca que es muy cara y demandada, por lo que no son pocos los que se tienen que conformar con el mercado de segunda mano. Al menos en este sentido en 2023 se vivió un pequeño respiro: el Informe sobre el stock de vivienda nueva 2023, publicado el mes pasado por el Ministerio de Vivienda y Agenda Urbana revela que se produjo un pequeño repunte de oferta el pasado año, después de 14 años consecutivos de caídas: se situó a cierre de 2023 en las 447.691 viviendas sin vender.
Las mayores caídas

Por capitales, las de Castilla y León son las peor paradas por la pérdida de stock. Encabezan la lista Ávila (caída del 30%), Burgos (30%), Zamora (25%) y León (24%). Por supuesto, en términos absolutos cuentan con mucha menos vivienda en venta que las grandes capitales, por lo que estos descensos porcentuales tan violentos no son igual de destacables al hablar de número de viviendas. Por contra, solo cinco capitales tienen más oferta que hace un año, y sus avances se mueven entre el 1% de San Sebastián y el 15% de Girona.

Respecto a las provincias, las mayores caídas se han dado también en Ávila, como en el caso de las capitales; en Asturias, en Cantabria y en Guadalajara. Las cuatro han perdido un 19% del total de su oferta de vivienda usada. Mientras, solo Cuenca (2%), Girona (6%) y Alicante (7%) han conseguido contar con más vivienda usada en venta que hace un año.

More Democratic lawmakers call for Joe Biden to withdraw from election race

Pressure builds as president vows to remain in contest against Donald Trump


Joe Biden has been isolating at his holiday home in Delaware since testing positive for Covid-19 on Wednesday © Reuters

A growing number of Democratic lawmakers, including two US senators, have called for Joe Biden to withdraw from this year’s White House presidential race, deepening the peril for his campaign for re-election.

Sherrod Brown, the veteran Democratic senator from Ohio who is locked in his own fierce re-election battle, issued a statement on Friday evening saying: “I think the president should end his campaign.”

Brown became the fourth senator to urge Biden to step aside and the latest in a slew of Democratic lawmakers who on Friday called on the president to abandon his re-election campaign.

New Mexico senator Martin Heinrich also urged Biden to drop out on Friday, while two other senators, Jon Tester of Montana and Vermont’s Peter Welch, have publicly called on Biden to drop his White House bid.

“This moment in our nation’s history calls for a focus that is bigger than any one person,” Henrich said, adding it was “in the best interests of our country” for the president to end his campaign.

Nearly a dozen House members also said on Friday that Biden should step aside.

In a joint statement, four US House members — Jared Huffman, Mark Pocan, Chuy Garcia and Marc Veasey — said it was time for the 81-year-old president to “pass the torch to a new generation of Democratic leaders”.

“We must face the reality that widespread public concerns about your age and fitness are jeopardising what should be a winning campaign,” the politicians added. House Democrats Sean Casten, Greg Landsman, Zoe Lofgren, Kathy Castor, Betty McCollum, Morgan McGarvey and Gabe Vasquez also called on Biden to drop out.

Biden insisted on Friday that he would remain in the race, saying in a statement he “look[ed] forward to getting back on the campaign trail next week to continue exposing the threat of Donald Trump’s Project 2025 agenda”.

The president has been isolating at his holiday home in Delaware since testing positive for Covid-19 on Wednesday. White House doctor Kevin O’Connor said on Friday that Biden’s symptoms had “improved meaningfully” and he would continue taking Paxlovid, the antiviral drug.

The new wave of lawmakers calling for Biden to quit comes as Democratic party grandees such as former House Speaker Nancy Pelosi, as well as the megadonors crucial to funding his campaign, heap pressure on him behind the scenes.

The Financial Times reported on Thursday that donors and other senior party operatives believe Biden is very close to a decision to exit the race.

On Friday, Michael Moritz, the venture capitalist and Democrat megadonor, called on Biden to step aside, saying the president had a choice between “vanity or virtue” in remarks first reported by The New York Times and confirmed by Moritz.

He added that Biden’s attempts to hold on for a second term risked damaging the country, but did not say who he would back to replace him.

Chris Coons, the Democratic senator and close Biden ally, said on Friday that the president was getting the necessary advice to make a decision about his political future.

“I am confident he is hearing what he needs to hear,” he said while speaking on a panel at the Aspen Security Forum.

But Coons — who insisted Biden was “strong” and “capable” enough to carry on — acknowledged the unease within the Democratic party, saying: “There is a lot of concern and anxiety because the stakes are so significant.”

The latest interventions came a day after Trump formally accepted the Republican party’s nomination for president, less than a week after he narrowly escaped assassination in Pennsylvania.(...)

Where will private equity aim its $9tn money hose?

‘Use it or lose it’


The private capital industry right now

Private capital firms are sitting on an ungodly amount of capital, after mammoth fundraising in 2020–21 and little investment in subsequent years.

Late last year, Preqin estimated the amount of “dry powder” at over $4tn, almost a third of the entire private capital industry’s total assets under management. As Alphaville wrote in May, the industry has now raised more money from investors than it has returned for six straight years, for a gap of ca $1.6tn.

Morgan Stanley analysts reckon the pile of proverbial dry powder has now grown to about $4.5tn — which, with leverage, means they are sitting on about $9tn of buying power — and that this will need to be actually invested soon:

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Time to deploy (dry powder relative to annual deployment) has extended to ~3 years, the highest since 2013 and above the levels we’ve seen over the last 5 years at ~2.4 years to deploy. Given large fundraises in 2020-21, and limited deployment over the last 2-years, we now see an aging cash pile of private equity dry powder that in some cases may begin to no longer generate economics unless deployed, hence driving an urge to transact.

This was a bit of a theme on some second-quarter conference calls in the industry as well, with Partners Group CEO David Layton noting that “you use it or lose it within a certain period of time”.

But where? Most of the money is in private equity funds, and despite the prayers of investment bankers activity remains muted. By dollar value, PE-backed M&A was up 32 per cent year-on-year in the first half of 2024, but relative to history and the industry’s growing size it remains weak.

And by number of deals activity is continuing to contract. If you discount the first half 2020 — because, well, obvs — we saw the fewest number of deals in the past six months of 2023 and first six months of 2024 since 2017.


© Morgan Stanley, Dealogic


© Morgan Stanley, Dealogic

Unfortunately, Morgan Stanley doesn’t really have anything actionable to say about where this money is going to get sprayed, only observing that private credit opportunities, refinancing of existing deals, opportunistic “dislocations” and sexy themes like green energy and AI will get attention.

Here are the bank’s “key deployment themes”:

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1. Expand across the private credit spectrum. Alts mgrs continue to step into the lender friendly backdrop with attractive risk/rewards. Opportunities span beyond sponsor-backed lending, CLOs and into asset-backed finance, varying forms of bank partnerships and more. We continue to see opportunities emerging with banks from asset portfolio sales, regulatory capital trades, and forward flow arrangements.

2. Bring liquidity and flexible capital solutions. We see alts mgrs remaining nimble to bring a range of liquidity solutions (i.e. LP/GP-led secondaries, continuation vehicles, hybrid capital) to market given limited distributions and realizations. Refinancing demand is also high, with mgrs providing structured solutions to refinance and provide a bridge to when rates decline.

3. Step into selective pockets of dislocation. Alts mgrs are selectively stepping in areas of dislocation that presents compelling valuation, particularly across a challenged real estate asset class. Some point to near-bottoming real estate values which present opportunities to buy into themes like warehouses, student housing, residential rental, logistics, European real estate, etc. Global Foundation

4. Lean into high conviction LT themes and markets undergoing structural change. Secular themes (i.e., energy transition, data centers, logistics, AI, digital infrastructure) with resilient growth profiles and long-term tailwinds are in focus. As markets are undergoing structural change, such as in Japan that’s exiting decades of deflation, seeing greater risk appetite and greater shareholder activism. This is incentivizing corporates to re-evaluate their strategic options and portfolio of businesses and may catalyze divestitures of non core businesses as well as take-privates of public companies

In other words: ¯\_ (ツ)_/¯

But pretty much everyone agrees that the current situation — where private capital funds keep trying to raise new funds but are not deploying their existing capital, realising many of their investments or handing returns back to investors — can’t go on for much longer.

Morgan Stanley’s own CEO Ted Pick talked about this in the bank’s earnings call on Tuesday, noting that:

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. . . there’s just been so much activity that has been suppressed by any kind of measure percentage of asset, stock, percentage of market cap. And the stickiness that we’re seeing in the sponsor community, too, needs to unglue. There is an enormous, as you know, multitrillion-dollar stockpile between the two sides of — sitting on inventory that needs to be released and then dry powder that’s been raised.

Given the scale of money that might be deployed when things eventually ‘unglue’, the only people happier than investment bankers might be financial journalists who adore a dumb deal. 🍿

Trump Welcomes China to Build Cars in US in Departure From Biden

Former President Donald Trump has reiterated an openness for Chinese automakers to build cars in the US as a way to boost the economy, signaling a potentially different approach from a Biden administration that has sought to keep out vehicles with links to the country.

“Right now as we speak, large factories just are being built across the border in Mexico” by China to make cars to sell in the US, Trump said in an address at the Republican National Convention in Milwaukee on Thursday. “Those plants are going to be built in the United States and our people are going to man those plants,” he said, adding that he would otherwise slap tariffs as high as 200% on each car to prevent them from entering the country.(...)

China to boost support for equipment upgrades and consumer goods trade-ins

BEIJING, July 19 (Reuters) - China will step up support for its program of equipment upgrades and consumer goods trade-ins, state media reported on Friday, citing a cabinet meeting.

China will expand support for equipment upgrades to sectors of energy, electricity and batteries, the cabinet was quoted as saying.

"Large-scale equipment upgrades and replacement of consumer goods are a strong driving force, and increasing policy support will help better release the potential of domestic demand," the cabinet was quoted as saying.

China will coordinate the allocation of ultra-long special treasury bond funds to further promote equipment upgrades and consumer goods trade-ins, the cabinet said without elaborating.

The government will increase subsidies for the scrapping and renewal of used automobiles and home appliances, and provide financial support for the recycling of waste electrical and electronic products, the cabinet said.

The government will also simplify the approval procedure for the scrapping and renewal of old ships and trucks, it added.

In March, the cabinet issued a plan to support large-scale equipment upgrades and consumer goods trade-ins, in a bid to boost investment and consumption amid a shaky economic recovery.

China's retail sales rose a slower-than-expected 2% in June from a year earlier, the weakest growth in 18 months, as deflationary pressures forced businesses to slash prices on everything from cars to clothes.

UK seeks ‘regular’ EU meetings to rebuild post-Brexit relations

Starmer’s new envoy wants to see Britain ‘reconnected on the world stage’

(...) But for all the warm words, Thomas-Symonds says Labour has no intention of taking Britain back into the EU: “I don’t think it’s in the national interest to go back to the debates of the past and the uncertainty that would have.”

Nor will talks with the EU be easy. For example the EU would like a youth mobility deal with Britain and improved terms for access to its universities, neither of which are palatable to a government committed to ending free movement and with a higher education funding crisis.

But Thomas-Symonds says the diplomacy of the past two weeks had been promising. “We are certainly encouraged,” he said. “It’s about setting a mood, an atmosphere. I don’t think we should be underplaying that.”

Record-breaking summer for flights across Atlantic tests demand for travel

Booming demand for transatlantic travel comes amid signs of a wobble in the US domestic market

US and European airlines have embarked on a record-breaking summer of transatlantic flying, in a test of demand for travel on some of the world’s most lucrative routes.

There are nearly 418,000 flights scheduled between the US and Europe from April to October, 7 per cent higher than the record set last year, according to aviation data consultancy OAG.

Airlines bosses have reported particularly strong demand from US travellers visiting Europe, buoyed by the strong dollar.

“A lot of Americans are walking the streets of London, as they are in many other great destinations across Europe,” said Ed Bastian, chief executive of US carrier Delta.

European tourists are also travelling the other way in significant numbers, and capacity along transatlantic routes has boomed.



Capacity along transatlantic routes exceeds where it was in July 2019, while it has shrunk on routes to Asia, from either the US or Europe. United Airlines scheduled the most seats in July — more than 722,000, up 3 per cent from July 2023 — while British Airways has planned more than 419,000 seats, slightly more than one year earlier.

Meanwhile, Air France boosted its seating capacity by more than 15 per cent to 279,000 seats, the largest increase among transatlantic carriers, according to aviation data provider Cirium.

Virgin Atlantic recorded its highest ever revenue for passengers travelling from the US to the UK last month, while in the other direction, flagged particular interest from UK travellers flying to Los Angeles, San Francisco and Florida.

The booming demand for travel across the Atlantic comes amid signs of a wobble in the US domestic market, with some investors asking if capacity oversupply could bleed into the US-Europe routes.

United Airlines scheduled the most seats in July — more than 722,000, up 3% from July 2023 © Gary Hershorn/Getty Images

There are few signs of cracks in demand across the Atlantic, according to airline bosses. Along with the strong currency, continued demand for international travel following the coronavirus pandemic has encouraged Americans to fly to Europe, including Italy, Spain and France.

“I think there is a desire [to travel] after years of feeling cooped up,” Bastian said.

He pointed to an added factor of Taylor Swift fans driving up demand for European flights, as they sought concert tickets that were generally cheaper than in the US.

This jump in demand for leisure travel — particularly in business and first class — has helped compensate for the continued decline in corporate travel, which is yet to return to 2019 levels.

“There is no doubt that the transatlantic market remains one of the most attractive markets for airlines and for many carriers is the most profitable part of their networks,” said John Grant, chief analyst at OAG.



US airlines, too, are motivated to cross the Atlantic as the supply of seats in the domestic market outstrips demand, sending fares lower.

Yields remained strong on transatlantic flights, offering carriers a “pricing opportunity”, said Cirium analyst Rob Morris. “People are going out to make money on these routes,” he added.

This summer will also see more low-cost airlines fly across the Atlantic than in previous years, as a growing number of carriers look to break into a market traditionally dominated by a handful of legacy airlines including BA, United and Delta.

Just over 7,300 flights by low-cost carriers including Norse Atlantic and Canada’s Air Transat are scheduled between North America and Europe, although this will still only account for about 5 per cent of the market, according to OAG.

More low-cost airlines fly across the Atlantic than in previous years this summer © Spencer Platt/Getty Images

The airline industry has a history of adding more flights and seats to the market than consumers want, as carriers compete for a greater share of the market.

This has been evident in US domestic travel, where the plentiful supply of seats has led to discounted fares, at a time when fuel and labour costs have increased.

Shares in US airlines declined after Delta forecast lower third-quarter profit than Wall Street expected, as did United, despite strong second-quarter revenue figures.



United chief Scott Kirby predicted “an inflection point” by mid-August, with industry domestic capacity falling 3 percentage points.

“This is an industry that can ill-afford overcapacity,” said Raymond James analyst Savanthi Syth. “Something has to give.”

For now, demand for travel in Europe appears more solid. But Air France-KLM this month warned it would take a financial hit after a “significant” number of tourists have avoided trips to Paris over the summer Olympics. 

Lufthansa has also warned it was becoming “increasingly challenging” to break even this year, citing reasons including pressure on air fares. 

Despite worries among some investors, airlines are continuing to maintain pricing power on transatlantic routes, particularly amid an industry-wide shortage of new aircraft, Morris said. But as Boeing and Airbus deliver more planes, fares could decrease.

United chief commercial officer Andrew Nocella this week shrugged off concerns about a transatlantic supply glut hitting margins later this year. Capacity for flights to southern Europe has risen 31 per cent this summer compared with last year, with the industry pushing “the limits of demand” to the region, but United has been “careful” in managing scheduling for the rest of the year, he said.

“We feel good about the set-up that the Atlantic will continue to look pretty good going forward.”

Von der Leyen bets big on housing

Commission president vows to free up cash for affordable homes and create the bloc’s first-ever housing commissioner.

From Lisbon to Tallinn, Europeans have taken to the streets to protest against sky-high housing costs.

European Commission President Ursula von der Leyen has apparently heard them.

In her address to the European Parliament on Thursday ahead of her reelection, von der Leyen said housing would be a priority issue for the next Commission. Among other measures, she vowed to appoint the EU's first-ever commissioner for housing and present a plan to boost public and private investment in homebuilding across the bloc.

In her speech, von der Leyen acknowledged that housing had not "typically" been seen as Brussels' problem. The EU treaties don't mention the topic, and member countries have not given the Commission the power to intervene directly in the sector. But housing associations and local authorities have long argued that the institutions can still play a role in addressing the issue, and on Thursday the president agreed.

"Prices and rents are soaring ... People are struggling to find affordable homes," she said. "I want this Commission to support people where it matters most, and if it matters to Europeans, it matters to Europe."

In addition to creating a dedicated housing commissioner — a portfolio likely to be sought by a candidate backed by the Socialists, who made housing a key issue in their European election manifesto this year — von der Leyen proposed revising state aid rules to make it easier for member countries to build homes.

At present, EU members can use public funds to build affordable housing for people who cannot buy at the market price. But a growing number of national governments argue the crisis is now affecting middle-income households, and say guidelines need to be changed so that the cash can be used to build homes for a larger swathe of society. Von der Leyen's policy program, which was shared with lawmakers on Thursday, suggests her next Commission will back that proposal.

The policy program also suggests doubling the bloc's so-called cohesion funding earmarked for new affordable housing, and for the European Investment Bank to launch a pan-European investment platform to channel more public and private investment into affordable and sustainable housing schemes.

Von der Leyen's housing plans for the next term lean on several big-name measures created during her first administration. In her policy program, she argues the "swift and effective roll-out" of the Social Climate Fund — an €86.7 billion scheme to help governments soften the blow of higher prices for vulnerable consumers — will be key to renovating homes and accessing affordable, energy-efficient housing.

She also calls for the continuation and expansion of her signature New European Bauhaus program, which aims to marry innovative, climate-conscious development with aesthetic design.

Housing is one of the few topics von der Leyen can tackle with broad support from across the political spectrum. The Left and the Socialists campaigned on the issue in the lead-up to June's EU election and the Netherlands' new far-right government has made homebuilding one of its priority issues.

Two lawmakers told POLITICO that the Parliament was also keen to work on the issue, so much so that a new committee to address housing may be created in September.

Toronto Condo Developers See Lowest New Unit Sales in 27 Years
Sales in the first half of the year fell 57% from 2023
Trend does little to cut prices as development costs stay high

Toronto’s condominium developers saw sales of new units fall to the slowest pace in 27 years as high interest rates temper demand despite a shortage of housing.

Sales of newly built condos in Canada’s largest city fell 57% from last year, to just 3,159 transactions in the first half of this year, consultancy Urbanation said in a report Thursday. That’s the fewest in the first half of a year since 1997, helping unsold inventory rise to a record.

While the Bank of Canada cut rates in June for the first time in four years, the quarter-point decrease may not be enough to relieve pressure on a housing market that has grown unaffordable for many Canadians. With inflation easing and the unemployment rate rising, the central bank is widely expected to continue reducing borrowing costs — including at its rate decision next week.

The lower mortgage rates those cuts would bring may be the best hope for making new condos more affordable to buyers.

“Buyers remained cautious in anticipation of further rate cuts and amidst a burgeoning supply of units for sale,” Shaun Hildebrand, Urbanation’s president, said in a statement.

Despite the slowdown in sales and the buildup in unsold inventory, prices for new condos have held up, declining only 2.6% over the past year, according to Urbanation. The consultancy said developers’ high construction and financing costs, as well as the prices they paid for land, make them unwilling or unable to reduce prices for their units.

And because most new condominiums are sold before construction starts — a way to secure financing for projects — the decline in new unit sales has translated into a decline in new developments. Only 727 new condo units started construction in the second quarter, a 20-year low, according to Urbanation.

With Toronto, and Canada more broadly, facing a shortage of housing that’s keeping prices out of reach and rents at record highs, the slowdown in future supply runs counter to policymakers’ efforts to boost building.

“The continued weakening in condo market conditions during the second quarter of 2024 is likely to cause more projects that were slated to launch this year to remain on hold,” Hildebrand said. “Others that are struggling to meet sales thresholds for construction financing may ultimately be pulled from the market.”

Has private equity become a Ponzi scheme?

The economist Hyman Minsky’s name can once more be heard in ominous whispers around Wall Street. Private equity firms have recently been undertaking such funny financial manoeuvres that those who invest in the funds have had to put a stop to it. With private equity markets depressed, fund managers have been taking on so-called net asset value (NAV) loans to pay their investors’ dividends. Far from being happy to get their money, investors realised that the funds they had invested in were borrowing from Peter to pay Paul, and told them to cut it out.

In his stellar 1992 paper “The Financial Instability Hypothesis”, Minsky argued that there were three types of borrowing which corporate entities engaged in. He called these: hedge, speculative, and Ponzi. Hedge financing involves loans which are taken on, typically for business operations, and can then be paid back using a company’s cash flows. Speculative financing describes loans usually taken on to invest in the company, which can then ideally be paid off by the future cash flows generated by the new investment. Meanwhile, Ponzi financing refers to loans taken out by desperate companies which use them to simply pay interest on previous loans.

Minsky argued that when Ponzi financing units became predominant in an economy — or in part of the economy — this indicated that a financial crisis was brewing. The clue is in the name: a Ponzi scheme is upheld only through finding more and more people to pay up in the promise of money that is itself a result of convincing more and more people to pay up. It is hard not to see in private equity’s use of NAV loans to pay off dividends a classic Ponzi-financing regime.

Private equity’s entire model is based on Minsky’s concept of speculative financing. Fund managers buy up companies and then load them up with debt. This debt is typically used to drastically increase investment in the companies — and in doing so grow them and produce returns for investors. This carries risks. If too many of the investments go bad, the fund might go bankrupt and investors might pull out. There is more than a little speculation that the NAV loans signal that much of the sector has already gone bad and is engaged in increasingly funny tricks to try to cover it up.

If these were simply private investors, the damage would be limited. A few rich people losing money on their speculative investments is nothing to get upset about. But it is by no means clear this is the case. Private equity has become an asset class, meaning that those working in asset management — the more conservative side of the investment industry that typically manages pension funds and other low-risk investments — have started to allocate capital into this space. This has become notorious in Australia with the rise of the so-called “Supers”, and Britain’s new Labour government is reportedly interested in exploring this as an option.

There are also questions surrounding the links between private equity investing and the property markets. After the 2008 crisis, the central banks and regulators said: “Never again”, and imposed strict regulations on bank lending. When we look at mortgage-lending data, we see that banks are not providing the credit for the current rise in house prices — leading to suggestions that it might be the so-called “shadow-banking” sector of private equity and hedge funds which is driving the market.

If the current murmurs proves correct, this could all collapse in a Minsky moment reminiscent of 2008, but with private equity and hedge funds responsible rather than the banks. Pension funds would be affected, but so would banks allocating capital to the private equity sector. If this scenario were to play out, expect there to be bailouts just as there were in 2008. The central banks and the regulators may have said “Never again”, but speculative credit, like life, tends to find a way.

ECB keeps interest rate at 3.75%

Christine Lagarde says September rate cut decision is ‘wide open’


The ECB has said it wants more evidence that inflation, which peaked at 10.6% in 2022, is on track to drop to around its 2% target by the end of next year © Kirill Kudryavtsev/AFP/Getty Images

The European Central Bank has kept its main interest rate at 3.75 per cent, as its chief Christine Lagarde said the decision on a possible cut in September was “wide open” but downplayed fears of sticky price pressures.

The ECB governing council’s decision to leave its benchmark deposit rate on hold was in line with market expectations, amid concerns that geopolitical uncertainty and rapid wage rises will keep pushing up prices.

“What we do in September is wide open and will be determined on the basis of all the data that we will be receiving,” Lagarde said at a press conference after Thursday’s decision.

She added that the governing council, which cut rates in June from a record high of 4 per cent, had agreed it would not provide guidance on future rate decisions.

The euro fell against the dollar afterwards, and was down 0.3 per cent at $1.0905 by mid-afternoon.

The ECB has said it wants more evidence that inflation, which slowed to 2.5 per cent in June after peaking at 10.6 per cent in 2022, is still on track to fall to its 2 per cent target by the end of next year.

It said on Thursday that recent data “broadly supports” such a scenario, playing down signs that services inflation could remain high.

“While some measures of underlying inflation ticked up in May owing to one-off factors, most measures were either stable or edged down in June,” the governing council said.

The Eurozone is contending with wage growth of 5 per cent, as workers demand to be compensated for the worst bout of inflation for a generation.

But Lagarde said recent pay increases “did not come as a surprise”, and that wages were still expected to rise less quickly over the course of 2025 and 2026. “That is the direction that it is heading,” she said.

While Eurozone inflation was on a “disinflationary track”, the ECB would still need to keep rates high. “We will stay in restrictive territory for as long as it takes to get to target and we are not at target,” Lagarde said.

She added that the Eurozone economy was expected to have grown “at a slower pace” in the second quarter than the 0.3 per cent expansion in the first three months of this year. Risks to growth were “tilted to the downside”.

Traders in swaps markets put the chances of a September rate cut at 65 per cent, down from 73 per cent immediately before the decision.

Dirk Schumacher, a former ECB economist now at French bank Natixis, said Lagarde’s reluctance to clearly signal its next move was “the prudent thing to do, given the uncertainty and the too early commitment in June”.

Several council members had been uncomfortable at how clearly it pointed to the rate cut in June, leaving them little choice but to go ahead despite some unwelcome signals from economic data.

Rate-setters are also worried about political turmoil, especially after this month’s inconclusive election result in France raised doubts over whether a high-spending new government in the region’s second-largest economy would push up inflation.

Lagarde stressed that all Eurozone countries would need to adhere to the EU’s new fiscal rules. The provisions require countries with high debt levels such as France and Italy to bring them down by lowering their budget deficits to 3 per cent over time.

“This is the set of rules that has to be implemented and respected,” she said.

The ECB president said it would start an assessment “reasonably soon” of the new strategy it put in place two years ago and present the results next year. She added that it would not consider changes to its 2 per cent goal or the idea of publishing the rate expectations of individual policymakers in a US Federal Reserve-style “dot plot”.

YPF in Talks With Energy Transfer to Fund Argentina Pipeline

State-run driller YPF spearheads conduit to unlock oil exports
US pipe operator Energy Transfer looks into financing project

Argentine crude driller YPF SA has held talks with US pipeline company Energy Transfer LP to finance a cross-country conduit that’s key to the South American nation’s ambitions of ramping up shale oil exports.

State-run YPF, the biggest oil producer in Argentina’s Vaca Muerta shale patch, is spearheading development of the pipeline, which is estimated to cost $2.5 billion. It’s been in conversations with Energy Transfer to fund the project, according to two people familiar with the matter who asked not to be named as the talks are private.

A spokeswoman for Energy Transfer declined to comment on the matter, adding that the company is looking at opportunities inside and outside the US. A spokesman for YPF declined to comment.

YPF needs outside backing to pay for the pipeline, called Vaca Muerta Sur. It is negotiating with other oil drillers in Argentina, who require extra transportation capacity to unlock production, and would bring in additional partners once that consortium is in place, said one of the people.
Economic Boost

The pipeline would give a significant boost to Argentina’s share of global oil exports and help stoke the country’s economy. The nation desperately needs new sources of export dollars beyond its traditional crop shipments to increase central bank reserves, where shortages of hard currency have driven recurring crises.

The conduit is key to reaching a goal of exporting some half a million barrels a day of shale oil by the end of the decade. Vaca Muerta’s exports are currently just north of 100,000 barrels a day. Shipments from the shale patch have been severely constrained by pipeline bottlenecks, and some production still has to leave the fields in trucks.

YPF is already building a 128-kilometer (80-mile) duct to take oil from shale fields to the town of Allen in Rio Negro province. The larger project that Energy Transfer may partner would involve laying down 437 kilometers of pipe from Allen to the Atlantic coast, where a port will be built at Punta Colorada, an old iron-shipping outpost.

The project may qualify for a series of tax, currency and customs benefits included in a sweeping reforms law drafted by libertarian President Javier Milei, who has been in power for seven months.
Incentives Program

The benefits package — known as RIGI, the Spanish acronym for the “incentives program for big investments” — is designed to lure international investors who have avoided Argentina because of years of volatile policies, especially controls on taking money out of the country.

RIGI establishes investors’ rights to freely use proceeds from exports, including keeping them abroad. That will reduce borrowing rates to finance infrastructure projects in Argentina, said Marcelo Etchebarne, a managing partner at law firm DLA Piper’s Buenos Aires offices.

Dallas-based Energy Transfer operates more than 125,000 miles of pipelines for energy products and several export terminals in the US, and has offices overseas in China and Panama, according to its website.