Bershidsky on Europe: And Now Portugal
Here's today's look at some of the top stories on markets and politics in Europe.
Portugal bond issue oversubscribed.
Following in Ireland's footsteps, Portugal, which is still not out of an international bailout, sold $4.4 billion worth of five-year bonds. Demand for the issue was more than $15 billion, and the bonds were sold at a yield of just 4.657 percent. Portugal's five-year debt was trading at 5.4 percent in December. There's so much appetite in the markets for EU periphery debt that even Bankia, the huge Spanish bank bailed out by the government in 2012, managed to raise $1.35 billion with an oversubscribed bond issue. Irish five-year debt yield, absurdly, has fallen below the U.K.'s. The lopsided bond rally is in sync with European Central Bank chief Mario Draghi's promise to "maintain the high degree of monetary accommodation and take further decisive action if needed." Perhaps investors should listen to something else Draghi is saying: Europe's economic recovery is far from assured.
Marine Le Pen hopes EU will "explode" after parliamentary election.
Marine Le Pen, leader of the far-right National Front party, which according to polls is headed for victory in European Parliament election in France this year, said she and her allies in the Netherlands, Austria, Sweden and Italy would work to block any further transfer of power from national governments to the EU. "We must bring down the wall of Brussels, just as the Berlin Wall came down," Le Pen said. She is busy building an anti-EU alliance for the election, courting, among others, the U.K. Independence Party. The plan to blow up the EU from the inside is not likely to succeed, but there is at this point nothing that could stop Le Pen and like-minded leaders from expanding their representation in the European Parliament, dealing a blow to the body's efficiency and turning it into a caricature of itself.
S&P confirms Germany's AAA rating.
The rating agency Standard & Poor's upheld Germany's AAA rating with a stable outlook, praising the country as a "modern, highly diversified and competitive economy" with a "prudent fiscal policy," able to cope with strong economic and financial shocks. The guidance on Germany would hardly be worth noting, if not for S&P's recent decisions to downgrade the Netherlands, France and the EU. The ratings agency is hardly upbeat on Europe as a whole, but in love with Germany, the continent's economic locomotive and, increasingly, the only political decisionmaker that matters. S&P's recent moves reinforce a view of the EU as "Germany and the others."
EU clears Omnicom-Publicis merger.
EU antitrust authorities cleared the $35.1 billion merger between advertising companies Publicis and Omnicom, creating the biggest firm in the industry. They put foward no conditions, saying that advertising was and would remain a competitive business, with clients able to switch easily to other firms if service quality deteriorates. There is another side to this endorsement of the deal: It is hard to see the advantages of a $23 billion advertising giant in a business with low entry barriers and an increasing need for nimbleness and flexibility.
French firm designs connected toothbrush.
Leave it to the French to produce and market a parody of the Internet of Things. A start-up called Kolibree has designed a toothbrush, christened Plover, that uses Bluetooth to transmit information about its activity to a smartphone. Plover records which teeth it has brushed and how many times. It is also able to tell its owner whether he or she applies too much or too little pressure to the brush. Many of the new generation of gadgets encourage obsessive-compulsive behavior, but Plover raises the bar to a level that's hard to match. "The first intelligent toothbrush" is coming to a store near you in mid-2014.
(Leonid Bershidsky can be reached at firstname.lastname@example.org).