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Today's big stories

Even as the economy picks back up, an intergovernmental organization warned that 2020’s still on track to be really bad
The ideal time to invest in US bank stocks could be approaching – Read Now
Two major Spanish banks have reportedly agreed to join forces in an effort to survive the pandemic

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Disaster Zone

What’s Going On Here?

The OECD predicted on Wednesday that the global economy’s still headed for its biggest ever annual shrinkage, but it's not all doom and gloom.

What Does This Mean?

Things are bad, the OECD admitted, but not quite as bad as it thought they would be: the organization updated its annual forecast for this year’s global economic decline from 6% to 4.5%. And it’s not alone, with some major central banks having made their own less pessimistic predictions lately. Still, there are plenty of countries in varying levels of lockdown, and even those that aren’t might not see industries like travel and leisure recover any time soon – dragging down the global economy for years to come.

According to the OECD’s forecasts, China’s the only major country that’ll grow its economy this year, albeit barely. And while the organization still reckons the US and Europe will shrink, their actual declines probably won’t be as bad as when it made its predictions back in June. Prospects for emerging markets like India and South Africa, on the other hand, are only getting worse.

Why Should I Care?

For markets: Here come the taxes.
The OECD’s update should be a positive sign for stock markets, which in theory reflect the wider economy. But investing heavyweight Blackstone doesn’t think that’ll hold up this time around (tweet this). Government tax cuts, low interest rates, and ongoing central bank support have helped cushion the economic collapse and send stocks to record highs, but Blackstone reckons they’ll eventually give way to rising interest and tax rates. And given that high borrowing costs and taxes eat into company profits, that could limit share price rises over the next five to ten years.

The bigger picture: Control, alternative, don’t delete.
Investors who share Blackstone’s concerns might now be looking elsewhere for returns – namely fine art, private equity, and other “alternative” investments. And with good reason: those once-exclusive assets are increasingly accessible to everyday investors via fintech platforms, as well as traditional investment managers.

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2/3 Premium

Bank Stocks Are Going Cheap

What’s Going On Here?

More professional investors than ever think bank stocks are undervalued compared to the tech sector, but one of two things needs to happen before you might want to flock toward financial shares.

Find out what those investors know with Finimize Premium

Belles Of The Ballroom

What’s Going On Here?

It takes two Spanish banks to tango, and luckily Bankia and Caixabank are both wearing their dancing shoes: they reportedly agreed to a merger on Wednesday.

What Does This Mean?

The banks haven’t officially formalized the agreement yet, but now that their main shareholders are on board – including the Spanish government, which owns almost two-thirds of Bankia – it could happen as soon as Thursday. That’s pretty quick going considering the two only announced they were considering a merger at the start of the month.

Folding Bankia and Caixabank into one another will combine their revenues, and should allow them to boost their profits by cutting duplicate office, tech, and risk management costs. Investors will be happy to hear that: years of low interest rates in Europe have been hampering how much profit the two banks can earn from the loans they make.

Why Should I Care?

For markets: Muy bueno.
The new “Caixa-Bankia” should be worth about $17 billion and will become Spain’s biggest lender: rival Santander is worth twice as much, but it makes two-thirds of its profit outside Europe. That newfound dominance might be why investors initially sold Santander’s shares and bought up Bankia and Caixabank’s on Wednesday. It might also have validated the European Central Bank’s efforts to make it easier for eurozone banks to team up – even if German banks haven’t taken advantage since Deutsche Bank and Commerzbank’s mooted merger fell through last year.

The bigger picture: No bueno.
While cost-cutting plans might go down well with banks’ shareholders, spare a thought for their employees: Citigroup, Nomura, and HSBC have now restarted the lay-offs they’d put on hold during the pandemic, meaning this year’s industry job cuts are likely to exceed last year’s 80,000. And since unemployed people can’t spend as much, that could hit already-slowing consumer spending hard.

Take action: How you can benefit from company team-ups.

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💬 Quote of the day

“Each person must live their life as a model for others.”

– Rosa Parks (an American activist)

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🌍 Finimize Community

💸 Who Finimize?

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📚 What we're reading

Aliens, u up? (NPR)
Dave Grohl vs. a British child (AV Club)
How to hide a billion dollars (Forbes)

Finimize - 😷 The economy might never recover

Today's big stories

Disaster Zone

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Bank Stocks Are Going Cheap

Belles Of The Ballroom

What’s Going On Here?

What Does This Mean?

Why Should I Care?

💸 Who Finimize?

Older messages

😎 Relax, China's got this

🌍 Nvidia versus the world

📈 Investors go back to college

😷 Coronavirus hurts insurers

🤢 Tesla's 30% crash

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