Catalonia. There can be no doubt that it has a national identity. It was ethnically different from the rest of the Iberian Peninsula since pre-Roman times. It was an autonomous marque under French influence for four centuries and then became a semi-independent part of the kingdom of Aragon, the region behind it. Aragonese and Catalans created a small and prosperous empire that at one point included Sardinia, southern Italy and even Athens. They came to have their own pope, Alexander VI Borgia, much better than tradition has depicted him.
In 1469 Fernando of Aragon married Isabella of Castile to complete the expulsion of the Arabs from the south and to project the two kingdoms towards Africa and the Americas. Although unified, the two kingdoms maintained total parity of weight and linguistic and legal autonomy until the beginning of the eighteenth century, when the Catalans sided with the losing side in the long War of the Spanish Succession and they found themselves a French Bourbon, Philip V, as the new king. Philip, direct nephew of the Sun King, immediately applied the centralist and absolutist principles absorbed in Versailles and took away their autonomy from the defeated Catalans.
With the beginning of the twentieth century and the transition to the republic, Catalonia immediately regained large political and linguistic autonomy and at the time of the Civil War it became, together with the Basque Country and Asturias, the center of opposition to Franco. Like Philip V, Franco victor repressed the Catalans in every possible way, who nevertheless managed to get back on their feet and act as the engine of the Spanish miracle of the XNUMXs. With the fall of Francoism, Barcelona regained it immediately a large autonomy, however progressively eroded under the governments controlled by the Partido Popular and above all with Rajoy. Hence, for a decade, the growing push to resolve the issue once and for all through independence.
However, Catalan independentism lacks the same element that is missing from independentism in Québec and Scottish independence, all capable of grazing 50 percent of the popular consensus without ever going beyond. The compactness of the entrepreneurial class is missing, what was called the bourgeoisie in the XNUMXth and XNUMXth centuries and was decisive in the wars of independence that ended with success (United States, Latin America, Italy, India). And so, while Korean companies remain quietly a few kilometers from Kim's atomic bombs, Catalan finance and utilities, subject to the regulators of Madrid, Brussels and Frankfurt, did not hesitate for a minute to escape. At this point, the mountain raised by the referendum seems destined to give birth to the little mouse of a political war of attrition destined to last for years or decades. Europe, which has lost memory of many of its values and which treats Catalonia as a rebellious province, will risk nothing but appearing even more distant, imperial and self-referential.
Third World war. Why do markets greet Trump's daily pronouncements about the need to prepare for with a yawn? a war with North Korea What about Senator Corker, who was one step away from becoming secretary of state, who claims that Trump's policy is leading us towards World War III? There is a widespread belief that the mountain of rhetoric only serves to scare Kim, who in fact seems to have taken a break for some time. It is known that channels of communication are open between Washington and Pyongyang and that aggressive rhetoric could really be a cover fire of the negotiations. As a matter of fact, the mountain of belligerent statements is producing an acceleration in the strong and sure rise of defense stocks. Whether there is war or armed peace, the sector's bull market is age-old.
China. Five days before the opening of the 6.7th Party Congress, everything is as it should be, that is, perfectly in order. The GDP, at 6.5 per cent, exceeds the plan target of 2015 by two decimal places, ie by the right. The renminbi is back in good health, capital no longer flees and foreign exchange reserves have started to grow again (all without exaggerating, so as not to damage the flourishing exports). The Shanghai stock exchange, after the storms of XNUMX, returned composed and in constant moderate growth. Xi Jinping controls the party with a firm hand and the country and no frond can be seen capable of worrying him.
And yet the mountain of expectations of recent years on a new course of reform in the economy must give way to a now consolidated reality that appears more contrasted. On the one hand it is true that China intends seriously, albeit with its times, reorient towards domestic consumption, limit overproduction in heavy industry and move aggressively towards new technologies, in which it wants to be ahead of America by 2030. And it is also true that the market is a heard voice in determining exchange rates and rates.
However, it is equally true that privatizations are no longer mentioned. Politics absolutely does not want to lose its command post. It accepts that public companies are confronted with the market, but intends to keep control of it. As for large private companies, their political loyalty must be total, so much so that it is proclaimed in the company statute. Once loyal, they can make as much money as they want. As for then the big debt problem, China continues to demonstrate great technical capacity in managing it, but has no intention of reducing it, if anything of moderating its growth by limiting shadow banking activities.
Where China is achieving great successes is in its widespread penetration of the economic fabric of Asia, Africa and now Europe as well. The grandiose One Belt, One Road project, with which China binds to three continents, is the fruit of powerful strategic thinking. China gives each country a gift of a nuclear power plant, a port, a railway line, an industrial park and in exchange it has an outlet for its products and, often, a military base. After the congress, Chinese growth will slow down slightly and the renminbi will stop strengthening, but in the next 6-12 months China, e with her throughout Asia, they will continue to enjoy excellent levels of growth in stability.
American tax reform. Studied in detail over eight years of Republican opposition, it was to be the biggest economic revolution since the New Deal. Month after month, however, has lost the pieces and now the risk is that a mouse really comes out of it. The importers' lobby has begun to prevent the introduction of the border tax on foreign production. Then the debt lobby blocked (at least for now) the abolition of the deductibility of passive interest. It was thought to lower the rate for companies to 15, but without the border tax and interest expense there is no money and now only Trump is left to talk about 20 while everyone else is talking about 23-25.
On the personal tax front, the Republican lobby of New York and California is working towards the withdrawal of the proposal to abolish the deductibility of local taxes, through which virtuous states finance spendthrift states. The money to lower the rates therefore falls with each passing day. In short, the reform system is bombed from all sides and the majority in the Senate is only two members, with McCain and Rand Paul already sidelined and Corker vowing he will not authorize a single cent more deficit.
Market consensus is pricing in $8 per share of higher earnings from tax reform, or 6 percent higher. In his calculations, however, the market starts from the proposal of the Six Wise Men (Trump and the leaders of the House and Senate) which, however, lacks the decisive votes of the senators mentioned. We have seen the radical upheavals to which the health care reform underwent in progress (the reform failed anyway) and there will also be profound watering down for the tax reform, starting from the postponement of its start over the next ten years.
The bags will celebrate any reform text coming out of Congress, but over the course of 2018, they'll find that the impact on earnings will be much more modest than they're expecting. In order not to correct (and to try to climb again) they will have to rely on other factors. Like global growth, which next year could be as good as this year's.
