Bielmeiers Blog

DZ BANK

Stefan Bielmeier, DZ BANK’s Chief Economist and Head of Research, comments on economic developments in Europe, the USA and the Emerging Markets, assesses international financial market trends and gives his opinion on politics and economic policy – concisely, succinctly and to the point.

The economics and financial market experts of DZ BANK’s Research division support Stefan Bielmeier in his blog.

Find out more in Bielmeier‘s Blog about DZ BANK Research’s current topics, the experts’ focal areas, and their general viewpoints on the latest developments.
S&P 500: greatest jump in profits since 2011 – and set to get even better

With the figures released by major corporations such as JP Morgan and Wells Fargo, the reporting season has begun for U.S. companies with publication of results from the fourth quarter of 2017. Over the next weeks, the flurry of results will first continue in the USA, before European corporations take their turn to report. Even without the recent tax reform – which will soon deliver a notable boost to the profits of “Corporate America” (cf. previous blog entry) – the majority of U.S. companies have done very well in the final quarter in any case. We are expecting a rise in profits of almost 14% for the S&P 500 companies (sales growth: +10%). Comparably high profit growth was last recorded in the fourth quarter of 2011. The driving force behind this development can be traced back to considerable profit increases in the following sectors: energy/crude oil (+134%), basic resources (+29%),…

China’s economy performed well in 2017 – and Peking will also keep growth at a high level this year

China can look on a good year for the economy in 2017: GDP growth increased slightly on the previous year to 6.9 per cent – for the first time in seven years the growth rate for the full year accelerated again. In the final quarter the growth rate remained stable on the third quarter at 6.8 per cent. The upswing firmed. The Chinese economy benefited above all increasingly from the buoyant global economy. After two very difficult years foreign trade was no longer a brake on economic growth in 2017, and in the final quarter it even made a positive contribution to growth. Admittedly, in the second half of the year economic growth failed to keep up completely with the strong momentum of the first half of the year. The boost from state investments, which initiated the upswing in 2016, has slackened off further and in the private sector investment…

Trump is not bad for the USA

For US President Donald Trump, things are not developing all that badly at the moment. Growth in the USA is very robust and unemployment has fallen to nearly 4 percent. The development of wages and salaries and of inflation remains very moderate. The US Federal Reserve is therefore under no pressure to tighten monetary policy and dampen growth. These are all solid conditions for a good longer-term economic development. But Trump is not only doing well economically but also politically. The federal debt ceiling was temporarily raised, preventing authorities from coming to a standstill. However, the most important development is the Senate’s adoption of the tax reform. The law has yet to receive the green light from the House of Representatives, but the tax reform will most likely be adopted in the end. The expected tax reform in the United States could turn out to be an enormous Christmas present…

Fresh Brexit referendum under discussion – a second chance?

The British side is still looking for a uniform negotiating position which can stand up. However, so far, there is no sign of anything more than just mere empty phrases such as the UK calling on the EU to be „imaginative and creative“ in working towards a tailor-made solution, or „CETA Plus Plus Plus“. At the same time, the EU has been urged in fairly blunt terms to put forward proposals about how the future relationship with the UK might work. The Chancellor of the Exchequer, Philip Hammond − who is in fact regarded as pro-Europe − has implied that the EU is a badly run club tending towards paranoia. To add to all the confusion, the discussion surrounding a second referendum about leaving the EU has started up again in the last few days. This latest rekindling was triggered by comments made by former UKIP leader and passionate Brexit…

African swine fever (ASF) moving closer

The virus was brought over from Africa to Georgia way back in 2007. To date, there is no vaccine against it. Although the virus is not a threat to humans, it quickly leads to death in feral and domestic pigs. Humans are thought to be the main source of transmission, probably through carelessly throwing away infected food leftovers (e.g. in rest areas), which facilitates/triggers the spread of the disease. The virus has spread along highways from Georgia via Russia and the Baltic States all the way to Poland and the Czech Republic. Many experts assume that it is only a question of time before ASF arrives in Germany. Germany’s pork market is dependent on exports. Germany’s own needs are covered to over 120%, which means that the additional production has to be sold on via the global market. An outbreak of ASP in Germany (just one case being reported would…

Euro-dollar exchange rate at its strongest level since 2014 – German companies should be able to weather the appreciation

One euro currently costs just shy of USD 1.23. The common European currency last reached such heights in December 2014. Let us recap: The debate one year ago was whether or not the euro/dollar exchange rate would reach parity. The euro has appreciated by nearly 17% since then. The sharp increase in the common European currency will present German companies with more and more challenges in the months ahead. German companies are known for their strong export trade. Based on our analyses, the share of sales of the German HDAX companies invoiced in USD was 28% (the HDAX comprises the companies included in the DAX, MDAX and TecDAX indices). This exposes them to increased risks through changes in exchange rates. However, 23% of the costs are also incurred on a USD basis, which puts the approach into perspective. It is also not that advisable to focus on the current (=incidental)…