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.
Scottish Referendum 2.0?

The Union between Scotland and England has been in existence since 1707, but was not born under an auspicious star: The Scots were bankrupt and had to agree to the Union purely out of financial considerations. A partnership between equals it definitely was not. It is therefore not surprising that the Scots have repeatedly risen up against the dominance of the parliament in Westminster. What is, however, far more surprising was the result of the first Scottish referendum on independence held in 2014, which ended with a majority of 55% to 45% in favour of the Union. In the years since then, the mood in Scotland has markedly changed, however. The triggers have included not least the British EU referendum. While in England and Wales the majority of those who voted wanted an exit from the EU, the Remain camp booked a clear majority of 62% in Scotland. Nicola Sturgeon,…

Crude oil: OPEC cutbacks and rising inventories – a paradox?

There may well be a number of market players rubbing their eyes in some dismay at the crude oil announcements passing on the news ticker these days. The crude oil inventories in the USA on which investors are currently focusing their attention have risen since the beginning of the year – i.e. since the start of the often discussed OPEC/NOPEC production cutback deal – in six (in each case positive) weekly steps of 40 million barrels (+8%). An altogether similar situation can also be seen in the western European “ARA” storage region (Amsterdam-Rotterdam-Antwerp) where crude oil inventories have risen in the same period by 8 million barrels (+14%). But why have they risen? Hadn’t the ten “reduction-committed” OPEC and the eleven “reduction-willing” NOPEC countries promised an accumulated production cutback of a total 1.8 million barrels per day (OPEC-10: 1.2 mbd and NOPEC-11: 0.6 mbd) for the period 1 January –…

German companies rate their current business situation at the highest level in more than five years

After a somewhat bumpy start to the new year, the Ifo Business Climate Index improved again in February, rising from 109.9 points in January to 111.0 points. The previous month’s decline has thus been evened out again for the moment. Companies again viewed their current business situation in a far better light than was the case in their January assessment, with the index climbing from 116.9 points to 118.4 points and thereby marking the highest level since August 2011. This compares with the long-term average for the current business situation which lies at 103.5 points, i.e. way below the current level. The business expectations for the next six months also turned out somewhat more optimistic than in January, improving from 103.2 to 104.0 points. Despite the rising oil price, the approaching Brexit and the possibility of taxes on US imports, industrial companies’ concerns at the beginning of the year appear…

The superb sentiment among EMU purchasing managers simply persists

The pre-release of the EMU purchasing manager survey for February paints a picture of extraordinarily optimistic sentiment. The purchasing managers polled reported on rampant job creation on a level last seen over nine years ago and of growing order receipts and improving business prospects. However, the rising price pressure can only in part be passed on to customers. The summarised Composite Index for Euroland climbed from 54.4 to 56.0 index points, the highest mark in 70 months. Here, sentiment improved in both industry and the service sector. It is also gratifying that according to Markit the good sentiment has also spread to economies over and above the two large EMU member states of France and Germany. In February, German purchasing managers were extremely upbeat. The sentiment index for industry climbed from 56.4 to 57.0 index points and thus hit a high for the last 69 months, indicating that German industry…

Growth in credit markets in Germany expected to accelerate

Last year, the surge in growth in Germany’s credit markets seen from the end of 2015 onwards stabilised and intensified. Corporate and private households’ bank debts rose 2.7 percent to EUR 2,372.3 billion. In other words, the usually sluggish trend of past years was at long last overcome. Private property financing was again the growth driver. With stronger new building activity and increasing demand, as well as rising prices in the property markets, the need for credit grew appreciably. Demand was also buttressed by extremely favourable financing terms. The only thing preventing even more buoyant growth was the translation of the EU Mortgage Credit Directive into German law, which led to stricter regulations for loan approvals above all for senior citizens and young families. The trend for corporate credit was also gratifying: From 2013 to 2015 this market segment saw only weak, indeed usually negative change rates. However, in 2016…

The return of inflation – equities are an imperative

Inflation has been picking up worldwide for some months now. For example, the price hike in the USA recently reached 2.5%, the highest figure since 2012. In Germany, prices rose by 1.9% as at the end of January – a level last seen in 2013. It is not really surprising that the buzzword of “reflation”, meaning the return of inflation, triggered both by monetary and fiscal policy hitting a more expansionary gear and by rising commodity prices, is doing the rounds again. Specifically German citizens are disproportionately exposed to such fears, not least owing to the negative reports on hyperinflation in Germany just short of a century ago. For many years, dividend-bearing securities had the reputation of being inflation-proof investments. However, were the suitability of equities as a hedge against inflation to be true, then price trends for shares in periods of high inflation should be correspondingly better than at…