Bielmeiers Blog

DZ BANK

Selecting business news – analysing it – commenting on it. That’s the job of Stefan Bielmeier, Chief Economist and Head of DZ BANK’s Research and Economics Division, and of his team of analysts. In his blog, Bielmeier reports on economic developments in the world's most important economic regions, looks at trends in the international financial markets and states his position on current political events.

Bielmeier’s Blog picks out the essence of the daily data deluge for you – make use of his expert knowledge.
China: Growth slowed in Q3 – investments are a brake, impact of trade dispute yet to be felt

China’s economy lost steam again in Q3. With economic growth coming to 6.5 percent, it actually weakened somewhat more strongly than expected. Given the way the trade dispute escalated over the summer, the trend for the Chinese economy is no doubt being followed especially closely at present. However, the cooling of the economy can hardly be attributed to trade with the United States having decelerated growth. At the moment, this is still being overshadowed by other factors having been brought forward and is being cushioned by the devaluation of the Yuan. Instead, it is Beijing’s restraint on the investment front that has squeezed growth. In the current quarter, the strain from foreign trade may well become more clearly noticeable. We feel that all this bears out our cautious growth forecast for this year of 6.5 percent. The monthly export figures for the past months in which US customs tariffs were…

Why is the DAX going so badly in 2018?

This year the DAX has lost eleven per cent, whereas the S&P 500 has risen by five per cent. A similarly great discrepancy between prices on the bellwether equity indices in Germany and the USA was last seen in 2002 and 2011. But this year’s poorer price performance is not only to be seen in the DAX, but also in all other major European share indices. The price losses range from minus five per cent (France) to minus twelve per cent (Italy). Prices have also come down significantly this year in China and the emerging markets. To put it the other way round: Only the US share indices are in positive terrain in 2018. We have pointed out the reason for the good performance in the US markets several times here. This is (in a nutshell): A good sector trend in the key US technology, banking and petroleum sectors is…

Why the DAX will recover again in 2019

With profit performance in 2018 defined in many instances by exceptional effects among DAX companies, we expect an improved profit situation again in 2019. Nonetheless, current analysts’ estimates projecting (another) ten percent increase in profits at DAX companies in 2019 could be overoptimistic once again. We see a five percent rise in DAX profits as a more realistic scenario. The same goes for the Euro Stoxx 50. Although we do not envisage any escalation of the negotiations surrounding Brexit and Italy, the sometimes unsettled economic and politic environment, which left its mark already in 2018 (reflected in a slowdown in growth in Europe and disruption in global trade, among other things), should continue to persist at the beginning of 2019. We remain positive as regards the equity markets in 2019; on the one hand, important key variables such as a strong economy (tailwind from the US) and a favourable equity…

US election – will the “America first” strategy pay off?

The midterm elections for the US Congress that take place in less than three weeks are deemed to be a mood test for Donald Trump’s policies. The decisive question is whether the Republican Party can keep a majority in both Houses or whether Trump will lose a large part of his clout. The Republican Party and the President are certainly aware that the presidential party usually loses seats in the midterm Congressional elections. Which of the party blocks is best able to mobilise its voters will play a great role in the outcome of the election. According to an opinion poll, US consumers are better satisfied with the government’s economic policy than at any time in the past 15 years. The President can claim successes above all with one of his central election promises, namely strengthening US industry. A visible recovery in the industrial climate goes hand in hand with…

Brexit negotiations: Pressure on May grows

The EU summit in October, which according to the original schedule was supposed to bring a major breakthrough in the Brexit negotiations, does not actually end until this afternoon, but as early as yesterday evening it became clear that the hopes of significant progress would be dashed. Theresa May’s 15-minute address offered no new insights and instead the Prime Minister called on the EU to offer creative and innovative ideas. What might a few months or even weeks ago have been considered a negotiating play is now truly serious. Time is running out fast and there is still no constructive solution to the Ireland problem in sight. The bone of contention remains the so-called “backstop solution”: Should the British not agree to a customs union with the EU and no other “technical” solution be found, then the EU would continue to treat Northern Ireland as part of the single market….

Fed Minutes: Moving in the direction of restrictive

The minutes of the Federal Reserve interest-rate meeting held on 26th September, published yesterday evening, reveal that the Fed’s top echelons have had an animated debate about whether to respond to solid growth momentum by raising key rates temporarily above the neutral fed funds rate. A number of FOMC members turn out to be advocating a temporary shift to a restrictive monetary-policy stance. Some of the other monetary custodians opposed such a move, arguing that the economy was not showing any signs of overheating and that a clear upward shift in inflation rates was not to be detected. Regardless of the monetary-policy target level at which the Fed will ultimately take aim, members of the Fed’s top policymaking committee agreed that further moderate key-rate hikes were called for in the coming months. Furthermore, the transcript offers a more precise explanation of why the sentence indicating that “the stance of monetary…