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.
ECB accounts: technical framework for TLRO in preparation

From the ECB accounts for the January meeting of the Governing Council, it emerges that the currency guardians discussed the possible risks to the EMU’s economic outlook at some length. The most recent economic data had turned out to be weaker than ECB representatives expected. One of the factors cited as a driver of this development was the introduction of the new emission standard (WLTP) and its negative impact on automotive production. Governing Council members agreed that it was not yet conclusively clear how long the economic dip would persist. Moreover, they expressed uncertainty with regard to how this would impact on the medium-term growth outlook. ECB representatives agreed with the analysis of Chief Economist Praet that the downward risks to the Eurozone’s growth outlook have increased. Where inflationary developments are concerned, the Eurozone’s senior central bankers continue to believe that fundamental price pressure in the Eurozone is on the…

Euroland purchasing manager indices: Industry brakes and surveys point to ongoing muted growth

On balance, the sentiment amongst European purchasing managers has brightened slightly in February. The Composite Index rose from 51.0 to 51.4 points, which in the wake of the latest falls corresponds to the highest level in three months. The improvement can be attributed solely to the service sector, where the sentiment barometer rose. The yardstick for manufacturing lost ground, by contrast, and at 49.2 points it is not only below the growth threshold of 50, but also the lowest figure in five years and eight months. Production decreases, dwindling demand and declining export business are all impairing sector sentiment. Judging by the survey results, the Euroland upturn should continue although the growth rates will presumably remain muted. The preliminary figures released on February sentiment among German purchasing managers painted a mixed picture. The Composite Index for Germany edged up from 52.1 points in January to 52.7 in February. However, this…

FOMC minutes: The Fed’s balance-sheet rundown looks like ending soon

The minutes of the FOMC meeting held on 29th /30th January which were published yesterday reveal that committee members are not yet prepared to proclaim that the Fed’s rate-hike cycle is at an end. For example, a number of members of the Fed’s policymaking body have gone on record as saying that further tightening may perhaps be necessary over the course of the year, making this contingent on how the economic situation develops. The transcript shows, however, that almost all FOMC members are in agreement, in view of the growing risks, that a temporary pause in the rate-hiking cycle would be appropriate. They argue that there is currently a whole cluster of risks which, in their view, indubitably justify an interruption in the tightening cycle. Factors imposing a particular burden are the difficult Brexit negotiations, the trade dispute between the United States and China, the volatile equity-market trend and the…

US: escalation on the domestic political front but foreign trade deals might be possible?

Only the courts can stop Trump now and prevent the misappropriation of budgetary resources. With the first primaries of the presidential election starting already in one year, the polarisation and division in domestic politics will increase. The latest escalation level does not bode well either for the next deadline for raising the debt ceiling, which is on the agenda shortly. The negotiations for budget year 2019/2020 that starts on 1 October are unlikely to go any better than this time round. As far as foreign policy is concerned, Trump will on the other hand probably retain his dealmaker status. He is clearly very keen to be re-elected next autumn. Talks on the trade disputes with China are currently in full swing and it is quite possible that further punitive tariffs will not be imposed. The cooling-off period agreed on by the heads of both countries ends already at the end…

US: agreement reached on the federal budget but Trump’s political escalation shows no signs of abating

The two parties and the US president reached an agreement on the budget dispute a few days ago, just before the deadline was set to expire. Another shutdown of numerous federal authorities was thus avoided – good news from the US political front. However, just after the compromise was reached, President Trump declared a national emergency in order to access the full amount he had demanded to build a wall at the border to Mexico. Rather than leading to the anticipated easing of internal political affairs, it escalated the confrontation instead. The Democrats and a few individual federal states have already announced their intention to take political and legal action against this. Trump only declared the national emergency to bypass Congress’ budgetary authority, thus creating a precedence in US history. Although the US president holds considerable sway over foreign policy, domestic policy generally requires the approval of the Senate and…

Brexit: financial markets continue to anticipate a smooth outcome

UK Prime Minister May suffered another defeat last week in the House of Commons and right now we have no idea as to what happens next. What we do know is that another vote will be held in Parliament on 27 February. It is still unclear whether this will be merely a vote on another government proposal or the so-called meaningful vote; in other words, the vote on the EU exit agreement. Right now, the first seems the more likely scenario. Although there is theoretically nothing to prevent Prime Minister May from repeatedly presenting her deal to Parliament, she will, however, do her utmost to avoid another defeat. May is therefore unlikely to present her deal unless there is a realistic chance of gaining Parliament’s approval. This is only conceivable under two conditions: either a) the EU makes the concessions required by the UK Parliament or b) Parliament no longer…