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.
DAX upswing jeopardised by crises

The escalation of the Turkish crisis illustrates how quickly Donald Trump can create unrest outside the USA. Until the congressional elections in the USA in November, the US president could increasingly try to further his own good by attacking alleged opponents, also as a means of detracting attention from his personal affairs. Investors can comfort themselves in the knowledge that Trump’s rhetoric and his deeds are not always one and the same thing. But it is precisely this unpredictability that is adding to companies’ and investors’ nervousness. While the first stage of the escalation „only“ affected part of the trade relations between the USA and China, a whole array of new risks are now looming on the horizon in places such as Iran and Turkey. Until now US companies have been virtually unaffected by the burdens, with the domestic economy recording growth rates not seen in a long time. Markets…

Turkish crisis reaches Rome

At first glance, Turkey’s home-grown crisis has little to do with Italy. Even so, the collapse of the lira of all things has also afflicted Italian government bonds. BTP-Bund spreads widened since mid-July, reflecting concerns that Italy will raise new borrowing and the dispute with the EU Commission could possibly escalate. The latest increase in the risk premiums is due primarily to the intensified crisis in Turkey. Italian government bond prices recovered this morning for the first time in days. The Turkish lira also posted slight profits. Even though the Lega’s economic pioneer, Borghi, stated in press reports that he found any spillover from the Turkish crisis towards Italy illogical, two main reasons are probably behind the development. On the one hand, concerns are growing that a wave of bankruptcies in Turkey could also impair European banks. Italian banks are the most exposed to Turkey, after their Spanish and French…

Risks emanating from Turkey are manageable for European banks

The massive plunge in the Turkish lira – the currency has depreciated by more than 70% against the US dollar since the beginning of April – accelerated especially during the course of last week, moving Turkey’s economic problems onto the front burner and into the front of market actors’ minds. It is not much of a surprise that equities and bonds issued by Turkish banks have come under pressure in such an environment, but many market watchers are using the metaphor of a “ticking time bomb“ and fear possible contagion effects spreading to other developing countries and other banking systems. Accordingly, a number of European banks have moved more and more into the focus of market participants – at the latest in the wake of the article published in last Friday’s edition of the Financial Times (FT) arguing that the ECB Banking Supervision has become increasingly concerned about lenders with…

Turkey: in a perception trap

An extremely important foundation for Turkey in particular – the confidence of international markets – has developed deep rifts. The country’s considerable external financial requirements – for example to finance the chronic trade deficit – require regular access to the global capital market. Turkey will find it more difficult or at least more expensive to borrow if market perception turns negative. The list of factors that have burdened the perception of risk is long: examples include the country’s transformation to a system with substantial power at presidential level, president Erdogan’s statements about wanting to exert more influence on monetary policy and the removal of experienced and respected economic policymakers. A series of foreign policy confrontations did not help either. The latest spat with Washington is perhaps one conflict too many – especially since the White House does not exactly fence with diplomatic foils. What solutions are available? One is left…

German housing market: another dynamic price increase in Q2 2018 but big cities lose momentum

Reports on the German housing market have meanwhile become almost boring, with prices rising at a fast pace on the back of good economic conditions, low interest rates and a shortage of supply. The second quarter of 2018 is nothing out of the ordinary either. The property price index just released by the Association of German Pfandbrief Banks (vdp) posted another sharp rise. Prices for residential properties rose by 7.5 percent year-on-year, while multi-family homes sought by investors were up by almost 10% annually. The increase has been even greater in the seven largest German cities. Residential property prices here climbed by nine percent while multi-family homes were another two percentage points higher. Very interesting developments can also be gleaned from the vdp figures. Whereas nationwide housing price growth maintained its rapid tempo, price momentum eased in the top-7 cities – Berlin, Dusseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart. Multi-family…

Japan springs a surprise with its high growth rate in the second quarter of 2018

The Japanese economy sprang an exceptionally positive surprise in the second quarter: its economic output increased according to the first preliminary estimates by a seasonally-adjusted 0.5 per cent quarter-on-quarter. Such a growth rate had not been expected at all after the negative result of -0.2 per cent for the first quarter and after the generally rather modest growth and sentiment indicators in the spring months. This positive trend in the second quarter was driven mainly by a strong turnaround in private consumption expenditure. This was 0.7 per cent higher than in the previous quarter, which was the biggest increase for a year. Private investment excluding residential construction, which increased 1.3 per cent (quarter-on-quarter) also played an important part in the recent surge in growth. But residential construction itself declined further, down -2.7 per cent, having already posted significantly negative rates in the three previous quarters. The public sector generated only…