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.
Inflation rate in the Eurozone: Easter drives inflation – peak for the year most likely reached

The rate of inflation in the eurozone is once again gaining momentum. According to preliminary data, the annual rate is +1.9% in April and therefore again approaching the ECB’s target level of “close to, but below, 2%”. However, the figure for April is not an indication of growing price pressure in the currency union. Rather, the increase is attributable to the “Easter effect”, which is particularly reflected in the sharp rise in the core rate. Going forward, the price pressure is for the time being likely to be on a downward trend again as the year progresses, especially because the strong upswing in energy prices can be expected to slow down, provided that there are no unexpected hikes in the oil price. As a result, the pressure on the ECB to justify its actions is likely to fall for the moment. However, it is worth noting that the less volatile…

Trump’s tax plans are good, but they are a mortgage on the future

US President Donald Trump wants to stimulate the economy by introducing tax reductions for enterprises and private households. The economy is to gain a further boost from a general unravelling of the tax maze. Yesterday’s announcements of the President and his Finance Minister are probably intended to underscore that the election pledge of achieving “the greatest tax reform of all time” is to be implemented at all events. For even though the Republicans have the majority in both chambers of Congress, hardly any of Trump’s election pledges have been realised until now. A preliminary legislative draft to reform “Obamacare” was unceremoniously outvoted in the House of Representatives. Many of the President’s executive orders were revoked again by the courts or could only be applied on the basis of huge restrictions. The green light given to the billion-dollar expansion of the “Keystone XL” oil pipeline, which had been shelved for years,…

ECB’s monetary policy is heightening the pressure on banks

The monetary measures of the European Central Bank (ECB) are increasingly burdening the profits of banks in Germany and Europe. This is revealed in the ECB’s Bank Lending Survey for April on the lending business of banks. While the extended asset purchasing programme of the Eurosystem has directly or indirectly improved the liquidity position and financing conditions of banks in the last six months, the improvements in Germany resulted primarily from clients’ cash asset reallocations into bank deposits and to a lesser extent from the sale of banks’ own securities. However, a significant majority of the institutions surveyed in Europe also reported contracting net interest margins and a deterioration in the overall earnings situation of banks. The reduction in lending rates, boosted by the asset purchasing programme, has particularly contributed to this development. The average European effective interest rate on new business with corporate clients fell in February to a…

Germany needs to invest more in R&D

Research and development play a decisive role precisely in economies short on commodities, such as Germany. To secure qualified jobs and thus income levels and prosperity in the international competition between economic hubs, what is required is a broad-based, efficient R&D industry that “produces” ideas and develops them into new products and technologies. Indeed, in the past the inventiveness of German researchers and developers has repeatedly seen success on the market. In recent years, research activities have in fact been tangibly boosted. Thus, Germany swiftly achieved the target level for research expenditure of three percent of gross domestic product at an early date. On a European comparison, the German economy is not only well positioned as regards research intensity, but also as regards research, development and marketing successes, as is borne out by patent filings and exports of high-tech goods. However, innovation cycles are growing ever shorter and international competition…

Macron and Le Pen through to the second round

The independent liberal Macron looks set to emerge as the victor in the first round of the French presidential election, overtaking the far-right populist Front National candidate Le Pen by a margin of about two percentage points. Based on initial projections, Macron has polled almost 24% of votes, and Le Pen nearly 22%. Conversely, the Republican candidate Fillon who still looked like the frontrunner at the beginning of the year, failed to get through to the second round. Allegations of fraudulent payments of public funds to family members have undermined his election campaign and ultimately proved too much for many French voters. The left-wing populist Mélenchon, who enjoyed a massive surge of support in recent weeks, did not make any further gains at the crucial moment, and thus also failed to deliver a surprise result. Consequently, there will be no run-off between two radically opposed candidates, which would have sent…

Purchasing managers’ indices signal a good start for the second quarter

Sentiment among European purchasing managers points towards a sound economic backdrop in the European Monetary Union. According to today’s advance release based on around 85 percent of the answers of the purchasing managers surveyed, the trend barometers not only remain at a high level but could even come in slightly above the high March values. This is reflected in the comprehensive composite purchasing managers’ index, which encompasses the sentiment in the entire private economy. It improved once again by 0.3 points to 56.7 index points in April, which is the highest level in the last 72 months. Both the services and the manufacturing sector reported an improvement in sentiment. With regard to individual countries, better sentiment figures in France and the other countries more than compensated for the slight deterioration of sentiment among the German purchasing managers at a high level. According to the survey results, the monetary union’s economic…