Germany

Money for nothing…

Who doesn’t know the Dire Straits song „Money For Nothing“? Reality even caught up with us. For debts there is even money back today. In this logic, debts have become an asset and no longer a burden. This of course reverses many laws in the real economy and the financial markets. In the US, companies with new debts are buying back shares because they expect financing advantages in view of the low interest rates for corporate bonds. In Germany, you can soon get real estate loans for free. Low interest rates are of course also a reason for rising house prices. However, the favourable interest rate environment does not mean that the road to home ownership has in principle become easier and more affordable. Rather, the challenges have changed. The hurdle that households have to overcome today when buying their own home is no longer the viable monthly burden. Since…

Despite economic slowdown: Craft trades in Germany develop splendidly

  Even though the German economy shrank slightly in the second quarter and the manufacturing sector in particular is suffering from weak demand: With around one million enterprises, the skilled trades in Germany are doing excellently. This is by no means due solely to the construction and finishing trades, whose sales rose by 6.4% and 4.0% respectively in the spring. These two large segments of the skilled trades, together with the health sector and the skilled trades, set the pace for private demand. Compared to the previous year, however, sales in the second quarter grew in all seven branches of trade, even in the case of crafts for commercial requirements, which are noticeably dependent on industry. On the whole, the skilled trades are missing the extremely high growth momentum of the first quarter. Nevertheless, sales in the second quarter rose by a total of 3.3% in the craft trades requiring…

Credit demand remains robust

In the second quarter of this year, rising consumer spending by private households and the state was not sufficient to compensate for the weaker foreign trade contribution. As a result, the German economy shrank slightly by 0.1% compared with the winter quarter. The export-dependent German industry, in particular, is feeling the effects of declining demand from abroad. However, incoming orders even from Germany have been declining recently. So far, the economic slowdown in Germany has not affected the credit markets. Corporate loan portfolios continued to grow dynamically in the second quarter. One of the main reasons for this development is the high significance that bank loans continue to have, at least among small and medium-sized enterprises in Germany. In addition, replacement investments and above all investments in measures to maintain capacity continue to ensure solid demand for loans, even though expansion is less in demand at present in view of…

You shouldn’t go by speedboat

The dispute between „value“ and „growth“ followers is almost as old as the stock market itself, although these are not per se contrary investment styles. The value of a company is created by growth. Value stocks are regarded as boring thick ships with little growth and low valuation, growth stocks as speedboats characterised by high profit growth. What is value, what is growth, as defined by the relevant index providers? – They make it easy for themselves and usually only look at the ratio of a company’s price to book value (KBV). This indicates how the current market value of a company is quoted in relation to the equity value shown in the balance sheet. In most cases, the index providers „book“ the more expensive half of all shares in the index according to KBV in the „Growth“ index and the other half in the „Value“ index. In our view,…

Bad news for the German industry: Incoming orders continue to fall

Geopolitical uncertainties and the effects of the trade conflict between the USA and China are causing a cooling of world trade, which especially the export-dependent industrial companies in Germany cannot escape. After all, they generate around 50% of their sales abroad. In the automotive industry, mechanical engineering and the chemical industry, the figure even exceeds 60%. Accordingly, incoming orders fell further in July, falling by 5.6 percent year-on-year. In the first seven months of this year, orders declined in all major segments of the manufacturing industry. The global economic slowdown is thus no longer merely causing weakness in export-dependent industries. As companies in these sectors are themselves placing fewer orders due to lower capacity utilization, domestic demand is now also being depressed. Demand from non-euro countries had calmed down somewhat in the second quarter. Exports from Germany to the USA increased by 4.3% in the first half of the year,…

Inflation rate in the euro zone at 1.0 percent – Expectations for the ECB rise

The rise in consumer prices in the euro zone did not gain any momentum in August either. According to Eurostat’s flash estimate, the annual rate of inflation in the currency area remained unchanged at 1.0 percent as in the previous month. However, this means that the inflation rate remains well below the ECB’s original target. Once again, energy commodities, which fell in price year-on-year, played a major role in the weak price trend. No wonder, since one of the main fundamental drivers of energy prices in the shopping basket of European consumers, the price of crude oil, is quoted around 19 percent lower than a year ago. At the country level, the national economies, which have also provided initial estimates of price trends, showed only limited momentum. In Germany, the Harmonized Index of Consumer Prices (HICP) fell from 1.1 to 1.0 percent, in France it fell from 1.3 to 1.2…

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