Politics

Growing uncertainty for US Presidential Election

The upcoming US presidential election has stirred up some unease on financial markets over the past few days. This was triggered by the falling opinion poll scores for the Democratic candidate Hillary Clinton. These have recently deteriorated again significantly from the state of play not too far back when polls showed a lead that suggested a relatively sure chance of victory. The election takes place on 8 November and the denigration of the opponents by ever more revelations has recently picked up considerable momentum again. True to the motto “voters have a short memory” it is no coincidence that damaging information is only now coming to light, virtually on the finishing straight to the election date. We continue to expect that Hillary Clinton will be the next president of the USA. The outcome of next Tuesday’s presidential and Congressional elections will probably not have any influence in the short term…

Spain has a government again, but stability is likely to be some time coming

Last Saturday after a ten-month stalemate the conservative Mariano Rajoy was elected again as the new prime minister of the Kingdom of Spain. While – as expected – the leader of the PP failed to obtain the required absolute majority in Thursday’s initial round of voting, in Saturday’s parliamentary vote he only needed a simple majority. King Felipe VI swore in Rajoy as prime minister today, initially putting an end to the political stalemate in Spain. But it remains to be seen how stable the new minority government, which will have to rely on the support of the Socialists, will prove to be. This shotgun marriage of convenience between the two main arch rivals, the PP and the PSOE, is a novelty in the history of Spanish government. It was mainly out of fear of more new elections in which they would probably have lost even more votes that the…

British economy still defies Brexit – for now…

The British economy proved this morning that it is always good for a surprise: contrary to initial concerns, the unexpected Brexit vote in June has hardly done the economy any harm to date – growth has not only not buckled but economic momentum eased only negligibly during the summer months. With GDP growing by 0.5 percent in the third quarter over what was already a strong second quarter, the pace of economic growth has been extremely robust in the last few months. Annual growth even accelerated recently from 2.1 to 2.3 percent. Does this mean the concerns about Brexit are over and done with? It is hardly any wonder that the warnings about the economic outcome of the referendum are meanwhile seen by many as scaremongering. Nonetheless, we believe it would be reckless to think that such a drastic political watershed as the EU exit will not lead to any…

US – good employment situation but hardly any sign of wage pressure

All in all, the employment situation in the United States is very good. The rate of unemployment has halved since the end of 2010 and the average number of unemployed persons in 2016 is likely to have fallen below the eight million mark again for the first time since 2007. In the course of the current year, as in previous years, we are seeing very moderate wage increases only, despite the quite good situation meanwhile on the labour market. Wage momentum appears to be capped by the sustained intake of returnees. Based on our calculations, the influx from the hidden reserves will continue next year too. We anticipate an unemployment rate of 4.8 percent next year and wage increases of around two and a half percent. Nonetheless, the reduction in unemployment and hence the decline in the unemployment rate is likely to progress at a somewhat slower pace than in…

EMU reports persistently high capital export

Once again, the latest capital account data from the eurozone give little cause for encouragement. In August, capital withdrawals amounted to a sizeable EUR 34bn – albeit an improvement on the two preceding months but still at a worrying level. All in all, the development of the capital account in the eurozone has assumed ominous dimensions in recent years: While the region was still profiting from net capital inflows even in the crisis years 2010-2012, since the end of 2014 the situation has dramatically changed. In the third quarter 2014, net capital withdrawals of EUR -100bn were not only deep in the red but at the same time marked a new record low. And the data still show no sign of recovery. Quite the reverse in fact, with the capital flight from the eurozone having accelerated further since then. This trend is being driven not only by foreign investors but…

Germany – investors like commercial property and multi-family dwellings even if they come at a price

Property investors have had plenty to worry about in the last few years. The flats constructed in the wake of the reunification boom in Germany resulted in high vacancy rates and a sharp fall in rents. Soon afterwards, the office property markets crashed when the new market bubble burst and following 9/11, as it became virtually impossible to let space in the office towers constructed during the years of the dot com hype. Some of the shopping centres built in the 1990s also turned out to be simply too much of a good thing in view of stagnant retail sales. Today, the situation is much brighter with regard to commercial property, although not all locations are flourishing. Structurally weak regions with a high level of migration from the area are not necessarily doing well. Among the clear winners are central German property markets in the country’s seven biggest cities –…

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