Frankfurt In the past weeks there have been repeated attempts to recover the course, on some days one could believe that the corona pandemic has already been overcome. But on Friday, disillusionment returned – the collapsed ifo business climate index made the whole dilemma clear.
The course of the mood barometer looks like a “Highway to Hell”, was the analysis of the VP Bank. The index is now significantly below the values of the crisis year 2009. The simple message for the future was: “Massive income losses are imminent. We will all get poorer. This applies not only to Germany, but to all economies. ”Sometimes it is better to hear the unvarnished truth.
Other analysts and experts are also skeptical about the weekly outlook. Cautious savings by consumers and companies create a completely different economic and inflation environment than one knows from the post-war period, the analysts at MFS Investment Management believe.
They expect the earnings recovery to be weaker than the market and point to the possible dilution of earnings through capital increases. They particularly highlight 2008 as a comparison.
“When the extreme risk of the international financial crisis subsided, companies were no longer concerned with distributions, but with recapitalization. To this end, new shares were issued – at the expense of existing shareholders, whose capital was heavily diluted, ”said the investment professionals. The new wave of recapitalization has probably just started. In the past few weeks, leisure companies and service providers in the United States and Europe have already offered new shares.
Warning to bargain hunters
The BLI – Banque de Luxembourg Investments is also cautious. “The financial markets are currently giving the impression that they are underestimating the extent of the economic damage and are counting on a rapid recovery as soon as the containment measures are reversed,” is the BLI’s assessment.
Many investors are conditioned to view any decline as an opportunity to buy. However, the analysts recall that while the fall in share prices in February / March was dramatic, the valuations were also very high. As a result, the markets today are anything but cheap, especially after the recent price recovery.
Quality companies with a very solid balance sheet, one or more sustainable competitive advantages and the ability to self-finance should be preferred. The main factor that will continue to speak for stocks remains the low interest rate level and thus the lack of alternatives. At the same time, gold will become an “indispensable part of a balanced portfolio because of the inflation risks.”
After the significant recovery since mid-March, the European stock market has recently lost some momentum, the Weberbank experts believe. In addition, the balance sheet season that is already underway shows significant impacts on corporate balance sheets due to the global “lockdowns”.
Correspondingly, the analysts have also significantly lowered their profit expectations for industrial companies, but also for the banking and energy sectors. Due to the economic slump, banks faced increased write-downs on their credit books and the massive drop in yields clouded interest income. Most recently, they also negatively impacted the rating agency Standard & Poor’s (S&P).
The Deutsche Bank and the Commerzbank were therefore particularly under pressure on Friday “We continue to distance ourselves from these sectors and prefer creditworthy pharmaceuticals or companies from the non-cyclical consumption. In addition, titles from the technology sector are promising in our eyes, ”said the Weberbank experts.
Central banks meet worldwide
If the economic situation continues to be poor, the states and central banks will have to take further support measures. Robert Greil, chief strategist at Merck Finck Privatbankiers, sees an opportunity for this next week because the European Central Bank, the US Federal Reserve and the Bank of Japan are meeting.
“As a result of the unprecedented economic downturn caused by the Covid 19 consequences, all central banks will reaffirm their willingness to support,” says Greil. The economic downturn left neither governments nor central banks a choice but to take further measures to support and recover the economy.
The gross domestic product for the first quarter of 2020 will be published in the euro area on Thursday, and new growth figures will come in the US on Wednesday. Further important economic data in Germany are the preliminary inflation figures and the labor market report for April.
According to DZ Bank, the next quarter should bring an improvement in the economy, but there does not have to be a “V” or “I” recovery. This is not ignored on the stock market, many stocks are up to 80 percent down.
By agreeing with Opec-plus, the global oil industry, economies, and other oil-dependent industries could avoid a very deep crisis, said Daniel Yergin of information service provider IHS Markit. “It prevents stockpiling, which takes pressure off prices when normalcy returns – whenever that will be.”
The wide-ranging restrictions on public life in many countries are having an impact on the economy, and the oil price has dropped 50-60 percent this year. “We do not expect a sustained recovery in the oil price until tense demand is eased again in the third quarter,” said Harry Tchilinguirian of BNP Paribas. These are not good signs for the German stock index (Dax), which will start trading again on Tuesday.
Last week’s market developments seemed to be fueled by the hope that the worst of the corona crisis would soon be behind us. Won on weekly view the Dax almost eleven percent, which is the most since November 2008 – on Thursday alone it was 2.2 percent. However, optimism cannot be determined from the economic indicators.
The latest bad news in short: The mood of the US consumer continues to collapse in view of the virus. The consumer confidence barometer in April fell to 71 points from 89.1 points in March, the University of Michigan said Thursday. This is the lowest level since December 2011. At the same time, the level of initial jobless claims in the US remains awesome, at 6.6 million a week through April 4.
Federal Reserve steers against the crisis
Federal Reserve chief Jerome Powell even warns that the US economy will sink into mass unemployment. For Thomas Gitzel, chief economist of the VP Banken Group, it is clear: “The decline in social product in the second quarter will break negative records.” Economists understand social product as the goods and services produced in an economy.
However, like all other central banks around the world, the US Federal Reserve is doing everything it can to at least mitigate the consequences of the slump. With additional emergency aid of over $ 2.3 trillion, the Fed wants to support the small and medium-sized companies in the United States that have been hit hard by the crisis.
The states are also generous in Europe. With aid programs worth more than 1.5 trillion euros, they are fighting the effects of the corona crisis on the economy. In order to finance the debts raised, “states will try to keep interest rates extremely low for years to come,” says Daniel Kerbach, chief investor at Merck Finck.
So far, the stock markets have shown behavior typical of bear markets. A deep fall was followed by a clear countermovement. “But as we know from historical crises, the phase of initially disoriented fluctuations in the capital markets can drag on over a long period of time,” says Daniel Schär from Weberbank. In the financial crisis, violent price drops and strong countermovements had alternated for half a year in close succession.
The market low was only reached after five months. Therefore, the market expert is only assuming an intermediate step in the current recovery of the stock markets. In the past, the phases were twelve to 60 months. It took so long to overcome such a serious crisis.
Profits could plunge 50 percent
The effects can also be seen in the yields. “This year, corporate earnings in the German Dax share index could plunge 50 percent and more, more than in previous recessions, when earnings fell by an average of 35 percent,” feared Christian Kahler, chief strategist at DZ Bank. After previous recessions, the price peak in the Dax was only reached again after four years.
Corporate earnings would have recovered faster. In DZ Bank’s view, this means that the companies in the Dax would earn as much in 2022/23 as they did in the record year of 2018. “The index itself would not reach its old high of 13,800 points until 2024,” judges Bald.
The number of corporations that cut, cut or postpone dividends due to the crisis is increasing every day. “Especially in the Dax, this will leave its mark, since in addition to subscription rights, dividend payments are also included in the price,” says Ulrich Stephan, chief investment strategist for private and corporate customers at German bank. According to him, exchange-traded futures contracts on the dividends of the Euro Stoxx 50 index indicate that the market does not expect a rapid recovery in payments, even for the largest European companies.
Derivatives on dividends, which will not be paid until 2022, have also fallen by 47 percent at the top. In the current year, a 25 to 30 percent drop in distributions in the Dax is expected.
Look into the next week
For Robert Greil, chief strategist at Merck Finck, what will probably be the most noticeable economic news in the coming week will be the number of new US jobless claims on Thursday reported for the week ending April 11. In America, retail sales and industrial production are also due in March next Wednesday. The Fed’s “Beige Book” also gives an impression of the state of the US economy.
There is little important economic data in Europe. This includes the result of industrial production for the euro area in February on Thursday. However, the corona pandemic is not expected to have a significant impact until March.
Things are getting more exciting in China. On Friday, the gross domestic product is due in the first quarter, which has been badly affected by the corona virus. In addition, industry figures for March will be published, which will provide information on the pace of normalization in the Middle Kingdom.
Despite all the existing uncertainty, Christian Kahler from DZ Bank judges: “Anyone who buys shares during the coming quarters should achieve good long-term investment results.”
Frankfurt Otto Fürst zu Castell-Rüdenhausen can look back on almost 1000 years of family history. The aristocratic family, which has its headquarters in the Lower Franconian town of Rüdenhausen near Würzburg, is managed by “Manager Magazin” with an estimated 500 million euros in 310th place among the richest families in Germany. “A look at our history shows that we have weathered many crises of small and large dimensions before. That gives me confidence that I can master the difficult times at the moment, ”says the prince.
In situations like today, values such as humaneness and solidarity would experience a renaissance “The trust in the actions of our employees forms an important basis at this time,” he emphasizes. The businessman does not want to claim state aid for his company investments, forests and agriculture. Together with his uncle Ferdinand zu Castell-Castell, he also holds half of the Fürstlich Castell’s Bank, founded in 1774, and a quarter of each of the Castell insurance.
The prince issued a return target of four to six percent for his wealth. This also applies to the bank, which once shed once more. According to Otto zu Castell-Rüdenhausen, it is worthwhile for the bank with its 210 employees, even in times of the corona crisis. In the current phase, the bank is aggressively approaching customers to provide advice and credit. “Our customers will not forget this attitude in these times in the future,” he hopes.
He does not think of selling the bank, even if consolidation is pending for smaller private banks. A farewell to banking is “out of the question for moral reasons” for the prince. It is not yet clear whether, together with his uncle, he will distribute half of the annual surplus, which was last at three million euros, and the other half in the bank or, given Corona, not. Otto zu Castell-Rüdenhausen: “We will only make a decision in this respect once we have recognized the net profit for 2019 and in compliance with the existing regulatory conditions.”
You can read the entire interview here:
The history of the Castell family goes back to their ancestor Rupert de Castello in 1057. You have survived epidemics and wars, how do you classify the pandemic against this background? A look at our history shows that we have survived many crises of small and large dimensions before. That gives me confidence that I can master the difficult times at the moment. Regarding the current situation caused by the corona virus, it can be said that we dealt with the possible effects very early on. We track the latest information every day and consider what we have to do. For me personally, as for our generation, it is of course a completely new and unprecedented situation. A look at the past teaches us above all to persevere and remain confident. I hope that we will be able to deal with this situation and that we will soon be able to leave it behind.
Which values are particularly important for you in the crisis? In such a situation, values like humanity and solidarity experience a kind of renaissance. Values that have always been lived within our companies together with trust and confidence. The trust in the actions of our employees forms an important basis at this time. In general, it is important that people stick together now and support each other.
Is tradition alone really a good advisor when it comes to managing assets that primarily consist of alternative investments such as forests and company investments? The companies have been in our possession for centuries. We are supported by outside management. For us it is clear that there will always be someone who has more expertise in the respective area than we do. Our job is to find the right managers. For my family, the saying that everything is gone after three generations is not allowed.
The situation with your assets is further complicated because there are two families in the princely estate with Castell-Castell and your own line Castell-Rüdenhausen, each of which has a half stake in different companies. How can this work, even if Ferdinand zu Castell-Castell is not only your business partner, but also your godfather? It is true that we each have a half stake in Fürstlich Castell’s Bank, founded in 1774, and a quarter each in Castell Insurance. We manage our agricultural and forestry holdings together. The families have had a common denominator for over two centuries. At the same time, I lease vineyards to my uncle. The fact that we have always been of one mind makes it much easier to manage our shared assets. I do not know why. Maybe because we only live a few kilometers apart and have had a similar upbringing? In any case, it works. The guideline of a return target of four to six percent often applies to the wealthy. Does this also apply to you? I strive for that in my assets. This also applies to the bank, where it used to be higher. You remember the testimony of the former boss of the German bank, Josef Ackermann, who spoke of 25 percent and more. That is out of the question today.
What is the decisive benchmark for you when investing? Do you avoid anything that resembles a monoculture? This already happens through the different participations. But even within these holdings I try to diversify further. For example, I think about renewable energies or forest cemeteries, to name just two examples. The same applies to my investment portfolio.
And you are sure that your investments still fit in with the times? In any case, I of course regularly put them to the test and feel comfortable with my company. Somehow that was put into my cradle. It would be difficult to be the first to sell certain assets after several generations. Finally, there is an historical obligation. This also applies to the bank in these difficult times when all institutions are struggling with negative interest rates and regulation. A large part of your investments, such as forestry and agriculture, have just come into fashion in the face of negative interest rates. Large investors expect stable, attractive returns that bonds previously provided. What are your experiences with it? Of course, I would like to achieve a higher return in agriculture and forestry than can currently be achieved with fixed-income securities. Against the background of the current situation in this area, it has become very difficult to achieve a desired return.
Is this due to climate change, which affects spruces and pines, which have long been popular in Germany? Does the bark beetle destroy your wealth? With my around 1,800 hectares of forest in Lower Franconia and another 900 hectares in Thuringia, my father was lucky enough to meet a forester who, with foresight, already started to switch to mixed forest in 1990. For conifers, we started planting silver fir and Douglas fir early. In the case of hardwoods, we are currently testing the chestnut and walnut trees. For me, sustainable management is of the utmost importance.
Is climate change the financial crisis for forest owners? Due to the early conversion, it does not hit us as hard as some other forest owners. We have been working with the University of Würzburg for two years and make climate measurements in the region. In the meantime, my godfather and I have put together a concept “Our forest in 2100”, according to which we are converting the forest. The hurricane “Sabine” in February hardly affected us both.
Due to climate change and hurricane damage, there is an oversupply of wood. What does this mean for your economic success? With the current oversupply I could sit out for a year, but I don’t do it because I also have bark beetle damage in conifers. This also applies to beeches infected with fungi. I have to cope with the low prices. However, I don’t actively go to the market with precious woods like oak. Here I serve the demand addressed to me.
Will palm trees grow in the Steigerwald in 100 years? There will be no palm trees. Prince Ferdinand zu Castell-Castell and I are currently looking around Alsace, where there are similar soil conditions, but the temperature is three to five degrees higher. Here, the sweet chestnut plays an important role. It has properties similar to those of oak, grows faster and can also be used to build barrels. On the other hand, walnut trees have a dark color and are similar in their properties to tropical woods.
But your family owns not only forests, but also the Fürstlich Castell’sche Bank for 246 years. Originally founded as a credit checkout after a famine, it was supposed to help farmers with loans to rebuild their livelihoods. Yes, we were then what is now called microfinance. The institute is now one of the few private banks and is the size of a medium-sized savings bank.
Are there memories of past crises in the face of the corona pandemic? Do corporate customers massively ask for new loans and draw existing credit lines? The past few weeks have shown that the situation of every company can change in a previously unknown manner and, above all, very quickly. The topics of liquidity, promotional loans, emergency aid and short-time allowance are very much in demand. Our customers react very differently. There are customers who want to manage the next few weeks on their own, others are asking about federal funding.
What about yourself, do you want to use the support of the state? We do not use government aid.
Does an institution of this size still have a future, especially in times of the corona crisis, is the bank still valuable? Definitely worth it. But the size of the bank with its 210 employees is a rather critical size. In addition, after the financial crisis, we have to meet the same costly regulatory requirements as a Deutsche Bank. We are a member of the Federal Association of German Banks (BdB), we cannot use the help of other associations such as that of the Volks- und Raiffeisenbanken. The advantage of our size is our flat hierarchy, short communication channels and personal customer contact. The current phase also offers opportunities. We prove to our customers that we stand by their side. We aggressively approach customers in order to support them with the necessary advice and possible loan grants. Our customers will not forget this attitude in these times in the future.
Shortly after the financial crisis, the bank was in good shape with its strong deposit business. Deposits are now synonymous with costs because of the negative interest rates. What does this mean for the Fürstlich Castell’sche Bank? The banking world and customer behavior have changed a lot. To do this justice, we also closed three branches in 2019 and expanded our digital services. We owners are in constant strategic discussions with the Supervisory Board about how the bank should look in the future. We currently have three pillars with private and medium-sized corporate banking and asset management.
What role do ownership play? We are proud that we are a real private bank, act as such and are perceived. We are independent and can determine our business policy ourselves. We stand by our bank and don’t run away if something should happen. We also stay away from businesses that should only bring quick profit. We are sustainable here too.
As the examples of Bethmann, Lampe and Merck Finck show, banks with a long history can be sold well. That may be, but for me it is out of the question for moral reasons; I wouldn’t want that with family history either. It also deprives the bank of its independence, that is, the asset from which it lives.
How much money do the two families deduct from the proceeds of the bank, whose net income last came to just under three million euros, or do you forego a distribution in view of Corona? The balance sheet is currently still being examined. Historically, half was usually left in the bank and the other half was distributed. We will only make a decision in this regard once the balance sheet profit for 2019 has been determined and the existing regulatory conditions have been observed.
Your lock is probably not cheap to maintain either. Definitely, but I’m lucky that my parents renovated the castle shortly before I moved in and that I won’t have to pay anything here.
How important is your private wealth for you in addition to the shares in the company? Does that give you the freedom you need? Part of our sustainability is that we reinvest existing money in companies. Otherwise I wouldn’t be able to buy a forest like I had recently in Thuringia. I also need reserves for the bank. The “Manager Magazin” has estimated the assets of the two princely families at half a billion euros. This put you in 310th place among the richest families in Germany. Is that a realistic assessment? I don’t want to comment on that.
How is your liquid assets divided, for example in shares or bonds? I concentrate on funds, mainly mixed, equity or bond funds from our bank and get advice from my in-house wealth management team. I don’t invest in illiquid investments like private equity or hedge funds. This area covers my own investments.
How do you feel about art? Of course I have ancestral paintings and I am very interested in art. Unfortunately, I don’t know my way around.
Finally, let’s switch to viticulture, which your uncle Ferdinand in particular runs, to whom you have leased acreage. Do you prefer the Silvaner vine? Yes, the Silvaner tastes particularly good. This applies, for example, to the Casteller location “Am Schlossberg”. In 1659 the first German Silvaner was planted there, which thrives particularly well in Lower Franconia.
More: The art market is facing an uncertain future.
Frankfurt For the time being, grit your teeth and survive the darkening situation. For the second half of the year, however, the stock market experts hope that the economy will revive if there are successes in curbing the Covid 19 virus and the restrictions on public life are relaxed again.
Investors on the stock markets meanwhile seem to be turning into a kind of wait-and-see attitude, after which the stocks are still down by a good 30 percent after a crash since mid-February and an intermediate recovery. Last week, the leading indices in the western world fell between one and two percent.
After the huge turmoil on the financial markets in the first quarter of 2020, the situation there should remain uneasy for now, my strategists. Robert Greil, chief strategist at Bank Merck Finck says: “In view of the open core question of how quickly economic activities will start up again worldwide, the second quarter will be extremely difficult both economically and in terms of stock exchange technology.”
Due to the persistently high level of uncertainty, he expects the markets to remain highly nervous despite glimpses of infection rates, for example. In the next few weeks, “fears will still prevail on the capital markets,” says Michael Bissinger from DZ Bank.
The central banks and governments tried to limit the corona damage that occurred with interest rate cuts and liquidity commitments. Nevertheless, according to the analyst, various sectors such as the aviation and tourism industries, but also the automotive industry, will suffer greatly.
He estimates that corporate earnings in Europe will decrease by ten to 20 percent in 2020. Many smaller companies could face bigger problems, which should have a negative impact on the unemployment rate.
Strategists recognize potential for catching up with stocks
But in the second half of the year strategists and analysts expect the political measures taken to take effect, the virus to be contained and the economy to turn around again. Greil von Merck Finck emphasizes: “With the increasingly bleak short-term economic prospects, it is becoming increasingly important that the global economy will recover significantly as soon as possible in the second half of the year.”
Such an economic sigh of relief should also inspire the stock markets more strongly again, adds Bissinger from DZ Bank – especially since the liquidity environment for the financial markets remains friendly due to “extensive stimuli” by the central banks.
DZ Bank analysts expect major indices to recover by around 20 percent by the end of the year after the stock price crash. They have lowered their index forecasts. But the German Leading index Dax see at the end of 2020 at 11,500 points, the leading euro zone index Euro Stoxx 50 at 3,200 points and the most important US index S&P 500 at 3,000 points.
So it could be “one of the best investment opportunities for equity investors” for decades, Bissinger emphasizes. Other strategists find that the stock exchanges in the Sars epidemic were weak as long as the number of infections rose about 17 years ago. When the number of new infections then decreased, the share prices recovered.
Economic downturn in Europe and the US in the second quarter
However, economic data is likely to deteriorate significantly in the second quarter. This suggests extremely weak leading indicators in Europe such as the purchasing manager indices. “Our data indicate a slump in the euro economic output of almost ten percent,” said Chris Williamson, chief economist at the market research institute Markit.
For the United States, where the pandemic appears to be worsening more than in Europe, analysts expect the economy to plunge even more sharply: analysts from the US bank believe Morgan Stanley a 38 percent slump in US economic output in the second quarter is possible – that’s more than it has been since the post-war year 1946.
Unemployment in the USA feared
The situation on the US labor market already deteriorated in March, as the official labor market report on Friday showed. Accordingly, many more jobs have been cut in the USA than expected. Last month, 701,000 non-agricultural jobs were cut instead of the expected 100,000 hobs.
“The labor market was already affected by the corona pandemic and the lockdown of the national economy in March,” comments Ralf Umlauf, Helaba economist. It is the first and very significant monthly job loss since 2010. According to experts, the worst is still ahead, as the effects of the pandemic in March cannot yet be fully recognized.
The day before, an extreme, surprisingly high number of first-time jobless claims for the United States had been announced. In the week the value was 6.65 million new unemployed, again higher than the previous record 3.28 million in the previous week. 3.5 million new applicants were expected.
The labor market situation in the US describes circulation at Helaba as “catastrophic”. Because of different survey times, the job losses in the official job market report were still reported as moderate, he says. But over the course of the year, he expects record unemployment in the USA: The unemployment rate is likely to “skyrocket to a double-digit level” from the current 4.4 percent in April.
Against this backdrop, investors and traders are eagerly awaiting the economic data to be released in the coming week. Orders for German industry are scheduled for February on Monday. Experts expect a drop of two percent here.
The significantly weaker demand from China, which had shut down its economy earlier than other countries due to the corona virus, is making itself felt here Commerzbank– Economist Ralph Solveen. However, the crisis will probably only take full effect in the March figures.
Industrial production for Germany follows in February, which is said to have decreased slightly. At the end of the week, the University of Michigan announced its preliminary consumer confidence for the United States in April. Here, too, analysts expect a significant decline.
Speculation about funding cuts in the Opec + countries
On the oil market, investors speculated on an impending agreement between the major producing countries of the “OPEC +” group, which, in addition to the members of the export cartel, include other producing countries such as Russia. You expect further production cuts. The price of a barrel of North Sea oil of the Brent variety rose by more than 14 percent on Friday to just under $ 34.
According to speculation, throttling by ten million barrels (barrel of 159 liters) per day is under discussion. If the cut were even more pronounced, states outside the alliance would also have to make their contribution.
US President Donald Trump said Thursday that the two clinched exporters Saudi Arabia and Russia have agreed on a 10 to 15 million barrel cut a day. This triggered a record price jump in oil: The price for crude oil from the North Sea rose briefly by around 25 percent and that for US crude oil by around 20 percent.
Saudi Arabia alone is currently pumping a record twelve million barrels a day. Restrictions to contain the pandemic have reduced global crude oil demand by around a third or 30 million barrels a day within a few weeks.
More: The stock indices have recently moved significantly from their lows. But such interim recoveries are not yet a sign of an all-clear – a comment.
A flash survey of the American Chamber of Commerce in Germany (AmCham) among 2,300 member companies now provides information for the first time on how much companies have suffered from the crisis in recent weeks. The data are available to the Handelsblatt.
Accordingly, only five percent of the companies surveyed felt no effects. Every third company experiences supply chain failures or delays.
Cancellation of trade fairs, events and business trips affects 95 percent of those surveyed. And with every second company, illnesses in the workforce or home office change the usual work processes.
All of this means that companies are expecting significant losses, with only one in ten not expecting a drop in sales to date.
“Our member companies are currently facing enormous challenges,” commented Frank Sportolari, President of AmCham Germany. “We welcome the German federal government’s aid package, but at the same time we demand that the necessary laws be passed as quickly as possible.” This is the only way to help small and medium-sized companies quickly and without red tape.
Help in the billions
The federal government took the first step on Wednesday and decided to provide billions in aid for companies, solo self-employed people, tenants and families. Small companies can receive up to 15,000 euros for three months, for which 50 billion euros are available. State guarantees for liabilities and an unlimited loan program through the KfW development bank are provided for large companies.
At the same time, the American Chamber of Commerce appeals to the US administration to work with Europe to find common solutions for transatlantic trade. “Our globalized world now demands solidarity and cohesion from us.”
Once again, AmCham is arguing differently from US President Donald Trump, who is more committed to foreclosure and protectionism in the sense of his “America first” policy. AmCham Germany distanced itself from it at an early stage and described it as a hindrance to intercontinental trade.
The interests of business show how important free trade is. The companies in both countries – USA and Germany – judge the other country as an important sales market with high potential. This is shown by the current “Economic Barometer 2020” of the AmCham in cooperation with the management consultancy Roland Berger.
American companies in Germany particularly appreciate the high qualifications of the employees, the quality of the supply networks and the excellent potential as a sales market.
This is remarkable in that Germany was already a growth locomotive even before the corona crisis. According to the chief strategist of Merck Finck’s private bankers, Robert Greil, Germany will now grow at below-average growth rates for the third year in a row, which means that “Germany remains a brake on the eurozone in a completely different way than before”.
But the geographically favorable central location of Germany in Europe and its large population make Europe’s largest economy still interesting for the Americans.
When asked what German companies particularly value in America, they even highlight the enormous sales potential in the first place. Nothing has changed in recent years, despite Trump’s trade threats and barriers. However, when it comes to the reliability of his policy, only four percent of German companies describe it as good.
In the last survey, it was still eight percent. Conversely, Americans in Germany criticize what they consider to be high corporate taxes and energy costs.
More: Read how governments are trying to contain the corona virus with big data.
OThe possibility of being able to hold a purely digital general meeting is getting closer. As the F.A.Z. learned about it is already being considered in political Berlin. Switzerland could serve as a model. In the wake of the Corona virus crisis, the Confederates had changed the legal requirements for shareholders’ meetings in such a way that the presence of shareholders is no longer necessary, and the opportunity for discussion can be eliminated. This regulation has been in effect since this week.
Business editor, responsible for the financial market.
The pharmaceutical company Roche made direct use of it and held the general meeting on March 17. Roche had already asked shareholders on March 10 to transfer their votes to independent proxies. In this way, the proposed appropriation of available earnings was resolved. Roche shareholders will thus receive the proposed dividend of CHF 9 per unit certificate. It is the 33rd consecutive dividend increase. Other Swiss companies, such as ABB, are expected to follow suit.
In Germany, on the other hand, one postponement of a general meeting follows the next. Merck, BASF and RWE are new additions. Many more are likely to follow. It is not possible to pay a dividend without the resolution of a general meeting. According to German law, the shareholders’ meetings are mandatory face-to-face events.
Dusseldorf Alex Karp is a free thinker. In interviews he talks about his wild days in Germany, where he did his doctorate in philosophy and also explored nightlife. He lets him know that he sees his life as an “artistic journey” that allows him to be creative. And he can be photographed with colleagues in Tai Chi.
However, this picture does not fit the company that the 52-year-old American is leading: Palantir Technologies develops data analysis software that intelligence services and investigative agencies use to search for terrorists and criminals. Management is vague on the details. Secretiveness instead of open discourse, big data instead of critical theory.
The start-up from Palo Alto is one of the stars of Silicon Valley with an estimated valuation of $ 20 billion. And with its technology, it is a sought-after partner for police bosses and security authorities. Also in Germany, where several authorities use the software or are working on its implementation – with the suspicious observation of civil rights activists and data protection officers.
Peter Thiel developed the idea: The co-founder of Paypal During his time at the payment service provider, he considered that technology to detect fraud should be transferred to other areas of life – for example, the search for terrorists. He contacted his friend Alex Karp, whom he knew from Stanford University – together with three other friends, they started building up the start-up in 2003, two years after the attacks on the World Trade Center.
The name comes from the “Lord of the Rings” book series, which also has numerous fans in Silicon Valley, and is said to be the program. In this fantasy world, a Palantir is a crystal that enables a view through someone else’s eyes – and thus serves as a powerful instrument for reconnaissance and espionage. The irony of history: In addition to the heroes, villains like the dark ruler Sauron also use such seeing stones – and the pictures are often misleading.
The CEO of Palantir built the start-up together with Peter Thiel in 2003.
What Palantir does has little to do with magic, much with technology. The start-up specializes in data mining, i.e. the analysis of large amounts of data. His systems analyze e-mails, entries in databases, publications on social media or images from surveillance cameras – the machine finds trends, cross-connections and relationships that people would have to laboriously collect. To do this, it needs intelligent statistics and powerful hardware.
Palantir Technologies markets this technology on the one hand to security agencies such as police stations and secret services. Many terrorist attacks have been prevented in this way, Karp claims, although without giving details. In view of this integration, the American civil rights organization ACLU describes the start-up as a key company in the surveillance industry.
On the other hand, Palantir works with companies; the list includes names such as airbus, Credit Suisse, JP Morgan Chase and Ferrari. The pharmaceutical manufacturer Merck, one of the most important customers in Europe, is an example of this. The Darmstadt-based company has been using the analysis tools since 2017 in a very different way than the security authorities: It wants to organize global supply chains with data analyzes more flexibly and develop new substances.
With the help of Palantir, Merck, for example, processes internal data from its own research as well as anonymized patient data available to the company. The knowledge gained from this is intended to accelerate new therapies against cancer and improve patient care. At the end of 2018, Merck also founded a joint venture called Syntropy with Palantir.
According to CEO Stefan Oschmann, it should become a platform for cancer research that aggregates data from scientists and research centers from all over the world – information from early cancer research in drug companies and institutes has so far only been available in isolation. The offer is aimed, for example, at large research centers.
Such examples show that Palantir has established itself. In 2018, sales were $ 880 million, according to the Wall Street Journal. The start-up found it difficult to find sponsors at first. In-Q-Tel, the CIA’s venture capital company, broke into the breach, and co-founder Thiel added $ 30 million in seed capital. Today, its stake is likely to be worth a multiple: In a financing round, the company was reportedly valued at $ 20 billion.
Alex Karp, the philosopher and son of hippies, should now be a rich man, especially if Palantir should go public one day, as observers have been expecting for some time. Not that it meant anything to him: in a podcast, he claimed not to think about the company’s valuation. The money gives him a lot of freedom to live free from pressure.
More: Merck CDO James Kugler wants to make the pharmaceutical and chemical company more efficient by analyzing data. In the end there is also hope for new therapies.
Dusseldorf The leading German index closed the week down just under three percent. On Friday, the German stock index closed the day down 3.37 percent at 11,541 points. After the Dax was initially on a recovery course in the middle of the week, things went downhill again on Thursday.
At times the Dax was even this Friday 4.1 percent in the red at 11,455 points. That was the lowest level in seven months.
The US stock markets also continued their downward slide on Friday. The Dow Jones of the standard values fell 2.9 percent at the opening to 25,354 points and has only recovered slightly since then.
The S&P 500 – the most important stock market barometer in the world – slid three percent to 2932 points when it opened and should have lost around ten percent of its value from its record high of February 19 at the end of this week. The technology exchange Nasdaq opened on Friday minus 2.9 percent to 8495 points.
The unexpectedly good data from the US labor market could hardly stabilize the prices, as the numbers only referred to the time before the rapid spread of the corona virus. Last month, 273,000 new jobs were created, the government said on Friday. This is more than what experts expect.
The corona virus is affecting more and more parts of the United States. Against this background, the Fed will have to make regular decisions on interest rates on March 18, and the markets expect a further cut.
The Euro Stoxx 50 as the leading index in the euro zone temporarily fell by a good four percent. The MDax of medium-sized market stocks lost more than three percent. The share of the industrial group listed in the MDax Thyssen-Krupp fell temporarily to a record low of minus 5.9 percent at 6.83 euros. The papers close 4.35 percent in minus at 6.94 euros.
Investors are clearly looking for security and sending out capital in bonds, certain currencies such as the yen and euro, but also gold. The prices of government bonds from the USA and Germany rose significantly, and their yields fell accordingly.
For example, the yield on ten-year stocks fell on Friday to a record low of minus 0.745 percent. It was below the previous low of minus 0.743 percent last September. At that time, Brexit and the trade dispute between the United States and China had unsettled investors.
Ten-year US bonds also fell to a new record low of 0.67 percent on Friday afternoon. Falling US bond yields are weighing on the dollar and making the euro rise. The single currency rose 0.7 percent and for the first time since July 2019 it again cost more than $ 1.13.
Experts believe that investors’ flight into bonds will continue. “Returns of zero percent are conceivable worldwide,” says Shaun Roach, one of the chief economists at the rating agency S&P Global. Bonds in the amount of $ 14.4 trillion are now yielding negative returns worldwide.
The price of gold rose to $ 1,690 on Friday morning, its highest level in seven years. Commodity analyst Carsten Fritsch from Commerzbank believes that gold should not have seen its high because of the ongoing uncertainties and further falling interest rates. In the early evening, the gold price was $ 1,667.
Corona concern pulls Dax into the red
That too unexpectedly strong increase in orders from industry did not provide buoyancy for the Dax. Orders to companies rose by 5.5 percent compared to the previous month, as the Federal Statistical Office announced on Friday. This is the most significant increase since mid-2014. Analysts had expected an increase of 1.3 percent.
However, economists do not read an upward trend from these numbers, “A silver lining on the order horizon, but unfortunately no sign of a noticeable economic recovery”, says Bastian Hepperle from Bankhaus Lampe. It is encouraging that the situation had improved at the beginning of the year even without large orders. But because of of the corona virus are “further disruptions in the production process and in incoming orders mapped out “.
The chief strategist at Merck Finck, Robert Greil, also believes that growth will continue to decline. “As long as the global spread of corona continues, they should Equity markets continue to fluctuate strongly, “ he says. After all: “The markets already have less economic growth and numerous profit warnings priced inIn addition, in his opinion, that of the US Federal Reserve (Fed) other central banks react supportively, the ECB “next Thursday at the latest,” believes Greil.
Also calculates CommerzbankChief Economist Jörg Krämer that the European Central Bank will decide at its meeting on Thursday to tighten the penalty interest rate for banks. He expects the deposit rate to change to minus 0.6 from the current minus 0.5 percent. In addition, the currency keepers around ECB chief Christine Lagarde are likely to increase the volume of their monthly bond purchases by 20 billion to 40 billion euros for a limited period of six months, for example.
A look at the Dax 30 values shows a concrete indication of the degree of uncertainty among investors due to the economic consequences of the coronavirus epidemic: at the stock exchange launch on Friday were all Dax 30 values in the minus, Were most affected Lufthansa-Titles and shares of German bank, which temporarily lost 6.6 and 5.2 percent of their value. In the afternoon Lufthansa recovered and went out of business with only a slight minus. Deutsche Bank shares closed 3.8 percent in the red.
Aviation and tourism stocks are suffering from the consequences of the virus epidemic. The European industry index falls 3.3 percent to a five and a half year low of 198.92 points. The share of the European aircraft manufacturer airbus fell temporarily by 7.3 percent to a 13-month low of EUR 99.86 and is heading for the largest daily loss in just over five years. Also MTU Aero Engines temporarily lost almost 7 percent in retail and closed 5.3 percent lower at EUR 203.60.
Bank stocks are also in a downward trend due to the corona virus, The European industry index drops 4.3 percent to an eleven-year low of 112.48 points.
Commerzbank already undercut its record low of April 2019 on Thursday, it continues its downward trend today and is temporarily 8.91 percent in the red. At the close of trading, Commerzbank was trading at minus 7.2 percent and EUR 4.30.
Overseers and politicians fear that evacuations and quarantine measures for an economy central functions such as payments or securities trading fail could. Banks are therefore already working intensively on emergency plans to ensure that they remain able to act under all circumstances, even if the epidemic spreads.
But that’s only one part of the threat to European money houses: investors fear that the virus will weigh on banks’ earnings. There is also the risk that The number and volume of loans at risk of default due to a recession increase significantly could.
Because of the corona virus, investors speculate that inflation will remain low and well below the ECB’s 2 percent target. As a result, what was important for the ECB’s monetary policy fell Euro inflation barometer Five-Year-Five-Year-Forward this Friday to a record low of 1.0402 percent, That means investors see inflation – starting in five years – over a period of five years at exactly this percentage.
Opec meeting in Vienna
The Opec summit in Vienna failed. Saudi Arabia was unable to persuade Russia on Friday to propose a cut in funding. On Thursday, Opec demanded a reduction of 1.5 million barrels (159 liters) of oil per day. The partners, including Russia, were to take over 500,000 barrels. Now the alliance of 14 Opec members and their ten cooperation partners is on the brink of extinction.
As a result, panic spread across the markets. The price of Brent oil peaked on Friday afternoon by around eight percent to around $ 45.75 a barrel (around 159 liters). The US variety WTI fell to around $ 42 per barrel. This is the lowest level in around three years.
The background to the required cut in production is the significantly lower oil demand that investors expect due to the Corona crisis. Now there is concern that the Opec + alliance will break up in a dispute between its most powerful members, Saudi Arabia and Russia, said Helima Croft, Opec expert and analyst at RBC Capital Markets. If Russia left the Opec + group, the price could drop.
Look at the individual values
Deutsche Bank: The titles of the largest German money house are falling under the wheels due to the increasing fear of corona virus having a negative impact on the global financial system. On Friday morning, Deutsche Bank stocks temporarily lost 5.2 percent of their value to EUR 6.67. At the close of trading, the shares were down 3.4 percent at EUR 6.77.
Thyssen Krupp: Thyssen-Krupp’s share price fell to a record low on Friday. The group, suffering from high losses, debts and pension burdens, sold its only notable profit maker, the elevator division, for a good 17 billion euros last week. The papers close 4.35 percent in minus at 6.94 euros.
Commerzbank: Just a few weeks ago, Commerzbank and Deutscher Bank papers were among the biggest winners this year. In mid-February, the Commerzbank securities had still cost around 6.80 euros. However, the effects of the corona crisis are particularly heavy on major European banks. Commerzbank shares already hit their record low of April 2019 on Thursday. This downward trend continues today, at times the minus was 8.9 percent and EUR 4.22. At the close of trading, Commerzbank was trading at minus 7.2 percent and EUR 4.30.
Airbus: Airbus gets a month without a new order. The European aircraft manufacturer’s share temporarily fell 7.3 percent to a 13-month low of EUR 99.86, heading for the biggest daily loss in just over five years. The good news is that there were no cancellations in February despite the coronavirus epidemic, writes analyst Sandy Morris from investment bank Jefferies. He also pointed out that in the previous two years there had been several months without new orders. In the evening, the stock was even 7.6 percent weaker at EUR 99.50.
Infineon: At the semiconductor company Infineon could be a planned multi-billion dollar acquisition of the US chip maker Cypress Semiconductor fail. The Committee for Foreign Investments in the United States (CFIUS) raised security concerns and recommended that President Donald Trump prohibit the German company from taking over, the finance agency Bloomberg said, citing persons familiar with the matter. The Infineon share then lost value on Friday and went out of trading at minus 5.5 percent at EUR 16.85.
Lufthansa: Lufthansa shares temporarily lost 6.6 percent of their value. According to a spokeswoman for the company, Lufthansa would like to send employees on forced leave due to the effects of the coronavirus. They are in talks with the Federal Employment Agency. As the airline announced on Friday, more flights than planned are to be canceled. Capacity is to be reduced by up to 50 percent in the next few weeks. In the afternoon, the papers went on a recovery course and closed in the slight minus of 0.2 percent at 11.47 euros.
What the chart technique says
11,624 points – this brand is the focus. Because this number is the correction low, the lowest point since the record high of 13,795 points on February 17. If the leading index does not break this brand significantly, there is a chance of a longer, sustainable bottom from which the prices can rise again. However, this mark was already fallen below on Friday morning, so a further sell-out is likely.
The German stock index is likely to remain outside its normal range for a long time, analyst Andreas Büchler of Index Radar speculates. The risk that the Dax will temporarily fall below the lower limit of its fluctuation margin at around 11,500 points is high. A recovery is overdue in the medium term, but the current trend could continue for a few weeks.
Economic analysts hope for political help
Handelsblatt analyst check: Barclays leaves SAP on “Overweight”
The British investment bank Barclays left the rating for SAP overweight with a target price of 150 euros. Following the fall in the price of the European software sector due to the novel corona virus, investors now have the opportunity to build up positions in shares of companies that shone with long-term growth drivers and attractive future prospects, wrote analyst James Goodman in a sector study available on Friday.
In this context, the expert explicitly named the papers from SAP, TeamViewer and Avast.