Despite huge aid, economists do not anticipate inflation for the time being

inflation

Economists do not expect prices to rise in a timely manner.

(Photo: dpa)

Munich Regardless of gigantic government spending, economists do not anticipate a surge in inflation in the Corona crisis for the time being – on the contrary, falling prices. A key factor in this is the drop in oil prices, according to several economists.

“In view of the severity of the current recession and against the background of the extremely sharp drop in oil prices, consumer price inflation should be significantly lower on average in 2020 than in the previous year,” says Michael Menhart, chief economist at the world’s largest reinsurer Munich Re. “I suspect that the corona crisis will lead to deflation,” says Markus Demary, Senior Economist for Monetary Policy and Financial Markets at the Cologne Institute for Economic Research.

“In the short term, the Covid 19 crisis is likely to have a deflationary effect,” says Katharina Utermöhl, Senior Economist responsible for Europe alliance. Europe’s leading insurer expects an extremely low price increase of 0.2 percent for 2020 in the euro area, and an inflation rate of 1.6 percent for 2021. BayernLB chief economist Jürgen Michels shares his colleagues’ assessments: “In the short term, I can clearly see that the pressure on prices is going down – also because of the oil price trend.”

Not only the governments, but also the companies will be sitting on mountains of debt after the crisis. “This debt has to be reduced and the debt reduction has priority over new investments for a certain time,” says IW money market specialist Demary. “Due to the reluctance to invest, demand is lacking, causing price growth to stagnate.”

Two of several other factors that Demary names: risk aversion and presumably subdued demand for the end of the pandemic. “Companies and households are more likely not to invest, but to wait and see that the uncertainty falls.”

Mountains of debt become the sticking point

And what about the end of the crisis? That depends on the extent and pace of the subsequent recovery, as Munich Re chief economist Menhart says – “although we are currently not assuming a fundamental change in the inflation outlook and therefore expect inflation rates to be roughly pre-crisis levels.”

However, like lawyers, economists analyze a variety of factors in their assessments. Some of these factors could well lead to a return in inflation. “But as soon as the crisis is over, dealing with the accumulated mountains of debt could turn out to be a sticking point,” says Allianz economist Utermöhl.

Experience from the financial crisis had shown that the resulting debt has not been reduced in many countries. “On the contrary: global debt has reached a new record high in 2019,” says the economist. “Since there will hardly be any productivity boost in the near future, I assume that the second path will ultimately be taken” – ie inflation.

Munich Re chief economist Menhart points to another point: “However, there are risks of higher inflation especially if, with normalizing economic demand, companies are unable to restart production sufficiently quickly.”

BayernLB chief economist Michels also believes that inflation can return. “In the medium term, I see a certain risk that inflation could go up, but only when we are economically back to the level we had before the crisis.” According to Michel’s assessment, this could only be the case in 2022/23.

“We noticed in the Corona crisis that we had too few reserves for many things,” says the Munich economist. “If we have a higher level of storage again, it costs money. And if you can no longer rely on international supply chains, production may be more local, but more expensive. These two factors could drive prices up. ”

More: Fluctuations on the stock exchanges are extreme due to the Covid 19 pandemic. But there is a way out: alternative investments. The Handelsblatt presents them.

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Hannover Re cancels profit forecast – dividend should remain

Hanover The world’s third largest reinsurer Hannover Re withdraws its 2020 profit target due to the corona pandemic. The expected negative consequences of the crisis cannot yet be assessed due to the great uncertainties, the company listed in the MDax surprisingly announced on Tuesday evening in Hanover.

Management expects increased burdens, especially in capital investments and property and casualty reinsurance. In mid-March, Hannover Re boss Jean-Jacques Henchoz had targeted an annual profit of 1.2 billion euros.

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Current Dax rate: Dax gives way slightly

Dusseldorf The German stock market starts the new trading week in a friendly manner, but slips further down the line. In afternoon trading, the leading German index Dax is down around 0.2 percent and is trading at 10,559 points.

The negative signs are increasing: According to a study, the Germans will put more money on the high edge this year. The savings rate is expected to climb to 12.5 percent this year from 10.9 percent in 2019, the economists at DZ Bank calculate. That is the highest private savings rate since 1992.

According to DZ Bank, uncertainties about job security and income prospects in particular contribute to a greater propensity to save. In return, consumption will shrink accordingly.

For example, less durable consumer goods such as cars would be bought. Private consumption in Germany is likely to fall by 2.8 percent, which would be the worst slump since reunification. The slump in consumption increases the proportion of savings in disposable income.

Overall, the disposable income of private households is expected to shrink by 1.1 percent this year, according to the DZ Bank experts. That would be the first decline since the 2009 financial crisis.

And according to the VDMA industry association, machine builders in Germany are increasingly feeling the drop in orders due to the corona crisis. In mid-April, 89 percent of the companies surveyed said they were affected by the effects of the pandemic. Overall, 45 percent of the companies report noticeable, 32 percent of those surveyed even serious order losses or cancellations.

As a result, the prices of cyclical stocks in particular are slipping. Daimler leads the list of losers with a minus of around 2.6 percent, as does the supplier Continental. In return, shares in non-cyclical companies such as the medical technology group Fresenius Medical Care (plus 3.2 percent) and the reinsurer Munich Re (plus 2.5 percent).

Investor sentiment is currently “wait and see neutral”, the possibility of a continuation of the recovery rally is limited in the short term, the risk of a setback is greater. This can also be seen in the current evaluation of the weekly Handelsblatt survey Dax-Sentiment.

Because surprisingly, the investment rate of investors is again at a relatively high level. This can also be seen from the overbought condition of the US selection index S&P 500, which rose too quickly after the price slump.

The insider barometer shows a similar picture, which analyzes the trading of Germany’s board of directors and supervisory boards in the shares of their company. Because with the recovery on the stock markets, insider buying has decreased.

The executives, who know their companies better than anyone else, go bargain hunting if they think their company’s shares on the stock market are undervalued. That is no longer so clearly the case.

Olaf Stotz, a professor at the Frankfurt School of Finance & Management, would only be able to support a new, larger rush of directors and supervisory boards to buy shares in their own companies Dax-Stands around 8500 points expected.

Look at individual values

Deutsche Bank: Germany’s largest money house is preparing for higher credit risks in the wake of the corona crisis. Actually, CEO Christian Sewing had promised a black zero in operating profit for 2020 after a billion minus in the previous year.

However, analysts now expect the bank to face a loss of around two billion euros. The share is down 1.8 percent.

Ceconomy: The restrictions on public life cause Saturn / Mediamarkt’s mother to plummet sales and lose quarterly. These numbers come as no surprise, a trader said. Nevertheless, the share of the electronics retailer loses 3.6 percent.

Philips: The Dutch medical technology group posted a significant drop in profits in the first quarter due to the virus crisis. Philips cited a drop in demand for electric toothbrushes, shavers and other health products as a result of the virus crisis as the reason for the decline. However, the share price rose 5.9 percent.

Look at other asset classes

The fall in oil prices cannot be stopped: In the afternoon, a barrel (159 liters) of the North Sea Brent cost $ 26.73, down 4.9 percent. The price of a barrel of the American grade WTI dropped temporarily by around 40 percent to around eleven dollars, the lowest level in 21 years.

While the slump in demand due to the corona crisis continues, concerns have recently increased on the US market that the oil deposits there may be reaching their capacity limits.

The slump in prices for US oil has thus amounted to almost 75 percent since the beginning of the year. Concerns about crude oil storage caused prices to plummet compared to North Sea oil, where discounts last year were 68 percent.

As market watchers from the Australia & New Zealand Banking Group reported, inventory levels in Cushing, Oklahoma, have increased by a whopping 50 percent since the beginning of March. “We still have hope of a recovery at the end of the year,” said the experts.

The EU summit on Thursday with the discussion on corona bonds has already on Monday impact on the bond market. The yield spread between German and Italian government bonds continues to increase and is now 2.32 percentage points. The yield on ten-year bonds is currently approaching the monthly highs reached last week at 1.940 percent.

This “spread” has become a kind of fever curve in the Italian economy. This risk premium reached a record level of 3.3 percentage points in 2018 when the EU Commission rejected the draft budget for the second time in November.

“Residential properties could emerge from the crisis as winners”

In any case, the Italian bond market is facing another test at the end of the week when S&P Global reviews Italy’s BBB rating with a negative outlook.

What the chart technique says

Corrections within the overall trend very often end at the 50 percent mark. Currently related to the Dax, this means that the downward trend has so far been from the record high in mid-February at 13,795 points to the low point in mid-March at 8255 points.

The 50 percent mark is accordingly at 11,025 points. With the increase to 10,820 points last Tuesday, the index of this brand has already approached.

Should the Frankfurt benchmark break this 11,025 point mark, the next resistance would be at 11,266 points, the August 2019 interim low.

The important resistance zone is in the range of 10,279 to 10,391 points. From the first-mentioned brand, the leading index started its rally in December 2018, which continued until a record high in February 2020. The brand was “confirmed” last Tuesday because the index ended trading right there.

Just below that there are so-called price gaps for which there were no quotes this year. The last gap would be closed at a Dax level of 10,097 points.

Here is the page with the DAX course, here is the current tops & flops in the Dax. Current Short sales of investors can be found in our Short sales database.

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Insurers are calling for state help

Paris, Frankfurt, Munich Oliver Bäte usually speaks quickly, but with caution. So it is no coincidence that a few days ago he ventured an unusual venture on the subject of Corona. A pandemic is “comparable to catastrophes such as earthquakes or the explosion of a nuclear power plant,” argued the CEO of Europe’s largest insurance company.

For such situations, there is cooperation between the public sector and the private sector in many countries. Bäte does not see himself alone with his wish. Also Thomas Buberl, the chief executive of the French rival Axa, brought into play a partnership between the public sector and the insurance industry in the face of the corona crisis.

The insurers are making an unusual move. Usually, a lot has to happen for the industry to call for the state. But the immense amounts of damage since the outbreak of the corona crisis threatens to push even the multi-billion dollar insurers to their financial limits. A pandemic and a war are risks that cannot be insured because their damage exceeds the financial strength of companies, the industry says in unison.

The situation is similar with other unpredictable major losses caused by natural disasters or terror. “Particularly with regard to the volumes of the aid measures decided by the state, it is clear that private insurance cover is not possible for pandemics of this extreme size,” says Christopher Lohmann, CEO of Gothaer Allgemeine, clearly.

CEO Bäte is therefore drumming openly in the shadow of the corona crisis for a pan-European solution – with the involvement of the state. “We should find a common solution in Europe because we are a community of danger,” argues the top manager.

In an extreme situation like a pandemic, however, private capital would never be sufficient, so a partnership between the public sector and the private sector would always be necessary. “At European level, you could set up a fund that the insurance industry pays into and that you can tap into in crisis situations,” said a spokesman.

Role insurance model

With the specialist insurer Extremus, there is already a model for this at the German level. The institute was founded in September 2002, about a year after the September 11, 2001 terrorist attacks in New York. According to its own statutes, Extremus provides support when damage to property and business interruptions are caused by acts of terrorism in Germany.

With an annual capacity of 2.5 billion euros, the specialist insurer has sufficient funds available to protect against terrorism. With the help of the federal government, this sum can be increased to ten billion euros. In extreme cases, a single company would receive up to 25 million euros, depending on the contract, its own fire and business interruption insurance. Many in the industry now favor such a model in the area of ​​epidemics and pandemics.

On Thursday, both sides demonstrated how quickly politicians and businesses can agree on common solutions under pressure from Corona. The German government and German credit insurers agreed to set up a € 30 billion protective shield to ensure that the flow of goods does not stall in the corona crisis.

The federal government therefore gives the insurers a return guarantee for up to 30 billion euros in defaults, as announced by the Association of the German Insurance Industry.

In return, the industry agrees to at least maintain or expand its cover letters. In addition, the insurers are giving 65 percent of the premium income in credit insurance to the state this year – and thus accepting losses. They also assume 500 million euros in reinsurance.

“For many companies, this crisis is threatening because they no longer receive orders,” said Federal Minister of Economics Peter Altmaier, explaining the move. “And if there are still orders, it is uncertain whether the customer will be able to pay in the end.” The agreement is intended to ensure that commercial credit insurance and most of the existing cover letters can continue to be maintained.

Credit insurance is an important prerequisite for the smooth flow of goods at home and abroad, especially in retail. This protects suppliers against the risk that their customers will not be able to pay the bill. Otherwise you would have to deliver against prepayment. Otherwise, with tight budgets, the risk of default in the crisis is likely to increase many times over.

However, a uniform procedure for pan-European pandemic coverage has not yet emerged. In France, the industry is building a national epidemic insurance policy that involves the state rather than a European fund solution. Axa boss Thomas Buberl had supported the considerations regarding the new policy in an interview with “Les Echos” a few days ago.

At Axa you can see certain advantages of coverage in partnership with the state. Because this would automatically put them at risk, the incentive for politicians to consider the consequences for the economy with all the measures ordered, such as a lockdown, would increase. Then he would have to pay the costs directly.

The German industry association GDV, on the other hand, considers the current time for the development of new approaches for insurance models after the crisis to be too early. “We have to drive on sight now,” said a spokesman. It is not yet known what effects the crisis and its consequences will have.

Insurers under pressure

In the corona crisis, insurers are under increasing political pressure to show more courtesy to their customers. US President Donald Trump urged industrial insurers in the United States to pay in principle for business interruption and shutdown losses due to the Covid 19 pandemic.

In many policies, pandemics are not explicitly excluded, insurers would have to pay, Trump recently said at his daily press conference on the pandemic in the White House. The pressure on the industry is also growing in Europe. For example, the temporary refusal of many insurers to take over damage from the closure of businesses in food businesses, restaurants and hotels in the corona crisis caused outrage.

In Bavaria, politicians and insurers agreed to take over up to 15 percent of the daily rates agreed for company closings for a total of 73,000 companies, mostly from the hotel and restaurant sector. “In the best case, the business closure insurance works like daily sickness benefits,” explains Gothaer-Allgemeine-Chef Lohmann about the current contractual arrangements.

Handelsblatt Morning Briefing - Corona Spezial

Such protection is expressly not intended for the now urgently needed closures to avoid social contacts. They were a prophylactic measure to avoid an epidemic.

So far, however, there is hardly any real protection against epidemics. Munich Re has been one of the few providers since 2017. Since then, the experts have tried to convince customers of products from the “Epidemic Risk Solutions” area through their unit in Singapore.

Interest in it was manageable until mid-March, it says from the house. Since then, the numerous inquiries have not been met. But for customers who still hope to be protected against the current consequences of the Covid 19 pandemic, this comes too late: Protection against the risks of Corona is now ruled out, according to Munich.

More: Despite Corona, Allianz is sticking to its planned dividend.

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Why it’s so difficult to predict pandemics

Dusseldorf, San Francisco Could you have known what was going to happen in the past? When people in large parts of the world cheerfully toasted the new year, a start-up from Canada warned of the corona virus.

On December 31, 2019, Bluedot reported to numerous authorities and hospitals in North America that there were signs of an outbreak in the metropolis of Wuhan and that it was expected to spread to other Asian countries.

Bluedot, founded in 2014, has developed a system that evaluates, among other things, news reports in 65 languages, data from airlines and reports of outbreaks of animal diseases using artificial intelligence (AI). In the event of anomalies, scientists examine what it is all about. The start-up issued a warning at the turn of the year – days before the World Health Agency named the emerging danger.

Bluedot founder Kamran Khan nurtures hope that AI can help predict future epidemics. He is not alone in this: the start-up Metabiota in San Francisco also warned of the Corona outbreak before the start of the year. Chief Nita Madhav says her algorithms can estimate the risk of epidemics before they break out – for example, by estimating data about the viruses in certain animal species and their transmission to humans.

Even large technology companies such as Google and Facebook are trying to use their gigantic mountains of data to make predictions for rapidly spreading diseases.

But experts have doubts that artificial intelligence is the solution. The data are useless for future pandemics, says Dirk Brockmann, for example. For the Robert Koch Institute (RKI), the physicist creates mathematical models that can be used to predict the spread of the coronavirus: “Epidemic outbreaks and pandemics are currently not an area of ​​application for models that are based on AI.”

graphic

In the beginning, an AI might be able to search for statistical irregularities in search patterns on the Internet. “But that hardly helps to predict an impending pandemic,” he told the Handelsblatt.

The physicist and sociologist Dirk Helbing, member of the Institute for Computational Science at ETH Zurich, also believes that AI will reach its limits when it comes to predicting global epidemics, no matter how much data is available. “The possibilities of AI and big data are often overestimated. They will not be able to prevent pandemics in the future either, ”he says.

Because the same applies to predictions of pandemics as to the prediction of earthquakes: there are too many unknown variables and constantly changing parameters. Despite all the technical possibilities, it is still not possible to make a precise forecast of when the next earthquake will break out in risk areas such as the San Francisco region.

In addition, pandemics mean that every virus is different. Therefore, there is no learning material that can be used to train an algorithm to warn of pandemics. It is also unknown how accurate the predictions are. Because “it is not at all clear how often these systems have falsely struck in the past and warned of an impending virus epidemic that did not occur,” says RKI researcher Dirk Brockmann.

Mathematical models have an advantage over AI

Metabiota boss Madhav is against it. Your company has collected data on 2500 past epidemics. Speech recognition algorithms in reports from WHO or local health authorities may recognize patterns from the early stages of an outbreak that are likely to indicate frequency and severity.

The algorithms also learned from the current crisis. If the knowledge changes, for example about the incubation period of the virus, this naturally shifts the prognosis, the epidemiologist admits. “We cannot predict exactly what will happen, but we can give a range of different results.”

In addition to the 52 diseases that Metabiota’s epidemic tracker is currently observing, the company also values ​​the willingness of individual countries to deal with an outbreak, for example. This should help insurance companies, for example, to manage the risk of epidemics. Metabiota has been working with the German reinsurer in the field for several years Munich Re together.

Researchers, on the other hand, largely agree that the fight against a pandemic begins before it breaks out and is not the first priority to collect data for predictions. Because even then, countries in Europe and North America would have had enough time to increase the number of ventilators and breathing masks. The diagnostic capacities could also have been increased in good time.

“If we defeat the corona virus, we have to ask ourselves why many countries were so poorly prepared for the pandemic,” says Helberg. “Because it would be expected statistically sooner or later.”

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Allianz maintains planned dividend

alliance

The buyback program in the amount of 1.5 billion euros is to be stopped once half of the amount.


(Photo: dpa)

Munich Europe’s largest insurer alliance wants to pay its shareholders a dividend for 2019 despite the corona crisis and against the advice of European supervisors. “Although the current environment is expected to be reflected in our results, our financial strength remains very strong,” said the DaxGroup in Munich on Monday.

The shareholders are to vote at the Annual General Meeting on May 6, as planned, on a dividend of EUR 9.60 per share. However, due to the corona virus pandemic, the meeting will take place in virtual form without the personal presence of the shareholders.

While the board of directors is sticking to the planned dividend, it is steering back during the ongoing share buyback. The current program, worth 1.5 billion euros, is to be stopped once half of the total. “We will consider resuming the program when the financial and economic impact of the Covid 19 pandemic is more apparent,” the group said.

A few days ago, the European insurance regulator Eiopa asked the companies in the industry to take a break from dividends and share buybacks. With her demand, however, she is not heard by large German insurers. In addition to Allianz, Munich Re also intends to maintain its payout: the group will stick to its proposed dividend of EUR 9.80 per share.

“Against the background of Eiopa’s statements, we are sticking to this decision,” said a Munich Re spokesman for the German Press Agency. “We were able to demonstrate our risk-bearing capacity to the German financial regulator even in the event of extreme damage. She expressed no concerns about dividend payments. ”A share buyback program was suspended until further notice due to the uncertainties.

The Talanx insurer is to propose a dividend of EUR 1.50 as planned. “We are confident that we can convince the Bafin of our position,” said a spokesman. Hannover Re is also in consultation with Bafin and refers to the unchanged dividend proposal of EUR 5.50. Talanx and Hannover Re do not have share buyback programs.

The German financial regulator Bafin had not considered a blanket distribution ban for insurance companies. The Bafin expected from the companies “a convincing reason, if they want to pay dividends”, it said. Bafin does not comment on individual companies.

“Eiopa is not our home regulator, but the Bafin,” said Allianz. The German financial regulator is positive about the dividend payment and share buyback because the financial strength and liquidity situation of Allianz – even in the crisis – is good ”.

More: Regulators argue about dividend payments.

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Regulators argue about dividend payments

Frankfurt The normal case goes like this: At the Annual General Meeting, shareholders criticize the distribution policy of a stock corporation. The dividend is too low, in view of the high profits, more must be paid out urgently.

At the two Munich insurers alliance and Munich Re such discussions are rare. Both have been dividend kings for years, and returns of more than four percent are an important argument for many shareholders to buy these shares in times of lean interest rates.

High dividend payments can also be voted on at the shareholders’ meetings of both companies scheduled for a few weeks. At Allianz, it should be € 9.60 per share, at Munich Re, it should be € 9.80. Last year, there was a lot of money.

Given the recent price losses of both stocks, this results in almost dreamlike dividend yields. At Allianz it is almost 6.5 percent of the closing price on Friday at EUR 149.32, at Munich Re there is also an extraordinary 5.7 percent, based on the closing price of EUR 171 there.

The joint-stock company and shareholders would therefore be in agreement as rarely if the European insurance regulator EIOPA had not surprised on Thursday evening with the recommendation to suspend dividends in view of the expected high burdens caused by the corona crisis. Overseers from other European countries also followed suit.

Bafin disagrees with EIOPA

The only sticking point: EIOPA, as the European supervisory authority, is not responsible for such questions, that is the German financial supervisory authority Bafin. There it was made clear relatively quickly that you see things very differently. Its executive director Frank Grund said whether a dividend would be paid and how high it could be, every insurer had to consider for itself.

However, risks from the corona pandemic would also have to be taken into account. “We are in close dialogue with the companies and expect a convincing reason if they want to pay dividends,” said Grund.

However, the big insurers in Germany have capital reserves and tend to invest little in stocks. Her recent fall in the course did not particularly affect her.

As a result, the grotesque situation came up this Friday that the insurers sought contact with the Bonn supervisors to explain the reasons for their high payouts. The high risk-bearing capacity could also be demonstrated in the case of external damage, Munich Re said in the evening. After that, the Bafin no longer had any concerns about the dividend payment. The alliance and the Talanx from Hanover could convince the supervisors.

However, insurers should not hope for direct praise from their shareholders. At least for the two Munich insurers Allianz and Munich Re, it is becoming apparent that this year there will be a virtual general meeting for the first time due to the corona crisis.

Instead of the Munich convention center with over 3000 shareholders, as in the previous year, Munich Re would then hold a virtual meeting from a conference room in the headquarters on April 29. It would be similar on May 6 at Allianz, otherwise it would have loaded into the Munich Olympiahalle.

This would also solve the problem of a possibly delayed payment of the dividend. If the general meeting were postponed to a later date, investors would also have to wait. Large investors, in particular, have already planned the lavish payments.

More: Read what investors should know about the online AGM here.

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BaFin against ban on dividends for insurers

Federal Financial Supervisory Authority

BaFin opposes the assessment of the EU authority EIOPA.


(Photo: Reuters)

Frankfurt The Bafin rejects a blanket ban on dividends for insurers. The German financial regulator is thus opposed to a different recommendation by the European supervisory authority EIOPA.

A blanket ban on distributions for insurers and pension funds is currently not available, the Bafin said. “When it comes to dividend policy, the individual situation of insurers must of course be taken into account, especially their risk-bearing capacity,” said Executive Director Frank Grund. “We are in close dialogue with the companies in this regard and expect a convincing reason if they want to pay dividends.” Any risks arising from the current crisis situation should be taken into account appropriately.

In view of the corona crisis, EU supervisory authority Eiopa on Thursday evening demanded that insurers and reinsurers should not pay dividends for the time being. In addition, it was advised not to buy back shares in order to conserve own funds. That burdened the shares of many insurers on Friday.

The insurance group Allianz said on Friday night demand that she wanted to hold dividends and buybacks.

The reinsurer Munich Re had withdrawn its profit target for 2020 on Tuesday and suspended the share buyback until further notice. At the Annual General Meeting on April 29, a dividend of EUR 9.80 per share will continue to be proposed, it said. The reinsurer did not want to comment on Eiopa’s claims.

In its statement to insurers, however, Bafin reaffirmed its expectation published on March 24 that financial institutions should not distribute dividends and profits.

More: More and more companies cut their dividends

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The Dax is going up slightly from nervous trade – Trump is fueling oil prices

Dusseldorf The leading German index ended a volatile trading day 0.27 percent up and went out of trading at 9570 points.

After a friendly start to trading the Dax first sank at noon and was temporarily around two percent in the red. The reason for the interim low was weak US data. Because in the Coronavirus crisis rocketed jobless claims in the US to historic highs. Last week, 6.65 million Americans made an initial application, the Department of Labor said in Washington on Thursday.

These figures had an impact on the German and US stock markets. The leading Dow Jones index fell 0.1 percent at the start of trading. The US markets later recovered, however, with the Dow Jones peaking at 2.45 percent. The reason for this was the intervention of US President Donald Trump in the oil price war between Saudi Arabia and Russia.

On Thursday afternoon, the US President tweeted: “I just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke to President Putin of Russia, and I expect and hope that they will cut back about 10 million barrels.” added in a second tweet: “It could be up to 15 million barrels.”

Trump may have related the ten to 15 million barrels to the daily production of the two states. That would be five times the cut in funding that Saudi Arabia and Russia have been arguing about since the beginning of March. The oil price then jumped at the top by more than 30 percent. But later, oil prices dropped slightly again, as Kremlin spokesman Dmitri Peskow immediately contradicted Trump.

Many companies change their forecasts

Despite today’s bottom formation, the stock market remains under strain. Economic development is clouding over, and more and more companies are moving away from their previous forecasts. However, reports of short-time work continue to increase.

Since the beginning of the year, the 160 companies listed in the Dax, MDax and SDax indices have already had 59 changes in their forecasts, as the service provider for financial communication EQS in Munich counted.

The company did not determine whether the individual changes in the outlook were triggered by the corona pandemic. However, the fact that the vast majority at 51 occurred after February 16, when the crisis was picking up speed, suggests a connection.

According to investor sentiment, the Situation on the German stock market somewhat eased again. The evaluation of the survey conducted by the Frankfurt Stock Exchange shows that local investors with a medium-term investment horizon are now increasingly relying on falling prices, presumably due to some “frightening” economic forecasts.

According to sentiment analysis, such behavior is a contraindicator. According to the behavioral economist Joachim Goldberg, who evaluates the survey, such bad forecasts have the advantage that they can hardly be undercut by reality. In addition, investors are now realizing that the economic consequences of the corona crisis will be considerable.

He sees the overall development as positive because investors would probably buy again at a significantly lower level.

Speculation on falling prices still at four values

In the past trading week they had Hedge funds still with their speculations contributed to the fact that there was an intermediate recovery on the German stock market. (Read: How Ray Dalio’s Billion Bet Winned Dax)
And how are the hedge funds currently behaving? Bridgewater, Dalio’s hedge fund, has resolved its speculation on falling prices at twelve DAX values. Or more precisely: the quota for all twelve stocks fell below the reportable limit of 0.5 percent of freely tradable shares.

The other funds that continue to focus on falling prices focus on four values: Covestro (1.7 percent), Deutsche Bank (2.9 percent), Germans Lufthansa (9.78 percent) and Wirecard (4.22 percent). The number shows the level of the short sale rate of freely tradable paper (as of Tuesday).

“When planning wealth, the rule is: never get out completely!”

Betting on falling prices in the Technical language Called short sales, operate according to the following principle: Investors borrow shares from companies where they expect price losses. They sell these papers afterwards and hope that the prices will drop. Then you can buy the shares back later and give them back to the lender. The difference between the short sale and the subsequent buyback is then the profit.

All of this leads to the conclusion: Trading with these four DAX values ​​is likely to become turbulent in the coming weeks. On the one hand, the outlook for these stocks is negative. But the Hedge funds will have to buy back the securities at some point.

This particularly affects Lufthansa’s share certificates, which slid to their lowest price level since 2012 on Wednesday. Almost ten percent of all freely tradable shares have to be bought back by the funds.

A calculation example shows that this buyback is likely to have a significant impact on the price. Of the 478 million freely tradable Lufthansa shares, 46 million shares are “sold short”. With a daily trading volume of around ten million units in the past week, this buyback should not be quick.

Look at the individual values

Rocket Internet: According to the start-up investor, it is financially prepared for burdens caused by the coronavirus pandemic, but the share was still down 2.45 percent at the close of trading. The bottom line was Rocket, whose biggest startups like Global Fashion Group or Home24 are now listed on the stock exchange last year, a profit of 280 million euros. In 2018, a profit of 196 million euros was incurred.

Hella: The auto parts supplier was hit by the corona pandemic in the third quarter of its 2019/20 financial year. Nevertheless, the headlight specialist is still within the expected range in the first nine months. For the full year, the board had already cashed its annual targets in mid-March due to the corona crisis. The share went down 2.53 percent from trading.

United Internet: They ended by 2.92 percent more United Internet-Share the trading day. The telecommunications provider plans to launch a new share buyback program with a volume of up to 150 million euros. A clear contrast to many other companies. The reinsurer Munich Re has, for example, stopped its current buyback program.

Carl Zeiss Meditec: Sluggish business hit the medical technology company and brought the shares down by 4.18 percent at the close of trading. Carl Zeiss Meditec has given up its financial targets for the current financial year 2019/20 due to the coronavirus crisis. A reliable forecast of business development is currently not possible.

What the chart technique says

Although there was no significant technical decision on Wednesday despite the high losses, the trading day was also not helpful. So the Dax was unable to close the small downward price gap.
Such downward price gaps arise when the daily low of the previous day is above the daily high of the subsequent trading day. The daily low on Tuesday was 9703 points, the daily high on Wednesday was reached at 9686 points.

On the other hand, the previous week’s low of 9453 was not fallen below. The Dax will, according to the Düsseldorfer Bank HSBC only switch back to crisis mode at prices below 9070 points.

The Frankfurt benchmark has moved far away from the important brands on the top. The decisive factor is the space between 10,138 and 10,391 points inclusive. Among other things, there is the low of December 2018 with 10,279 points, the starting signal for the rally until mid-February 2020 with the previous record high.

“This is the decisive hurdle in chart technology, skipping it would put the German standard values ​​on a quick recovery path,” say the technical analysts of the Düsseldorf-based bank HSBC.

Here is the page with the DAX course, here is the current tops & flops in the Dax. Current Short sales of investors can be found in our Short sales database. “

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Dax slips after weak US data

Dusseldorf After a friendly start to trading, the Dax slipped back into the red. The German stock market barometer is down more than 1.7 percent in afternoon trading at 9379 points. The reason for this is weak US data.

Because in the Coronavirus Crisis US Unemployment Claims Reach historic highs. Last week, 6.65 million Americans made an initial application, the Department of Labor said in Washington on Thursday. Analysts interviewed by the Reuters news agency had only expected 3.5 million applications. In the previous week, the previous high of 1982 had already been exceeded with almost 3.3 million applications.

Many economists assume that the unemployment rate of 3.5 percent will skyrocket in the wake of the wave of redundancies triggered by the virus pandemic: leading monetary authorities of the Federal Reserve expect an increase to double-digit figures. “The labor market situation in the United States can be described as catastrophic,” said the analysts at Landesbank Helaba.

The US unemployment rate will be released tomorrow Friday as part of the March job report. However, some of the statistics are collected before the outbreak of the corona crisis. So only the April values ​​should provide more information.

These numbers didn’t just impact the stock market. The gold price rose from $ 1,580 to $ 1,603 per troy ounce and is currently up 0.8 percent. The price of silver increases by almost four percent to $ 14.53 an ounce.

Yesterday, Wednesday, the leading German index went down again: He lost 3.9 percent and closed at 9545 points – that’s a minus of 390 points. All 30 DAX values ​​were negative yesterday. The ratio of winners to losers in the overall market was also clearly negative at 203 to 633.

Many companies change their forecasts

It is a dangerous mixthat continue to weigh on the stock market. Economic development is clouding over, and more and more companies are moving away from their previous forecasts. However, reports of short-time work continue to increase.

Since the beginning of the year, the 160 companies listed in the Dax, MDax and SDax indices have already had 59 changes in their forecasts, as the service provider for financial communication EQS in Munich counted.

The company did not determine whether the individual changes in the outlook were triggered by the corona pandemic. However, the fact that the vast majority at 51 occurred after February 16, when the crisis was picking up speed, suggests a connection.

According to investor sentiment, the Situation on the German stock market somewhat eased again. The evaluation of the survey conducted by the Frankfurt Stock Exchange shows that local investors with a medium-term investment horizon are now increasingly relying on falling prices, presumably due to some “frightening” economic forecasts.

According to sentiment analysis, such behavior is a contraindicator. According to the behavioral economist Joachim Goldberg, who evaluates the survey, such bad forecasts have the advantage that they can hardly be undercut by reality. In addition, investors are now realizing that the economic consequences of the corona crisis will be considerable.

He sees the overall development as positive because investors would probably buy again at a significantly lower level.

Speculation on falling prices still at four values

In the past trading week they had Hedge funds still with their speculations contributed to the fact that there was an intermediate recovery on the German stock market. (Read: How Ray Dalio’s Billion Bet Winned Dax)
And how are the hedge funds currently behaving? Bridgewater, Dalio’s hedge fund, has resolved its speculation on falling prices at twelve DAX values. Or more precisely: the quota for all twelve stocks fell below the reportable limit of 0.5 percent of freely tradable shares.

The other funds that continue to focus on falling prices focus on four values: Covestro (1.7 percent), Deutsche Bank (2.9 percent), Germans Lufthansa (9.78 percent) and Wirecard (4.22 percent). The number shows the level of the short sale rate of freely tradable paper (as of Tuesday).

“When planning wealth, the rule is: never get out completely!”

Betting on falling prices in the Technical language Called short sales, operate according to the following principle: Investors borrow shares from companies where they expect price losses. They sell these papers afterwards and hope that the prices will drop. Then you can buy the shares back later and give them back to the lender. The difference between the short sale and the subsequent buyback is then the profit.

All of this leads to the conclusion: Trading with these four DAX values ​​is likely to become turbulent in the coming weeks. On the one hand, the outlook for these stocks is negative. But the Hedge funds will have to buy back the securities at some point.

This particularly affects Lufthansa’s share certificates, which slid to their lowest price level since 2012 on Wednesday. Almost ten percent of all freely tradable shares have to be bought back by the funds.

A calculation example shows that this buyback is likely to have a significant impact on the price. Of the 478 million freely tradable Lufthansa shares, 46 million shares are “sold short”. With a daily trading volume of around ten million units in the past week, this buyback should not be quick.

Look at other asset classes

The prospect of a prolonged crisis in the United States weighs on the yuan. The chinese currency falls, a dollar costs 7.1283 yuan at the top 0.4 percent more and as much as it has not in almost half a year. In China, production is ramping up again after the corona virus outbreak, but customers are missing because the global economy is in quarantine.

Of the Oil price benefits from mediation efforts by US President Donald Trump in the dispute between Saudi Arabia and Russia. A barrel (159 liters) of light US oil costs nine percent more at $ 22.15, while North Sea oil of the Brent variety costs 10.1 percent to $ 27.23 per barrel.

According to a report by the “Wall Street Journal”, Donald Trump wants to meet with the CEOs of the largest oil companies on Friday to discuss ways out of the difficult situation. According to this, both aid for industry and punitive tariffs on oil exports from Saudi Arabia are under discussion.

Look at the individual values

Rocket Internet: According to the start-up investor, it is financially prepared for burdens caused by the coronavirus pandemic, but the share nevertheless falls by 1.97 percent. The bottom line was Rocket, whose biggest startups like Global Fashion Group or Home24 are now listed on the stock exchange last year, a profit of 280 million euros. In 2018, a profit of 196 million euros was incurred.

Hella: The auto parts supplier was hit by the corona pandemic in the third quarter of its 2019/20 financial year. Nevertheless, the headlight specialist is still within the expected range in the first nine months. For the full year, the board had already cashed its annual targets in mid-March due to the corona crisis. The share gains 0.16 percent.

United Internet: They are up 0.15 percent United Internet-Shares. The telecommunications provider plans to launch a new share buyback program with a volume of up to 150 million euros. A clear contrast to many other companies. The reinsurer Munich Re has, for example, stopped its current buyback program.

What the chart technique says

Although there was no significant technical decision on Wednesday despite the high losses, the trading day was also not helpful. So the Dax was unable to close the small downward price gap.
Such downward price gaps arise when the daily low of the previous day is above the daily high of the subsequent trading day. The daily low on Tuesday was 9703 points, the daily high on Wednesday was reached at 9686 points.

On the other hand, the previous week’s low of 9453 was not fallen below. According to the Düsseldorf-based bank HSBC, the Dax will only go back into crisis mode at prices below 9070 points.

The Frankfurt benchmark has moved far away from the important brands on the top. The decisive factor is the space between 10,138 and 10,391 points inclusive. Among other things, there is the low of December 2018 with 10,279 points, the starting signal for the rally until mid-February 2020 with the previous record high.

“This is the decisive hurdle in chart technology, the skipping of which would put the German standard values ​​on a quick recovery path,” say the technical analysts at Düsseldorfer Bank HSBC.

Here is the page with the DAX course, here is the current tops & flops in the Dax. Current Short sales of investors can be found in our Short sales database. “

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