Global
    Robo-advice - a true innovation in asset managementoverlay
    August 10, 2017
    EU Monitor
    Robo-advisors are online investment platforms that use computer algorithms to manage client portfolios and are thus part of the FinTech universe. With their user-friendly, automated and low-cost services, robo-advisors pose a challenge to traditional financial advisory services and are growing fast. Online client onboarding is the most crucial step in this process, relying on questionnaires to figure out clients' preferences. Following a conservative approach in their asset selection, robo-advisors mainly invest in ETFs. Portfolio allocation is done via mean-variance optimisation and threshold-based rebalancing is utilised to maintain targeted asset weights. Wealthier and more educated clients are joining millennials as robo-advisory clients. Fees are considerably higher in the EU than in the US where robo-advisors’ AuM are much larger. Robo-advisors can contribute to financial inclusion, while their long-term success relies on a high degree of accuracy and suitability for clients.
    Video: Cash, freedom and crimeoverlay
    June 22, 2017
    Noticeboard
    With the growing use of digital payments, the need for physical cash is no longer self-evident. But: Demand for euro cash is on the rise. Euro cash in circulation tripled between 2003 and 2016 to EUR 1.2 trillion and thus, grew faster than GDP at current prices. It is estimated that euro cash is used for domestic payments, hoarded for saving purposes and held outside the euro area at roughly equal parts.
    Video: Bargeld, Freiheit und Verbrechenoverlay
    June 14, 2017
    In eigener Sache
    Angesichts des zunehmend digitalen Zahlungsverkehrs ist die Notwendigkeit von Bargeld heute nicht mehr selbstverständlich. Aber: Die Nachfrage nach Euro-Bargeld steigt. Der Euro-Bargeldumlauf verdreifachte sich von 2003 bis 2016 auf 1,2 Billionen Euro und wuchs somit schneller als das nominale BIP. Schätzungen zufolge wird das umlaufende Euro-Bargeld für inländische Zahlungen benutzt, für Sparzwecke gehortet oder im Ausland gehalten, und zwar zu etwa je einem Drittel.
    Europe
    New EU money market fund regulation: Will growth continue?overlay
    September 13, 2017
    EU Monitor
    Money market funds in the euro area managed assets worth EUR 1.16 trillion in mid-2017. Low interest rates did not hamper the impressive growth by EUR 260 billion during the past three years. But new EU regulation taking effect in 2018 will impose stricter rules on fund managers. However, the measured regulation will probably not cause a major restructuring of the euro area market, in contrast to the reshuffling seen in response to the US money market fund reform. In the future, Brexit could lead to competition for non-EUR denominated money market fund business between the EU and the UK.
    EU Politics: Reform debate to pick up pace after the German electionsoverlay
    September 4, 2017
    Focus Europe
    Optimism about Europe’s future surged after the French elections, while the EU is increasingly losing patience with British “divorce tactics”. Franco-German initiatives will be key to set the path for European reforms but the debate is expected to only gain speed after the formation of a new German government towards the end of the year. Meanwhile, the refugee challenge and EU external relations will remain on top of Europe’s political agenda.
    Where do European banks stand? 10 years after the start of the financial crisisoverlay
    August 30, 2017
    EU Monitor
    It is remarkable what and how much has changed in the European banking industry since the global financial crisis erupted almost exactly ten years ago: comparing H1 2017 to the peak of the boom in H1 2007, revenue composition has shifted towards more sustainable sources, with the share of net interest income up to more than half of the total and trading income much diminished. Expenses are down, but only moderately, resulting in a fall in profits to just half of the pre-crisis level. Both the absolute amount of capital and capital ratios have risen dramatically. On the other hand, total assets have declined substantially over the past decade, contributing to a massive de-risking of the sector.
    Germany
    German carmakers are losing market share of late – albeit not everywhereoverlay
    September 22, 2017
    Talking Point
    German carmakers have recently lost market share in Western Europe and the USA, also – but not exclusively – due to the diesel debate. In China, the market share of German carmakers picked up again in the first half of 2017 vis-à-vis the preceding two years. Overall, chances are good the German automotive industry can in future at least maintain its position in the key global auto markets.
    Bundestagswahl Special 2017: The final countdownoverlay
    September 19, 2017
    Germany Monitor
    German Bundestag elections 2017: The winner seems to be clear, but not the next government! According to the ARD Deutschland-trend (14.09.) only a renewed Grand Coalition or a coalition between Merkel‘s CDU/CSU, the liberals (FDP) and the Greens (“Jamaica”) would be arithmetically possible. But given tight polls and their typical error margins other alternatives might become available. We are discussing coalition scenarios and their possible implications for Germany’s economic and EU policies as well as financial markets.<br/>
    Environmental aspects do not play a key role in car purchase decisionsoverlay
    September 13, 2017
    Chart in Focus
    Germans who want to buy a new car tend to focus on three issues: the price, the degree of comfort and security aspects. That is the conclusion of authors of the latest Aral car buying trends study. While environmental considerations now play a larger role – their importance rose by 5 pp, to 25%, in comparison to the 2015 survey – they still rank only 11th in the list of influencing factors and come behind aspects such as ergonomics or brand image. This appears somewhat surprising, particularly against the background of the heated discussions about excessive diesel car emissions (nitrogen oxides) in the last few months.
    Thematic
    Packed European agenda for the next government: Numerous challenges, no (easy) answersoverlay
    August 3, 2017
    Germany Monitor
    The benign economic and public environment allows to fundamentally address shortcomings of the E(M)U. The next German government’s term is faced with numerous challenges ranging from Brexit and its impact on the next EU Budget to migration and the upgrade of the euro area. A revitalised relation with France provides the opportunity for substantive steps to further stabilise the euro area albeit Germany and France need to find common ground on many issues and seek the support of EU partners. European politics is still less of a topic for the German electorate not least as mainstream parties are all various shades of pro-European. However, the next government’s party composition is likely to matter for both speed and scope of changes on European level.
    Who is afraid of populists?overlay
    March 23, 2017
    EU Monitor
    With developments in the UK and the US, populism was a key theme in 2016. But does the perception of 2016 as “the year of the populists” really fit for Europe? A closer look suggests that while populism was an omnipresent theme in public discourse, support for populist parties in polls rather remained stable and elections did not translate into outright populist wins. The rise of populist parties has however been a multi-year trend. Populists can affect national politics in various ways. One possible effect is that forming a government (coalition) often gets more complicated and time-consuming and results in more fragile governments. Another is populists’ potential impact on policy discussions’ style and content. Pursuing policies with long-term benefits but which are often not instantly popular becomes more difficult ‒ both at the national and the European level.
    Coping with mixed feelings: What future for European trade policy?overlay
    January 24, 2017
    EU Monitor
    It is hard to overstate the importance of trade policy for Europe. The EU28 is the largest trading bloc, the top trading partner for about 80 countries worldwide and ranks 1st for in- and outbound investment. The EU’s free trade agreements (FTAs) vary substantially, depending on partners and policy priorities. “New generation trade agreements” go beyond traditional tariff reductions, including issues like services trade, intellectual property or investment. EU agreements to foster trade (and investment), however, have sparked mixed feelings more recently given the backlash against globalisation as well as EU-internal controversies over the power to strike such deals. Yet, the EU’s ability to conclude trade deals is also contingent on political support. Rising scepticism about globalisation means, that (potential) distributional effects of FTAs and their (potential) interaction with national legislation, is going to feature more prominently throughout negotiations and in the public debate.
    The House View
    The House View: Back to schooloverlay
    September 18, 2017
    The House View
    Unlike the last few years, this summer was relatively quiet. As markets look ahead to the rest of the year, the key theme will continue to be the major central banks’ tentative progress toward removing monetary accommodation. Investors have so far not priced in this outlook. Since the prospects for growth across all the major countries is better than it has been for some time it remains a puzzle why there hasn't been a greater sell-off in bond markets.
    The House View : Taking a step backoverlay
    July 25, 2017
    The House View
    As markets enter into the summer lull, it is useful to take a step back. The global economy is in better shape than it has been in several years. This has allowed other central banks to follow the Fed and gradually start their exit journey, a process that is a historic challenge given the unprecedented level of monetary accommodation. But with inflation still below target, a key part of the normalisation puzzle is still missing.<br/>Although labour market tightness has not yet fed to wages, and hence to inflation, we expect it will. Core inflation should move higher over the medium-term in the US and Europe, supporting further monetary tightening and a normalisation of yield curves. While no policy change is expected by the Fed on 26-July, an announcement to begin phasing out its balance sheet reinvestment is likely in September and we expect another rate hike in December. As for the ECB, rate hikes are still far off, and we expect the central bank to announce another QE extension and tapering in October.<br/>Our global macro outlook is little changed this year. We expect growth to rebound from the slowest pace post-crisis in 2016, though relative to consensus we are more positive on the US and more bearish on Japan. In China, we continue to expect a gradual deceleration, but see upside risks to growth in the second half of the year.<br/>We are generally constructive on risk assets, expecting material upside to US equities in the next 18 months and positive but more balanced performance in EM. There are signs the dollar has peaked, but we do not expect a material devaluation yet. We are more positive on the euro, seeing upside versus the dollar and sterling. We expect yield curves to normalise gradually, but there is risk of a more sudden upward shift, depending on the path of core inflation.<br/>David Folkerts-Landau, Group Chief Economist<br/>Key pages this month:<br/>P6 Global economy in a better place<br/>P8 Central banks overview<br/>P11 Current low inflation regime vs. 1960s and 1980s<br/>P17 Signs of dollar top<br/>You can access a two-page update of Deutsche Bank Research's views on global macro, monetary policy and markets, as well as some of the key themes driving them, at any time by downloading The House View Snapshot from: houseview.research.db.com.
    The House View : Mixed signalsoverlay
    June 28, 2017
    The House View
    Global investors have recently been forced to sift through mixed signals from macro data and markets. Chief among these discordant messages is the apparent dichotomy between softer inflation, lower yields and flatter curves, and falling oil prices on the one hand, and still solid global growth and firm risk sentiment on the other hand.<br/>We remain generally optimistic in our global macro outlook despite these mixed signals. Supply-side factors, rather than a weaker demand outlook, underpin the fall in oil prices, and this is positive for growth for oil importers. The softening core inflation trend is due primarily to temporary factors, particularly in the US, and the uptrend should resume given the solid growth momentum.Indeed, our global growth outlook is little changed since the start of the year. We marked down US growth on lower odds of Trump’s policy agenda, but still expect deregulation and modest fiscal stimulus to support above-trend growth. This downgrade is compensated by upgrades to eurozone and China growth.<br/>Our market views largely reflect this overall constructive tone: we are not concerned about the discordance between firming risk assets and falling rates; the normalisation of US and Europe rates should resume in coming months. In FX we have turned more positive on the euro but stay bearish sterling.<br/>Our base case that political risk would not escalate is playing out. Moreover, the intervention to resolve ailing banks in Veneto is positive and lowers risk in Italy. The exception, as expected, is the UK, where the outcome of Brexit has become more binary: the risk of a soft Brexit has risen, but so has that of a crash Brexit.<br/>David Folkerts-Landau, Group Chief Economist<br/>Key pages this month:<br/>P6 Mixed signals<br/>P8 Oil less a concern for risk assets<br/>P11 Flat US yield curve but low risk of recession<br/>P17 Europe political risk not materialising<br/>P23 Limited scope for further oil weaknessYou can access a two-page update of Deutsche Bank Research's views on g
    Konzept
    DeCAF – how to invest in a post-carbon worldoverlay
    May 24, 2017
    Konzept (Engl.)
    Decarbonisation initiatives to halve global emissions will dictate how much certain industries can produce over the coming decades. DeCAF – Deutsche Bank’s Carbon Alignment Framework – is a new investment approach which recognises that the volume goals of policymakers and value goals of investors are not necessarily aligned.
    The case against US infrastrucutre mega-spendingoverlay
    October 22, 2016
    Konzept (Engl.)
    There is consensus among economists, politicians and commentators that America needs a massive infrastructure investment programme – even the two presidential candidates agree. In the name of<br/>balance, our lead feature sets out the counter argument.
    How to solve Europe's three biggest problemsoverlay
    June 7, 2016
    Konzept (Engl.)
    A lethargic economy, overwhelming refugee crisis, and a banking system that fails to inspire confidence— Europe seems besieged by intractable problems. Credible solutions exist but pursuing these requires policymakers to ditch decades of dearly-held beliefs, economic orthodoxy and dogma.
    Global Markets Research Portal
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