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February 25, 2021
Region:
The Jan print of 1% yoy surprised massively to the upside, in part due to one-offs. But the strong rise in core goods prices begs the question whether the Jan readings could herald stronger underlying inflation dynamics. There are still strong arguments for a continuation of structurally low inflation dynamics. However, we see risk that price dynamics could strengthen more strongly through impaired supply conditions. Overall, we now project the inflation rate to average 2.0% in 2021. Towards the end of 2021 the headline rate could spike to as much as 3% before easing to 1 ½% in Q1 2022. [more]
February 17, 2021
Region:
German GDP: Down (Q1) but not out (in 2021). The longer “hard” lockdown, weather-related losses in construction and impairments in car output due to chip supply problems have prompted us to cut our Q1 GDP forecast to -2% qoq. We continue to expect a strong rebound in the summer half propelled by healthy global demand, supportive fiscal and monetary policy and German households’ pent-up demand. Inflation: Now expecting 2% for 2021! The Jan print of 1% yoy surprised massively to the upside, in part due to one-offs. But the strong rise in core goods prices begs the question whether the Jan readings could herald stronger underlying inflation dynamics. There are still strong arguments for a continuation of structurally low inflation dynamics. However, we see risk that price dynamics could strengthen more strongly through impaired supply conditions. Overall, we now project the inflation rate to average 2.0% in 2021. Towards the end of 2021 the headline rate could spike to as much as 3% before easing to 1 ½% in Q1 2022. [more]
February 5, 2021
Region:
2020 ended on a conciliatory note for European banks. Following a heavy hit in H1, H2 saw a dynamic recovery in the economy and financial markets, which helped slow down the rise in loan loss provisions and buoyed trading income. Corporate loan growth stabilised but remained elevated and retail lending shrug off the crisis, while banks’ liquidity reserves at the ECB surged to unprecedented and unsustainable levels. Government bond holdings initially rose strongly before calming down a bit. Capital and liquidity ratios weathered the crisis well, without even needing support from supervisors which relaxed a number of rules, at the risk of undermining confidence and transparency though. The outlook for 2021 is more benign with bank profitability set to rebound significantly thanks to much lower loss provisions. [more]
February 3, 2021
Topic:
A year ago, we stated that:
− Cryptocurrencies would become more mainstream. Both Facebook and PayPal will be adding cryptocurrency capability to their wallets early 2021.
− Central bank digital currencies (CBDCs) will be widely discussed. The Bahamas launched the first nationwide CBDC last October, and both Sweden and China launched pilots in early 2020.

What do we see this year? Click here and find out [more]
February 1, 2021
The quick development of highly effective vaccines and, of course, expectations of huge fiscal stimulus in the US had made investors optimistic about global growth. However, their hopes were recently dampened as vaccination campaigns were slow to start and, in Europe, experienced supply problems. Furthermore, concerns about more infectious COVID mutations have led to prolonged and more restrictive lockdowns which have weighed on business and consumer sentiment. That has stopped the equity market uptrend for now. [more]
January 28, 2021
Region:
Analyst:
The COVID-19 pandemic has triggered unusual cyclical volatility in the German auto sector. However, structural challenges are much more relevant for the sector - some stemming from regulatory framework conditions (i.e. EU CO2 targets for new cars), others from market developments. Traditional factors which determine a country’s attractiveness as an industrial location, such as the tax burden on corporates, wages or working time flexibility, have recently deteriorated in Germany, at least in an international comparison. Germany’s share in both global and European car production may decline over the coming years. The German car industry is better prepared for the electric mobility future and other structural challenges than Germany as a production location. [more]
January 28, 2021
Covid-19 disruption to business has reshuffled priorities for CFOs and treasurers. They must address how to: maintain access to liquidity/credit; implement back-up procedures; create visibility to total cash in global locations; determine cash requirements in the short and medium term; and assess current exposures. Astrid Poussel, Global Corporate Coverage, Corporate Bank, joins the conversation. [more]
January 25, 2021
Region:
The COVID-19 pandemic has already changed and will continue to change working conditions in the long run. Companies have opened up for work from home solutions and hybrid work models seem to be the future. The recent increase in flexibility will enable companies to realise efficiency gains. On its own, however, remote working does not necessarily increase productivity per se. As employees work remotely, serendipity suffers. In Germany, demand for traditional office space appears likely to weaken in the medium term but the decline is likely to be smaller than the initial euphoria for remote working suggested. Demographic developments will considerably reduce the German workforce. Remote working may help to ensure workforce participation. We expect that working at the office and remote working will be combined in some way in the future - work from home has come to stay. [more]
January 20, 2021
Analyst:
Nigel Wilson, CEO, Legal & General and Jim discuss how the future is in our own hands and that there are huge opportunities out there in new technologies and strategic investments that can overcome many of the secular negative forces we are all familiar with (debt, demographics, low productivity etc.). However Nigel believes we need to shed our old fashion attitude to the type of assets we invest long-term money into and urges Governments to provide the infrastructure and regulatory regime to make the future as bright as he thinks it can be. [more]
January 18, 2021
Region:
Winning 53% of delegates’ votes, Armin Laschet - the PM of NRW and Merkel loyalist - secured a slim majority in the run-off for the CDU party leadership on Saturday. This does not come as a surprise, as Laschet was widely seen as the candidate with a small lead in a tight race. In the end, having most governing experience and a track record of winning elections probably tipped the scale in favour of Laschet (e.g. the former SPD stronghold NWR in 2017). Being well-connected within the CDU also paid off for him. However, with a mere difference of 55 votes this is no landslide victory, though still a clearer win for the Merkel camp than AKK’s 17-vote win over Merz in 2018. The slim majority is a reflection of the existing divisions within the party, leaving Laschet with the task of bridging those as soon as possible in this decisive super-election year. Norbert Röttgen (coming third in the election) quickly signalled support for Armin Laschet and was elected to the CDU’s steering committee. [more]
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