DGAP-News: Silvia Quandt&Cie. AG, Merchant&Investment Banking: In-between the lines 13.01.2011
(firmenpresse) - DGAP-News: Silvia Quandt&Cie. AG, Merchant&Investment Banking /
Key word(s): Miscellaneous
Silvia Quandt&Cie. AG, Merchant&Investment Banking: In-between the
lines 13.01.2011
13.01.2011 / 14:59
---------------------------------------------------------------------
- Germany needs to balance
- its own strong performance
- with the problems in the Euro zone
- Fiscal policy will be the key tool, but not more spending or tax cuts
'Life begins at 46' wrote The Economist magazine on the cover of its
year-end edition. This is the age when on average people start to feel
better about themselves or, in other words, leave their mid-life crisis
behind. Almost half the German population including this author has passed
this emotional nadir and more will follow soon. In a few years, more than
half the German population should feel increasingly happy. If true, that
would be really good news for a country full of skeptics. Germany needs
more optimistic people to manage the problems ahead, not least those of the
aging population.
Get used to strong growth
Indeed, Germans have good reasons to be cheerful. Although hit hard by the
financial crisis, real GDP fell nearly 5% in 2009, Germany has emerged
better than any other major industrial economy. The best indicator is
unemployment, which fell below the pre-crisis level a few months ago.
Moreover, Germany has not only recovered well from the crisis, but is now
entering a strong expansion. Germany is hitting a 'sweet spot' consisting
of three factors.
- Germany is better positioned to benefit from the boom in Emerging
Markets than most other OECD economies.
- Germany is harvesting the dividends of its pre-crisis reform drive.
This makes German corporates not only more competitive, but also allows
them to share more of the gains with the household sector.
- Germany can take advantage of the low interest rate environment in the
Euro area. This is starting to become visible in the housing sector.
Silvia Quandt expects real GDP growth in 2011 to hit 3%. Indeed, a
positive year-end base effect from 2010 plus the order rebound in November
may well help push growth above the 3% mark. For most Germans, even many
professional economists among them, this is too good to be true. Too long
has been the period of subpar growth, high unemployment, and zero real wage
gains. Only Germany's politicians are not shy to herald the good news and
take credit. To be sure, the German consumer will not go overboard, even
if more of them believe that the good economic news is for real. Still, it
is already making a big difference when consumption is no longer stagnating
but trailing income growth.
Goldilocks are not forever
No party lasts forever. Germany's has just started and will continue for
some time before excesses and fatigue take over. Fears that the monetary
policy response to the financial crisis and the Euro sovereign debt crisis
will lead to massive inflation are overdone. As ECB and Bundesbank keep
repeating, monetary conditions pose no immediate risk for inflation (see
falling M3/GDP ratio). Still, there is no reason to be complacent.
Headline inflation reached 1.7% in December. Much of that was due to food
and energy prices. Core inflation is closer to 1%. Disinflationary forces
are also stillstrong, both domestically, as seen in service prices, as
well as from sluggish conditions in the OECD area. But price pressures
emanating from a strong economy, a tightening labor market and booming
Emerging Markets are more likely to increase than decrease.
Fiscal policy is the solution
Before monetary union, the Bundesbank would have raised interest rates in
this kind of situation. The ECB cannot do the same, given the fragile
state of the Euro-area. Importantly, the ECB is not only responding to
weak economic conditions in many member countries, but tied down by the
role it plays in maintaining financial stability in the Euro area. It is
in Germany's interest to unshackle the ECB as soon as possible. The EU
rescue umbrella is not sufficient, even if it gets increased further, as it
does not solve the problems of insolvent countries, like Greece, Ireland
and probably Portugal. The debt of insolvent countries needs to be
restructured to restore stability. However, a workout involving existing
private creditors has been ruled out by EU leaders.
One option is for the Euro group to take over the debt of insolvent
countries through an exchange against Euro-bonds, restructure the debt and
share the losses among the members (see A solution for the Euro debt
crisis, 21. Dec. 2010). Of course, Germany would have to shoulder the
largest share of the restructuring burden, but that is less than the
accumulating costs of doing nothing. Fortunately, Germany is in a good
position to stomach the extra cost. Moreover, financing a large portion of
the debt restructuring is a better contribution to stabilizing the Euro
area than overheating the German economy with more fiscal stimulus.
In fact, the German government is well advised to do more to consolidate
fiscal policy and not be tempted to disburse the windfall revenue gains of
better growth on tax cuts and new spending programs. First, as long as
monetary policy is focused on the rest of the Euro area - and that will be
the case for several years even if the debt crisis gets resolved soon -
fiscal policy is the only tool to avoid overheating in Germany. Second,
Germany needs the extra savings not only to pay for the stabilization of
the Euro area, but to prepare itself for the extra burden of the aging
population.
Germans have good reasons to be cheerful. More fiscal restraint will not
spoil the party, but make it last longer.
Disclaimer
This analysis was prepared by Bernhard Eschweiler, Senior Economic Advisor,
and was first published 13. January 2011, Silvia Quandt Research GmbH,
Grüneburgweg 18, 60322 Frankfurt is responsible for its preparation. German
Regulatory Authority: Bundesanstalt für Finanzdienstleistungsaufsicht
(BaFin), Graurheindorfer Str. 108, 53117 Bonn and Lurgiallee 12, 60439
Frankfurt.
Publication according to article 5 (4) no. 3 of the German Regulation
concerning the analysis of financial instruments (Finanzanalyseverordnung):
Number of recommendations Thereof recommendations for issuers to which
from Silvia Quandt Research investment banking services were provided
during
GmbH in 2010 the preceding twelve months
Buys: 74 30
Neutral: 29 2
Avoid: 8 0
Company disclosures
Article 34b of the German Securities Trading Act (Wertpapierhandelsgesetz)
in combination with the German regulation concerning the analysis of
financial instruments (Finanzanalyseverordnung) requires an enterprise
preparing a securities analysis to point out possible conflicts of interest
with respect to the company or companies that are the subject of the
analysis. A conflict of interest is presumed to exist, in particular, if an
enterprise preparing a security analysis:
(a) holds more than 5 % of the share capital of the company or companies
analysed;
(b) has lead managed or co-lead managed a public offering of the
securities of the company or companies in the previous 12 months;
(c) has provided investment banking services for the company or companies
analysed during the last 12 months for which a compensation has been or
will be paid;
(d) is serving as a liquidity provider for the company's securities by
issuing buy and sell orders;
(e) is party to an agreement with the company or companies that is the
subject of the analysis relating to the production of the recommendation;
(f) or the analyst covering the issue has other significant financial
interests with respect to the company or companies that are the subject of
this analysis, for example holding a seat on the company's boards.
In this respective analysis the following of the above-mentioned conflicts
of interests exist: none
Silvia Quandt Research GmbH, Silvia Quandt&Cie. AG, and its affiliated
companies regularly hold shares of the analysed company or companies in
their trading portfolios. The views expressed in this analysis reflect the
personal views of the analyst about the subject securities or issuers. No
part of the analyst's compensation was, is or will be directly or
indirectly tied to the specific recommendations or views expressed in this
analysis. It has not been determined in advance whether and at what
intervals this report will be updated.
Equity Recommendation Definitions Silvia Quandt Research GmbH analysts rate
the shares of the companies they cover on an absolute basis using a 6 -
12-month target price. 'Buys' assume an upside of more than 20 % from the
current price during the following 6 - 12-months. These securities are
expected to out-perform their respective sector indices. Securities with an
expected under-performance to their respective sector index are rated
'avoids'. Securities where the current share price is within a 5 % range of
the sector performance are rated 'neutral'. Securities prices used in this
report are closing prices of the day before publication unless a different
date is stated. With regard to unlisted securities median market prices are
used based on various important broker sources (OTC-Market).
Disclaimer This publication has been prepared and published by Silvia
Quandt Research GmbH, a subsidiary of Silvia Quandt&Cie. AG. This
publication is intended solely for distribution to professional and
business customers of Silvia Quandt&Cie. AG. It is not intended to be
distributed to private investors or private customers. Any information in
this report is based on data obtained from publicly available information
and sources considered to be reliable, but no representations or guarantees
are made by Silvia Quandt Research GmbH with regard to the accuracy or
completeness of the data or information contained in this report. The
opinions and estimates contained herein constitute our best judgement at
this date and time, and are subject to change without notice. Prior to this
publication, the analysis has not
been communicated to the analysed companies and changed subsequently. This
report is for information purposes only; it is not intended to be and
should not be construed as a recommendation, offer or solicitation to
acquire, or dispose of, any of the securities mentioned in this report. In
compliance with statutory and regulatory provisions, Silvia Quandt&Cie.
AG and Silvia Quandt Research GmbH have set up effective organisational and
administrative arrangements to prevent and avoid possible conflicts of
interests in preparing and transmitting analyses. These include, in
particular, inhouse information barriers (Chinese walls). These information
barriers apply to any information which is not publicly available and to
which any of Silvia Quandt&Cie. AG and Silvia Quandt Research GmbH or its
affiliates may have access from a business relationship with the issuer.
For statutory or contractual reasons, this information may not be used in
an analysis of the securities and is therefore not included in this report.
Silvia Quandt&Cie. AG and Silvia Quandt Research GmbH, its affiliates
and/or clients may conduct or may have conducted transactions for their own
account or for the account of other parties with respect to the securities
mentioned in this report or related investments before the recipient has
received this report. Silvia Quandt&Cie. AG and Silvia Quandt Research
GmbH or its affiliates, its executives, managers and employees may hold
shares or positions, possibly even short sale positions, in securities
mentioned in this report or in related investments. Silvia Quandt&Cie. AG
in particular may provide banking or other advisory services to interested
parties. Neither Silvia Quandt Research GmbH, Silvia Quandt&Cie. AG or
its affiliates nor any of its officers, shareholders or employees accept
any liability for any direct or consequential loss arising from any use of
this publication or its contents. Copyright and database rights protection
exists in this publication and it may not be reproduced, distributed or
published by any person for any purpose without the prior express consent
of Silvia Quandt Research GmbH. All rights reserved. Any investments
referred to herein may involve significant risk, are not necessarily
available in all jurisdictions, may be illiquid and may not be suitable for
all investors. The value of, or income from, any investments referred to
herein may fluctuate and/or be affected by changes in exchange rates. Past
performance is not indicative of future results. Investors should make
their own investment decisions without relying on this publication. Only
investors with sufficient knowledge and experience in financial matters to
evaluate the merits and risks should consider an investment in any issuer
or market discussed herein and other persons should not take any action on
the basis of this publication.
Specific notices of possible conflicts of interest with respect to issuers
or securities forming the subject of this report according to US or English
law: None
This publication is issued in the United Kingdom only to persons described
in Articles 19, 47 and 49 of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2001 and is not intended to be distributed,
directly or indirectly, to any other class of persons (including private
investors). Neither this publication nor any copy of it may be taken or
transmitted into the United States of America or distributed, directly or
indirectly, in the United States of America.
Frankfurt am Main, 13.01.2011
Silvia Quandt Research GmbH
Grüneburgweg 1860322 Frankfurt
Tel: + 49 69 95 92 90 93 -0
Fax: + 49 69 95 92 90 93 - 11
End of Corporate News
---------------------------------------------------------------------
13.01.2011 Dissemination of a Corporate News, transmitted by DGAP - a
company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
---------------------------------------------------------------------
108919 13.01.2011
Datum: 13.01.2011 - 14:59 Uhr
Sprache: Deutsch
News-ID 32993
Anzahl Zeichen: 0
contact information:
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 213 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"DGAP-News: Silvia Quandt&Cie. AG, Merchant&Investment Banking: In-between the lines 13.01.2011"
steht unter der journalistisch-redaktionellen Verantwortung von
Silvia Quandt&Cie. AG, Merchant&Investment Banking (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
