1. society
2. work
3. unemployment

Economic Research
Week in Focus
7 November 2014
Bubble therapy: China set to follow Japan
In the wake of excessive investment and huge credit expansion, many fear a crash in China.
However, the case of Japan in the 1990s shows that there is another option which would
allow the distortions to correct themselves over many years. Huge state intervention and the
artificial resuscitation of near-bankrupt institutions (“zombification”) could prevent a major
recession in China. The likely price would be a long phase of comparatively low growth.
Page 2
The Week in Focus in 100 seconds
Please follow this link for a video summary.
One bubble in China has already burst
Equity index, quarters before and after the peak (peak = 100), Japan: Nikkei, China: Shanghai
Composite
120
100
80
60
40
20
0
-16
-12
-8
-4
0
4
Japan (Q4.1989 = 100)
8
12
16
20
24
28
32
China (Q4.2007 = 100)
Source: Bloomberg, Commerzbank Research
India: Reforms or modernisation of bureaucracy? Although Indian Prime Minister Modi
continues to enjoy strong public support, five months after sweeping to power, questions
remain over whether he is a reformer or merely a modernizer. We don’t see the two as
mutually exclusive but see the latter as a prerequisite for the former.
Page 5
Product Idea: Forward Plus Exporter in EUR-USD. We recommend EUR buyers to
participate in a Forward Plus EUR-USD in order to benefit from the EUR-USD down move
which we expect will continue in the coming months.
Page 6
Outlook for the week of 10 November to 14 November 2014
Economic data: Available data points to another slight contraction of the German economy
in Q3, which would fulfil the often used definition of a recession. Together with Italy,
Germany would also be the worst performer among the large euro countries.
Page 9
Bond market: ECB President Draghi gave the impression that there is full support from the
Council for further measures if needed. Downside risks to inflation may well emerge as soon
as next week, weighing on break-even inflation rates. Ten-year Bund yields are thus likely to
continue fluctuating around 0.85%.
Page 12
FX market: The JPY is under pressure thanks to the BoJ’s very expansionary monetary
policy. However, the depreciation trend appears to be coming to an end.
Page 13
Equity market: The recent improvement in M1 money growth in the euro zone and in the
US indicates that a DAX bear market is unlikely, in our view. Investors should continue to
use periods with a DAX below 9,000 to increase equity exposure.
Page 14
Commodity market: The nosedive in crude oil prices does not appear to be over yet and
both OPEC and the US Energy Information Administration are likely to lower their oil
demand forecasts further.
Page 15
For important disclosure information please see page 18.
research.commerzbank.com / Bloomberg: CBKR / Research APP available
Chief economist
Dr. Jörg Krämer
+49 69 136 23650
[email protected]
Editor:
Peter Dixon
+44 20 7475 4806
[email protected]
Economic Research | Week in Focus
Bubble therapy: China set to follow Japan
Bernd Weidensteiner
Tel. +49 69 136 24527
China is showing worrying parallels with previous economic miracles where growth
collapsed following a bursting of the bubble. In the wake of excessive investment and
huge credit expansion, many fear a crash in China. However, the case of Japan in the
1990s shows that there is another – and more likely – option: huge state intervention and
the artificial resuscitation of near-bankrupt institutions (“zombification”) could prevent a
major recession. The likely price would be a long phase of comparatively low growth.
China: Crash …
For a long time, China was the growth star of the global economy; today some see it as the
problem child. China’s very high investment rate (chart 1) suggests that overcapacity is
increasing. Furthermore, the loan portfolio has been expanding at a much faster rate than the
overall economy for some years (chart 2). This also suggests that many unprofitable investment
projects have been financed. Moreover, house prices are falling after a long and sharp rise,
which will reduce the quality of many loans.
Many such imbalances or bubbles have ended in a crash. The most extreme example is the
global economic crisis at the beginning of the 1930s when the sharp rises in loans and asset
prices in the US were followed by a deep economic slump.
… or the Japanese solution?
However, the example of Japan in the 1990s shows that there is an alternate outcome. The
burst of the bubble was comparable to the USA a good 60 years earlier. At the end of the 1980s,
Japan accounted for half of global property assets by valuation. The impact that followed on the
financial markets was substantial: the equity market peaked in Q4 1989 and then plunged 60%
by mid-1992, with the trough only occurring in 2003 following a total loss of 80%. House prices
have fallen steadily since their peak in 1991 and were recently 51% lower. The real economy did
not slump though. Indeed, it grew at an average rate of around 1% per capita (compared to 4%
in the 1980s) and only towards the end of the decade did real GDP marginally fall (chart 3,
page 3).
Japan chose the gentle therapy …
This difference between the USA in the 1930s and Japan in the 1990s is partly due to the fact
that the economic crisis of the 1930s was a global phenomenon, whereas Japan had the support
of exports in the 1990s due to economic growth in the USA and China.
That said, a more important factor was probably that Japanese economic policy reacted
differently after the crash than the US in the 1930s. It pertained to different approaches towards
running up excessive debt.
CHART 1: China is investing huge amounts …
CHART 2: … financed by a big rise in loans
Investment, % of GDP
Total loan portfolio (“Total Social Financing”), % of GDP.
60%
220
50%
200
40%
180
30%
160
20%
140
10%
120
0%
1950
1960
1970
1980
China
Source: IMF, Commerzbank Research
2
1990
2000
2010
100
2003 2004 2005 2006 2008 2009 2010 2011 2013 2014
Japan
Source: Global Insight, Commerzbank Research
7 November 2014
Economic Research | Week in Focus
In the USA, the radical option was taken in the spirit of a school of economic thought which
required an end to the funding of unprofitable projects; a curtailment of lending to inefficient
companies and banks had to appraise their loans more realistically, i.e. written off. In short, the
problems were to be resolved by shock therapy so that the rest of the economy could grow again
on a healthy basis. Nobody put that approach better than the then Treasury Secretary Mellon.
His advice to President Hoover was: “Liquidate labor, liquidate stocks, liquidate farmers,
liquidate real estate…it will purge the rottenness out of the system […] Values will be adjusted,
and enterprising people will pick up from less competent people”.
In Japan too, many companies that had previously expanded strongly on the back of easy credit
were suddenly (technically) insolvent at the beginning of the 1990s. Their assets plunged in
value after the property market crash. Sectors linked to the booming housing market were hard
hit and banks’ loan books were infused by bad loans.
It may have been partly because of the terrible experience of the 1930s that the authorities
decided on a cautious approach. The supervisory authority did not insist on an objective
appraisal of loans. Banks subsequently extended many loans to insolvent companies
(“Evergreening”) and thus prevented swift and fatal write-offs. At the same time, the central bank
and the state reacted with expansionary measures to shore up the economy.
… but only created “zombies”
This strategy had a price though, which has increased over time, as untenable economic
structures have been preserved. The companies (so-called “zombies”) kept alive by
“evergreening” and subsidized loans were competitors to healthy businesses and were partly
able to undercut their prices. Furthermore, it was harder for new companies to gain loans.
Market access for new and innovative businesses was thus hindered, which delayed necessary
structural change and dampened productivity growth.1 What’s more, countless economic
stimulus programmes led to a sharp rise in public debt.
Since the restoration to health of banks’ balance sheets, and overall restructuring took a very
long time, the government decided to change its strategy at the end of the 1990s. It forced banks
to undertake more write-offs, while at the same time recapitalising banks on a large scale. The
problems were corrected by these measures to such an extent that Japan was able to leave its
lost decade behind. Since 2000, Japan’s economy has been growing at a similar rate, in per
capita terms, as the US (chart 4).
China: Signs of a correction crisis are growing …
At worst, China is still in the early stages of a correction crisis. A broad deterioration in credit
quality is an increasing risk although not at a critical point as yet. China is unlikely to opt for a
radical structural correction as it is not in the government’s interest to provoke economic shocks
which could challenge its claim to power.
CHART 3: USA vs. Japan – slower was better …
CHART 4: … but correction crisis was inevitable
Real GDP per capita, 1929 = 100 (USA, Year “0”) and 1990 = 100
(Japan, Year “0”), annual data.
Real GDP per capita, 2000 = 100
115
110
105
100
95
90
85
80
75
70
120
115
110
105
100
95
90
85
80
75
0
1
2
3
4
5
USA
6
7
Japan
Source: Global Insight, IWF, Commerzbank Research
8
9
10
1990
1993
1996
1999
2002
Japan
2005
2008
2011
2014
USA
Source: Global Insight, Commerzbank Research
1
Classic studies on this subject are Caballero/Hoshi/Kashyap: “Zombie Lending and Depressed Restructuring in Japan“.
American Economic Review 2008, 98:5 and Peek/Rosengren: “Unnatural Selection: Perverse Incentives and the
Misallocation of Credit in Japan”, NBER Working Paper 9643, April 2003
7 November 2014
3
Economic Research | Week in Focus
The Chinese government will presumably do its utmost to control the crisis. Consequently, like
Japan, China will probably also decide on prolonged life-sustaining measures for its struggling
businesses, especially as the state has the necessary means to support such measures, at least
for now.
The focus at the moment is not so much on the stability of banks or companies but more on the
growing problems in local government finances, which so far have largely been driven by
revenues from land sales. Recently these revenues amounted to 7% of GDP, a rise of five
percentage points in ten years. The weakening of the property market and the increasing
problems of companies in this sector, allied to the difficulties encountered by land developers,
are undermining this funding model. Regions can therefore be expected to scale back
expenditure on infrastructure, which should further dampen growth. This will mean increasing
problems for highly indebted companies.
… but the government is supporting non-performing companies
In the past few months, the authorities have allowed some payment defaults, but these were
primarily to prevent investors from blindly trusting that the state will come to the rescue of every
business. On the other hand, the predominantly state-owned banks are unlikely to cut their credit
lines to large companies, even if they are insolvent. Indeed, non-performing loans are more likely
to be extended. Consequently, the percentage of “non-performing” loans on banks’ balance
sheets will increase. Problem loans could then be removed from banks’ balance sheets and
transferred to “asset management companies”. These assets could then be written off over a
period of time. The state would then ensure that these banks are recapitalised if need be, and
would also probably encourage a consolidation of the banking sector. However, it is
questionable whether these steps would happen quickly, or whether it would take place only if
banks’ balance sheets are at risk of running completely out of control, as in Japan.
The government’s readiness to support large non-performing businesses was evident recently
when the government surprisingly imposed import duties on coal after a coal mine encountered
payment difficulties, a move that supports non-competitive domestic producers.
China: no crash but disappointing growth
Such a policy will allow China to avoid an economic slump; a crash is therefore unlikely in our
view. But “zombification” would increasingly rob the economy of momentum. Furthermore, not
every country will enjoy the luxury of a favourable global economic environment to support a
domestic economy riddled with inefficiencies. On a longer horizon, China is therefore likely to
register disappointing growth rates.
What’s more, such a solution would not come cheap for the state. To cushion the process,
further economic stimulus programmes are likely to be introduced. As in Japan in the 1990s, this
will drive up public debt. In Japan, public debt to GDP in 1990 was comparatively low at around
65%. Many years of supportive measures have changed that and debt now stands at 230%
of GDP.
4
7 November 2014
Economic Research | Week in Focus
Charlie Lay
Tel. +65 6311 0111
India: Reforms or modernisation of bureaucracy?
Victories in the two recent state elections suggest that Indian Prime Minister Modi
continues to enjoy strong public support, five months after sweeping to power. Questions
remain over whether Modi is a reformer or merely a modernizer of bureaucracy. We do
not see the two as mutually exclusive but see the latter as a prerequisite for the former.
On the economy, growth is bottoming out and inflation has moderated which gives RBI
greater policy flexibility.
A question posed recently was whether PM Narendra Modi is indeed a market reformer or
merely a modernizer of existing levels of bureaucracy. We see the two going hand in hand in as
part of an attempt to force India to tap into the global supply chain and the wider global
economy. Much is talked about the twin deficit problem for India – the current account deficit and
the fiscal deficit. The fact is that India faces much bigger problems, in what we could call a
quadruple deficit: deficiencies in 1) governance; 2) infrastructure; 3) education; and 4) foreign
investor trust.
These are huge hurdles for Modi to overcome. There are no quick fixes and it is too early to
assess the government’s performance so far amid elevated expectations for reforms. The
initiatives announced so far continue to bode well for the bulls hopeful of change, these include:
1) Accountability: In early October, the government launched a Biometric Attendance System
(BAS) for government employees to track attendance records. The aim is to raise the
productivity of a cumbersome and inefficient public sector. Over time, this could be extended to
hospitals, state schools, courts etc;
2) Curtailing corruption: On 28 August, PM Modi launched the ambitious “Pradhan Mantri Jan
Dhan Yojana” (PMJDY) or the Prime Minister People Funding Scheme. It aims to provide at
least one bank account for every family in the next six months. To date, it is estimated that 55mn
new accounts have opened and USD700mn deposited with a target of 75mn by January 2016.
Apart from providing modern banking to the poor, the bigger picture is to better channel
government subsidies to the needy and in turn, reduce graft;
3) Review of labour laws: The Ministry of Commerce and Industry has placed 20 labour laws
on review arguing that they are obsolete and discourage foreign investment e.g. the Factories
Act of 1948 which stipulates that companies employing over 100 people require state approval
for dismissals; and
4) Welcoming FDI: in the July budget, the government raised the foreign ownership limit in the
defence and insurance sectors from 26% to 49%. In the railway sector, it approved 100% foreign
ownership in special projects e.g. in high-speed rail and in the construction sector. In October,
the government removed controls on diesel and natural gas prices. This is one of the more
significant announcements to date, signalling the administration’s intent to attract greater
investment in the energy sector.
Overall, the feel-good factor from BJP’s election victory is still apparently strong. We remain
hopeful of continued progress, with Modi still enjoying healthy public support. This is seen by the
positive reception Modi received in his speech at Madison Square Garden in September and the
recent state election victories, in two of India’s economically more important states, Maharashtra
and Haryana. At the same time, however, we maintain a realistic timetable for change. One
cannot overestimate the enormity of the challenges ahead to restructure an inefficient system
with so many number of distortions that hinder FDI. Furthermore, more ambitious reforms are
likely to encounter resistance from vested interest groups and from within BJP. There will be no
quick fixes and Modi will need time.
On the economy, there are positive developments in that inflation has moderated and growth is
showing signs of bottoming out. We continue to look for around 5.5-5.8% growth in FY2014-15
vs sub-5% for the previous two years. Inflation is set to easily reach RBI’s target of 8% by
January 2015 and on course to reach the 6% target by January 2016. This may not necessarily
portend a rate cut but it does provide RBI greater leeway to respond to the G7 environment in
2015.
7 November 2014
5
Economic Research | Week in Focus
Product Idea: Forward Plus Exporter in EUR-USD
Peter Kinsella
Tel. +44 207 475 3959
EUR-USD hedging and limited participation in weaker EUR
We recommend EUR buyers to participate in a Forward Plus EUR-USD in order to benefit
from the EUR-USD down move which we expect will continue in the coming months.
The ECB’s November meeting once again highlighted the risks to the European economic
outlook. With growth and inflation risks pointing clearly to the downside, the market will
increasingly begin to price in an ECB QE policy. This has not yet been fully discounted by the
markets and therefore if and when the ECB actually implements such a policy, it will be a burden
for the EUR. This alone is reason enough to expect lower EUR-USD levels to manifest in the
coming months; however external developments will also place further pressure on the single
currency.
The Federal Reserve is now closer to satisfying its dual mandate of low inflation and low
unemployment than at any time in the past 7 years. Already the Fed ended the tapering program
which was broadly priced in by markets and did not have a significant impact upon EUR-USD
exchange rates. However the markets’ focus will now be upon the development of short term US
interest rates, which trade significantly below FOMC expectations. If and when these rates
correct to more realistic levels, investors can expect that the trend of USD appreciation will
continue and even gather pace. This is not an insignificant risk given the divergence in market
expectations from the expectations of the FOMC. All told, the reasons to expect a broadly
stronger USD remain firmly in place.
We therefore recommend EUR buyers to consider participating in a Forward Plus EUR-USD.
The rationale is that the structure allows investors to have a defined hedging rate in EUR-USD at
1.2550 whilst also benefitting from any continuing down move towards 1.1700.
Product idea: Forward Plus in EUR-USD
Spot rate (sample calculation)
1.2425
Hedging rate
1.2550
Lower limit (‘trigger’)
1.1700
Hedging nominal
USD 500,000
Duration
6 months
Cost
Zero cost
The Forward Plus allows investors to lock in a fixed hedging rate. At the same time, they
have the chance to benefit from an exchange rate trend that is positive for their underlying
position. On the maturity date, a currency exchange will always be carried out. If,
(‘American-style trigger’) the EUR-USD spot rate touches or falls below the trigger (1.1700)
during the tenor of the trade or if the EUR-USD spot rate trades above the hedging rate
(1.2550) at maturity, the currency exchange will only be carried out at the agreed hedging
rate (1.2550). If the spot rate has not touched the trigger (1.1700) during the tenor of the
trade (‘American style') and the EUR-USD spot rate trades below the hedging rate (1.2550)
at maturity, the net hedging result will be equivalent to the (better) EUR-USD spot fixing.
6
7 November 2014
Major publications from 31 October – 6 November 2014
Economic Insight: Euro Inflation expectations no longer firmly
anchored - a model analysis
Long-term market-based inflation expectations are beginning to lose their anchorage. In the last
few weeks, they have been visibly lower than our model had implied based on core inflation, the oil
price and risk perception. Expectations are apparently meanwhile showing a much stronger
reaction to disappointing economic data. Amid probable continued weak economic growth in the
euro zone, inflation expectations are set to fall further. We therefore believe that the ECB is likely to
decide on broad-based government bond purchases. more
Economic Insight: The Unfinished
As from 3 November, the European Central Bank (ECB) supervises the most important banks in
the euro area. The banking union has taken a great step forward. But there are still dangerous
gaps in the rules and regulations of the monetary union. more
FX Hotspot: USD-JPY – Longer dated riskies offer good value
Last week the BoJ took the market by surprise and increased its asset purchase program. USDJPY consequently moved higher and the prospect of a stronger USD means that further significant
upside in USD-JPY should not be discounted. We recommend investors to buy longer dated risk
reversals in order to benefit from this dynamic. more
FX Hotspot: What's the best dollar?
Following Wednesday’s hawkish FOMC meeting, market participants can now have no doubts that
the USD rally is for real and looks set to continue. That being the case, the question for most
market participants is what is the best way to express this view? Essentially, what is the best
dollar? more
7 November 2014
7
Economic Research | Week in Focus
Preview – The week of 10 to 14 November 2014
Time
Region Indicator
Period
Forecast
Survey
Last
Monday, 10 November 2014
1:30
9:00
CHN
ITA
CPI
Industrial production
Oct
Sep
yoy
mom, sa
1.6
0.3
1.6
–
1.6
0.3
Oct
Sep
Sep
Sep
Sep
mom, k, sa
%, sa
yoy
mom, sa
yoy
mom
-25.0
5.9
0.8
1.0
0.2
-3.0
-25.0
5.9
0.9
0.7
-0.1
-1.3
-18.6
6.0
0.7
-1.8
-1.9
4.7
Oct
Oct
Oct
8 Nov
yoy
yoy
1998=100
k, sa
8.0
0.3
125.7
280
8.0
–
–
–
8.0
0.3
125.9
278
qoq
yoy
qoq
yoy, swda
yoy
qoq
yoy
yoy
yoy
mom
mom
sa
0.2
0.4
-0.1
0.9
0.9
0.1
0.7
0.4
0.8
0.3
0.3
87.0
–
–
0.1
0.9
1.0
0.1
0.6
0.4
–
0.3
0.2
87.5
0.0
0.1
-0.2
1.3
0.8
0.1
0.8
0.4(p)
0.7(p)
-0.3
-0.2
86.9
Tuesday, 11 November 2014
No relevant data is due for release.
Wednesday, 12 November 2014
9:30
GBR
10:00
EUR
Claimant count unemployment
Unemployment rate (ILO)
Average earnings (three month average)
Industrial production
23:50 JPN
Machinery orders
GBR: Bank of England releases Inflation Report (10:30)
Thursday, 13 November 2014
Industrial production
CPI
CPI ex tobacco
13:30 USA
Initial claims
EUR: ECB releases Survey of Professional Forecasters (9:00)
•
5:30
7:45
CHN
FRA
Friday, 14 November 2014
•
6:30
FRA
GDP
Q3
7:00
GER
GDP
Q3
10:00
EUR
GDP
Q3
CPI, final
Oct
CPI excl. food and energy, final
Oct
Retail sales
Oct
• 13:30 USA
Retail sales ex autos
Oct
14:55
Consumer confidence (University of Michigan), Nov
preliminary
ECFIN meeting: EU Finance Ministers discuss budget plans
G20: Finance Ministers meeting and Leaders’ Summit (15/16 November)
Source: Bloomberg. Commerzbank Economic Research; *Time GMT (subtract 5 hours for EST. add 1 hour for CET). # = Possible release; mom/qoq/yoy: change
to previous period in percent. AR = annual rate. sa = seasonal adjusted. wda = working days adjusted; • = data of highest importance for markets
8
7 November 2014
Economic Research | Week in Focus
Dr Ralph Solveen
Tel. +49 69 136 22322
Economic data preview:
Germany: In recession?
Available data points to another slight contraction of the German economy in Q3, which
would fulfil the often-used definition of a recession. Together with Italy, Germany would
also be the worst performer among the large euro countries. In the US, retail sales likely
increased in October despite considerably lower petrol prices.
Is Germany the new problem child in the euro zone? This view, which emerged in early October
in light of the very weak August figures (that were mainly owed to special factors), will likely
receive fresh support in the week ahead. Available data – excluding the September figures for
industrial production released this morning – give reason to expect that real GDP in Germany
contracted slightly for the second consecutive occasion in Q3. With the monthly data for
production and real sales, the average over July and August was mostly below the average of
Q2 (chart 5). Moreover, a particular statistical effect2 likely also subtracted from GDP in Q3, and
so, despite likely small growth rates in most service sectors – for which no monthly data is
available – we forecast a mild decline in GDP of 0.1% on the quarter (consensus: +0.1%).
Germany will thus likely bring up the rear among the large euro countries together with the
perennial problem child Italy (chart 6). For France, 0.2% growth on the quarter seems to be on
the cards going by available figures, and for Spain, an increase in real GDP of 0.5% has already
been reported. Since the economy probably also expanded in most of the smaller countries, we
forecast a growth rate of 0.1% for the whole euro area (consensus: 0.1%) after stagnation in Q2.
US: Petrol price subtracts from retail sales growth
In October, the petrol price declined further from $3.48 to $3.26 per gallon. This alone likely
lowered the growth rate of retail sales by two tenths. But the decline in the petrol price since July
has freed up resources, part of which will be spent by consumers spend on other goods. For this
reason we expect an increase in retail sales in October of 0.3% on the month (consensus:
0.3%).
CHART 6: Euro area – Germany bringing up the rear
CHART 5: Germany – minus signs dominate
Real, percentage change of July/August average vs. Q2 average, in
percent; *including September
Real GDP, percentage change on quarter, Q3 own estimate except
for Spain
0,6
0,5
0,4
0,3
0,2
0,1
0,0
-0,1
-0,2
Euro area Germany
Q2
Source: Global Insight, Commerzbank Research
France
Italy
Q3
Spain
Source: Global Insight, Commerzbank Research
2
In Q2, gross value added fell more steeply than GDP, which profited from a sharp rise in indirect taxes. In Q3, we are
likely to see a countermovement (for more details see “Germany’s soft patch makes QE more likely”, Week in Focus of 2
October 2014).
7 November 2014
9
Economic Research | Week in Focus
Central Bank Watch (1)
Fed
The Republican Party’s landslide victory in the midterm
elections is unlikely to leave the Fed unscathed. It will be
even more difficult for President Obama to find candidates
for the two vacancies on the Federal Reserve Board who are
acceptable to the Republicans. After all, the relevant Senate
committee will now be led by the Republicans.
The Federal Reserve should be prepared for more
headwinds from Congress. In recent years, Republican
members of Congress presented several bills aimed at
subjecting the Fed to tighter supervision. These even
included direct intervention in monetary policy, such as the
bill that would have made Fed policy subject to a rule.
According to the Chairwoman of the Federal Reserve Board,
Janet Yellen, this would be a “significant mistake”, as
expressed in a hearing in summer. Dallas Fed President
Richard Fisher already warned against limiting the Fed’s
independence. The new political climate should make it more
difficult for the Fed to stick to ultra-loose policy for too long.
This, too, supports our expectation of a first interest rate hike
in mid-2015.
Bernd Weidensteiner
+49 69 136 24527
CHART 7: Expected interest rate for 3-month funds (USD)
2,0
1,5
1,0
0,5
0,0
current Dez 14
Futures
Mrz 15
06.11.14
Jun 15
Sep 15
30.10.14
Dez 15
Commerzbank
TABLE 1: Consensus forecasts Fed funds rate
Q4 14
Q2 15
Q4 15
Consensus
0.25
0.25
1.00
High
0.25
1.00
2.00
Low
0.25
0.25
0.25
Commerzbank
0.25
0.50
1.50
Source: Bloomberg, Commerzbank Research
ECB
During the ECB’s monthly press conference, ECB president
Draghi re-emphasised the ECB’s balance sheet approach by
including an explicit balance sheet objective in the
introductory statement to the press conference: “…our
balance sheet … is expected to move towards the
dimensions it had at the beginning of 2012”. In addition,
Draghi stressed that the Council “has tasked ECB staff and
the relevant Eurosystem committees with ensuring the timely
preparation of further measures to be implemented, if
needed.” The ECB president said that in case the balance
sheet were not to increase as expected or in case inflation
expectations were to fall further, the central bank would act
again. As we expect both growth and inflation to surprise on
the downside, and a significantly lower balance sheet
increase than the ECB expects, we continue to forecast that
the ECB will opt for broad-based government bond
purchases.
Regarding the timing of further measures, Draghi said that
there is no deadline for the ECB staff to prepare measures
and that discussing specific measures now was premature.
In addition, the second TLTRO will take place after the
December Council meeting. All in all, therefore we think more
measures next year are more likely than this year.
Dr Michael Schubert
+49 69 136 23700
10
CHART 8: Expected interest rate for 3-month funds (EUR)
1,0
0,8
0,6
0,4
0,2
0,0
current Dez 14
Futures
Mrz 15
06.11.14
Jun 15
30.10.14
Sep 15
Dez 15
Commerzbank
TABLE 2: Consensus forecasts ECB minimum bid rate
Q4 14
Q2 15
Q4 15
Consensus
0.05
0.05
0.05
High
0.05
0.05
0.05
Low
0.05
0.05
0.05
Commerzbank
0.05
0.05
0.05
Source: Reuters, Bloomberg, Commerzbank Research
7 November 2014
Economic Research | Week in Focus
Central Bank Watch (2)
Bank of England (BoE)
Although this week's MPC meeting did not produce any
changes to monetary policy, the Committee will have
discussed the Inflation Report which is due for release next
week. We look for three main discussion points at the press
conference: (i) An abatement of global and domestic price
pressures is expected to prompt a downward revision to the
BoE's inflation projections. This places the two MPC
dissenters – Martin Weale and Ian McCafferty – in an
awkward position since their argument that the UK faces an
inflation threat is being undermined by the data. Whilst their
reasoning is based on inflation prospects on a two to three
year horizon, it is tactically difficult to consider a rate increase
so long as inflation is below target and falling; (ii) The degree
of economic slack remains at the forefront of the BoE’s
thinking. With evidence to suggest that the margin of spare
capacity is higher than implied by the headline
unemployment rate, any inflation threat from this source is
likely to be muted; (iii) Finally, the BoE will be concerned
about the impact of international headwinds on the UK
economy. In view of the uncertainty surrounding the nearterm economic outlook, this is another factor which will
encourage the BoE to sit on its hands for the time being.
CHART 9: Expected interest rate for 3-month funds (GBP)
2,0
1,5
1,0
0,5
0,0
current
Dez 14 Mrz 15
Futures
06.11.14
Jun 15
30.10.14
Sep 15
Dez 15
Commerzbank
Source: Bloomberg, Commerzbank Research
Peter Dixon
+44 20 7475 4806
RBNZ (New Zealand)
At the end of October, the RBNZ came up with a surprisingly
neutral statement, dropping its bias on higher interest rates.
Instead, it said “a period of assessment remains appropriate
before considering further policy adjustment”. Between
March and August, the RBNZ had raised its policy rate by a
total of 100 basis points to 3.5% to prevent the economy
from overheating. The central bank can thus afford a waitand-see stance. The rate of inflation dropped even lower
than expected, to 1%, in the third quarter and the pace of
house prices inflation has slowed, not least due to tighter
mortgage lending regulations imposed a year ago.
The growth outlook remains favourable, despite the
significant fall in commodities prices and weaker demand
from major importing countries. Impetus continues to come
from construction, high immigration and still relatively low
interest rates. Moreover, the RNBZ repeated its verbal
interventions, stating that it was expecting a further
significant NZD-depreciation. This would provide further
impetus to the economy as it will improve business
competitiveness. Overall, we expect the RBNZ to stay on
hold until next autumn before hiking interest rates further.
CHART 10: Expected interest rate for 3-month funds (NZD)
5,0
4,5
4,0
3,5
3,0
current
Dez 14 Mrz 15
Futures
06.11.14
Jun 15
30.10.14
Sep 15
Dez 15
Commerzbank
Source: Bloomberg, Commerzbank Research
Elisabeth Andreae
+49 69 136 24052
7 November 2014
11
Economic Research | Week in Focus
Rainer Guntermann
Tel. +49 69 136 87506
Bond market preview:
Bumpy sideways trend continues
ECB President Draghi gave the impression that there is full support from the Council for
further measures if needed. The Survey of Professional Forecasters and poor GDP data are
likely to stress the downside risks to inflation expectations as early as next week, weighing
also on break-even inflation rates. The expected slight increase in longer-dated Bund yields
following what is likely to be solid US labour market data thus looks set to revert again over
the course of the week, with ten-year Bund yields likely to fluctuate around 0.85%.
TABLE 3: Weekly outlook for yields and curves
Bunds
US Treasuries
Yield (10 years)
sideways
Moderately higher
Curve (2 - 10 years)
neutral
flatter
Source: Commerzbank Research
Outlook for the Bund
future, 10-14 November
Economy
↑
Inflation
→
Monetary policy
↓
Trend
→
Supply
→
Risk aversion
↑
ECB President Draghi has demonstrated once more that he is a clever tactician. Despite eyecatching press reports about a large rift in the Governing Council in the run-up to the meeting he
stated that there is not only full support for the ECB’s balance sheet goals but also for the
preparation to implement further measures at short notice, if need be.
Bund yields should thus drift moderately upwards in coming days as risk sentiment recovers,
especially since the expectation of solid US payrolls will probably add to headwinds on bond
markets today.
The agenda in coming weeks features a cascade of event which are likely to further increase the
pressure on the ECB to act. The Survey of Professional Forecasters and poor economic growth in
the euro zone look set to put the ECB’s relatively optimistic economic and inflation outlook to the
test, adding to the pressure for additional measures at the Council meeting in early December
when the ECB will most likely markedly revise down its macro projections.
Any rise in core government bond yields and risk premiums on peripheral bonds is therefore likely
to run out of steam quickly. Increasing political risks in the periphery – above all in Greece but also
in Spain – together with more cautious bank demand ahead of the balance sheet data at year-end
argue for a cautious stance towards the periphery in coming weeks.
The Bund outlook remains mixed though. On the one hand, longer-dated Bund yields are more
likely to fall and test their lows amid rising QE expectations, and also due to the decline in
market-implied inflation expectations. On the other hand, sound US economic data should add to
jitters of an imminent shift in the US central bank's rhetoric in December and therefore limit the
downside in yields. Consequently, we expect ten-year Bund yields to keep fluctuating around
current levels for now.
CHART 11: Draghi has so far failed to fuel inflation
CHART 12: Bund yields continue looking to US Treasuries
5y5y € inflation rate, derived from inflation-linked swaps, in %
Ten-year government bond yield, in %
2.4
2.3
'risks of
low inflation'
Jul HICP Jackson
Hole
2.2
Oct
HICP
2.1
2.0
1.9
1.8
1.7
Jan 14
1.3
2.6
1.2
2.5
1.1
2.4
1.0
2.3
0.9
2.2
0.8
2.1
0.7
2.0
Aug 14
Apr 14
Jul 14
Source: Bloomberg, Commerzbank Research
12
2.7
Oct 14
0.6
Sep 14
Oct 14
UST
Nov 14
DE
Source: Bloomberg, Commerzbank Research
7 November 2014
Economic Research | Week in Focus
Lutz Karpowitz
Tel. +49 69 136 42152
FX market preview:
JPY weak but not about to collapse
The JPY is under pressure thanks to the very expansionary monetary policy of the Bank
of Japan. Although losses are fundamentally based, depreciation appears to be coming to
an end.
TABLE 4: Expected trading ranges for next week
EUR-USD
EUR-JPY
USD-JPY
Range
Bias
1.2150-1.2600
140.00-145.50
112.75-118.50
Ô
Ò
Ò
EUR-GBP
GBP-USD
EUR-CHF
Range
Bias
0.7700-0.7900
1.5550-1.6050
1.2000-1.2110
Ô
Ô
Î
Source: Commerzbank Research
Hardly any currency (apart from the collapsing Russian rouble) has been under as much
pressure as the JPY over the last few days (chart 13). The reason for JPY weakness is easy to
find. The Bank of Japan (BoJ) surprisingly expanded its asset purchase programme last week.
Instead of the 60-70 trillion JPY recorded so far, the BoJ’s balance sheet total will now rise by 80
trillion JPY per year. Furthermore, this growth should be achieved almost solely through
government bond buying. The purchases will increase the monetary base by an annual 16% of
GDP. Even at its peaks, the Fed’s QE3 only once reached 6.5% of GDP. Consequently, from a
fundamental perspective, the reaction of the FX market is quite understandable.
To achieve its target, the BoJ has to buy more government bonds than the Finance Minister
issues new debt. Japan’s budget deficit is only about 10% of GDP. Consequently, the BoJ has to
buy an increasing amount of government bonds. It is therefore only a question of time before the
BoJ has all government bonds offered on the market on its balance sheet. The purpose of this is
to finally boost inflation. Despite the VAT increase, inflation has not gained any momentum as of
yet (chart 14) and the underlying price trend is close to zero again. Even with its mega QE
programme, the BoJ is unlikely to bring inflation to its target of 2%. It will be disappointed again.
There is further downside potential for the JPY since the BoJ could take additional measures.
Even so, we do not expect JPY to lose too much value. The introduction of QE in April 2013 put
huge pressure on the JPY but the currency then remained relatively stable although it soon
became clear that the central bank could miss its inflation targets. The next depreciation phase
started when the BoJ acted again. And the BoJ will definitely not open the floodgates wider in
the next few months. This should provide a breather for the JPY.
CHART 13: JPY is suffering from QE expansion
Chart 14: Japan: Inflation is not gaining traction
USD-JPY, spot price
Consumer price index in Greater Tokyo, year-on-year in per cent
116
115
114
113
112
111
110
109
108
107
106
105
15.10
4
3
2
1
0
-1
17.10
21.10
24.10
28.10
Source: Bloomberg, Commerzbank Research
31.10
4.11
-2
Jan-12
Jul-12
CPI
Jan-13
Jul-13
ex VAT effect
Jan-14
Jul-14
underlying trend
Source: Ministry of Internal Affairs and Communication, Commerzbank
Research
7 November 2014
13
Economic Research | Week in Focus
Andreas Hürkamp
Tel. +49 69 136 45925
Equity Market Preview:
Strong money growth in the US remains a key DAX bull trend
The recent improvement in M1 money growth in the euro zone and in the US indicates
that a DAX bear market is unlikely, in our view. And falling inflation expectations should
result in an ongoing accommodative global monetary policy. Therefore we stick to our
view that during the remainder of 2014 investors should continue to use periods with a
DAX at or below 9,000 to increase equity exposure.
TABLE 5: Equity Market with subdued start to November
Earnings 2014e
Performance (%) since
Index points
Growth (%)
P/E 2014e
Index
31/10
30/09
31/12
current
31/12
current
31/12
current
DAX 30
9.315
-0,1
-1,7
-2,5
708,1
731,1
1,9
11,6
13,2
31/12
13,1
MDAX
16.176
0,3
1,1
-2,4
930,6
994,2
26,6
41,6
17,4
16,7
Euro Stoxx 50
3.092
-0,7
-4,2
-0,6
221,4
242,3
4,5
12,1
14,0
12,8
S&P 500
2.024
0,3
2,6
9,5
116,6
119,3
7,5
9,9
17,4
15,5
Source: Commerzbank Corporates & Markets, I/B/E/S
The recent recovery of leading indicators – e.g. the ISM rose to 59.0 from 56.6 in the US and the
German manufacturing PMI rose from 49.9 to 51.4 – has resulted in declining recession fears,
and the DAX has recovered back to our expected trading range of 8,800 to 10,200.
The bears interpret the recent DAX recovery as a dead-cat-bounce in a recession scenario and
forecast the next painful downturn in the coming months. However, we do not believe in this bear
market scenario as monetary indicators such as M1 money growth – a proven leading indicator
for equity markets – have improved. In the euro zone, M1 money growth rose in September from
5.8% to 6.2% and in the US M1 money growth has accelerated from 9.9% to 10.7%. China's M1
money growth, however, continues to send warning signs with another decline to 4.8% from
5.7% – China's economy might continue to present lacklustre trends.
The falling trend in inflation (expectations) has become one of the biggest surprises of 2014. In
the euro zone, long-term inflation expectations have slumped from 2.2% in January to 1.8% by
November, and in the US expectations declined from 2.9% to 2.6%. In China measured inflation
fell to 1.6% from 3.4% at the beginning of the year. We interpret these inflation trends as positive
for equity markets as falling inflation expectations might result in (a) a full-scale purchases of
government bonds by the ECB (quantitative easing), (b) a more-relaxed-than-feared Fed policy
and (c) further measures by the central bank to stabilise the Chinese economy.
CHART 15: Euro
zone – 6.2% M1 money growth
Eurozone: Annual M1 money growth in %
CHART 16:
US – 10.7% M1 money growth
US: Annual M1 money growth in %
25
16
14
20
12
15
10
10
8
6
5
4
0
2
0
1985
1990
1995
2000
Source: Bloomberg, Commerzbank Research
14
2005
2010
-5
1985
1990
1995
2000
2005
2010
Source: Bloomberg, Commerzbank Research
7 November 2014
Economic Research | Week in Focus
Barbara Lambrecht
Tel. +49 69 136 22295
Commodities market preview:
A lot of data, not much new information
The nosedive in crude oil prices does not appear to be over yet. OPEC and the US Energy
Information Administration are likely to further lower their oil demand estimates,
following the International Energy Agency, which reduced its forecast in October. Weak
gold demand in the third quarter should not surprise anyone either. Even so, the gold
price could still drop further. In the case of corn, expectations of a record high US crop
should be sufficiently priced in at the current low level.
TABLE 6: Tendencies in important commodities
Per cent change
Tendency Commodity specific events
6 Nov
1 week
1 month
1 year short-term
Brent (USD a barrel)
82.5
-3.6
-10.4
-21.0
Þ
EIA and OPEC (12th), IEA (14th)
Copper (USD a ton)
6619
-1.8
-1.4
-7.0
Ö
CHN: Trade balance (8th)
Gold (USD a troy ounce)
1145
-4.5
-5.2
-13.1
Þ
WGC: Gold Demand Trends for Q3 (13th)
Corn (USD a bushel)
3.69
-1.3
11.0
-12.4
Ö
WASDE (10th)
Source: Bloomberg, Commerzbank Research
No end to the nosedive on the oil market is in sight: at just under 82 USD per barrel, Brent was
at a four-year low at mid-week. The new estimates of supply and demand are unlikely to trigger
a change in market sentiment. OPEC and the US Energy Information Administration are likely to
trim their forecasts again for global oil demand, thus following the International Energy Agency,
which already corrected its global oil demand forecast significantly downwards in October (chart
17).
The fact that Saudi Arabia had recently cut its selling price in the US indicates that the largest
and most influential OPEC oil producer primarily wants to defend its market share. As long as
OPEC does not show any readiness to reduce market oversupply through production cuts, the
nosedive is unlikely to end. Ahead of the OPEC meeting at the end of November, the market
might even wish to test the oil cartel’s pain threshold further. However, in the medium term,
Brent should settle at 85 USD per barrel.
Precious metals are also still under pressure. Gold slid under 1150 USD per troy ounce and is
now at its cheapest level in 4½ years. The new quarterly Gold Demand Trends report from the
World Gold Council does not promise much fresh impetus. Demand was presumably weak in the
third quarter. Although the lower outflows from gold ETFs show that investment demand in the
West did not have quite such a negative impact as in the year before (chart 18), buying interest
from the Chinese was much lower. As long as demand from Asia does not pick up, a price
recovery on the gold market is unlikely. In the short term, a stronger dollar and rising equity
markets could cause the gold price to fall to new lows.
CHART 17: Pessimistic energy agencies
Expected rise of global oil demand in 2014, million barrels a day
CHART 18: Outflows from gold ETFs have slowed in the
meantime
million ounces, USD a troy ounce
1.4
1.3
1.2
1.1
1.0
0.9
0.8
0.7
0.6
Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14
EIA
IEA
Source: EIA, IEA, OPEC, Commerzbank Research
7 November 2014
OPEC
90
80
70
60
50
40
30
20
10
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
ETF holdings, left
1900
1700
1500
1300
1100
900
700
500
300
Gold price (US$/oz), right
Source: Bloomberg, Commerzbank Research
15
Economic Research | Week in Focus
Commerzbank forecasts
TABLE 7: Growth and inflation
Real GDP (%)
Inflation rate (%)
2013
2014
2015
2013
2014
2,2
2,2
2,9
1,5
1,7
1,8
2,0
2,3
2,5
0,9
2,1
2,0
Japan
1,5
1,0
1,3
0,4
2,8
1,5
Euro area
-0,4
0,7
0,8
1,4
0,6
1,0
- Germany
0,1
1,3
1,3
1,5
1,1
2,1
- France
0,4
0,3
0,5
0,9
0,6
0,7
- Italy
-1,7
-0,2
0,3
1,2
0,4
0,6
USA
Canada
2015
- Spain
-1,2
1,4
2,3
1,4
0,0
0,5
- Portugal
-1,4
1,0
1,5
0,3
-0,2
0,8
- Ireland
0,2
5,2
3,1
0,5
0,6
1,4
- Greece
-4,2
1,0
2,0
-0,9
-1,3
0,5
United Kingdom
1,7
3,0
2,6
2,6
1,6
1,9
Switzerland
2,0
1,7
1,8
-0,2
0,0
0,5
China
7,7
7,3
6,5
2,6
2,3
2,5
India
4,7
5,8
6,2
6,3
6,5
6,2
Brazil
2,5
0,3
0,9
6,2
6,3
6,5
Russia
1,3
0,3
0,9
6,8
7,3
6,5
World
2,9
3,1
3,4
• The ultra-expansionary policy of the Fed is
boosting the US economy. At the same time,
fiscal policy is at least no longer a headwind.
We therefore expect US growth to markedly
accelerate.
• Growth in China decelerates further, also due
to decreasing house prices.
• The recovery in the euro zone will only
continue at a slow pace. GDP growth will
remain lower than that of the USA.
• EMU has survived the sovereign debt crisis,
but is gradually evolving into an “Italian-style
monetary union”.
• Despite its current weakness, the German
economy looks set to continue outperforming
the rest of the euro area – partly because ECB
target rates are much too low for Germany.
• High unemployment in most countries is
keeping inflation low for the time being. In the
long term, however, inflation is likely to rise, as
central banks have given up some of their
independence.
TABLE 8: Interest rates (end-of-quarter)
06.11.2014
Q4 14
Q1 15
Q2 15
Q3 15
Q4 15
Federal funds rate
0,25
0,25
0,25
0,50
1,00
1,50
3-months Libor
0,23
0,25
0,30
0,80
1,35
1,90
2 years*
0,53
0,70
0,90
1,20
1,60
2,00
5 years*
1,65
2,10
2,40
2,70
2,95
3,20
10 years*
2,37
2,70
2,90
3,10
3,30
3,50
Spread 10-2 years
184
200
200
190
170
150
Swap-Spread 10 years
14
10
10
10
15
15
USA
Euro area
Minimum bid rate
0,05
0,05
0,05
0,05
0,05
0,05
3-months Euribor
0,08
0,05
0,05
0,05
0,05
0,05
2 years*
-0,05
-0,10
-0,10
-0,10
-0,05
0,00
5 years*
0,12
0,25
0,20
0,25
0,35
0,40
10 years*
0,83
1,10
0,80
1,00
1,20
1,35
Spread 10-2 years
89
120
90
110
125
135
Swap-Spread 10 years
22
15
25
30
35
35
United Kingdom
Bank Rate
0,50
0,50
0,75
0,75
1,00
1,25
3-months Libor
0,56
0,80
0,90
1,05
1,25
1,40
2 years*
0,67
1,00
1,25
1,30
1,35
1,55
10 years*
2,25
2,60
2,85
3,05
3,20
3,35
• The Fed has ended its QE3 programme.
Interest rate hikes are on the cards from
2015Q2, due to a continuously decreasing US
unemployment rate and gradually rising
inflation.
• Due to the deteriorating growth outlook and
increasing downside risks for inflation we
expect the ECB to announce QE within the
next 12 months.
• 10y Bund yields are likely to stabilise around
1% later this year when the Fed
communication changes but mark new record
lows when the ECB announces QE in 2015.
Thereafter, yields should rise gradually. The
structurally low interest rate environment
remains intact.
• The focus on the Fed’s lift-off will put upward
pressure on US$ rates. A return to 3% for 10y
USTs is only on the cards for 2015, though.
The curve is in for a textbook-style flattening
via the short-end in the coming quarters.
• Risk premiums of peripheral government
bonds are set to decline further.
TABLE 9: Exchange rates (end-of-quarter)
06.11.2014
Q4 14
Q1 15
Q2 15
Q3 15
Q4 15
EUR/USD
1,24
1,25
1,22
1,19
1,17
1,15
USD/JPY
115
117
117
120
122
125
EUR/CHF
1,20
1,21
1,21
1,21
1,21
1,21
EUR/GBP
0,78
0,77
0,76
0,75
0,74
0,73
EUR/SEK
9,20
9,10
9,00
8,95
8,90
8,90
EUR/NOK
8,52
8,80
8,60
8,55
8,50
8,40
EUR/PLN
4,22
4,15
4,10
4,08
4,06
4,05
EUR/HUF
310
312
310
309
308
306
EUR/CZK
27,77
27,50
27,30
27,00
27,00
26,90
AUD/USD
0,86
0,87
0,85
0,83
0,81
0,80
NZD/USD
0,77
0,77
0,75
0,73
0,71
0,70
USD/CAD
USD/CNY
1,14
1,13
1,15
1,16
1,17
1,18
6,11
6,10
6,05
6,00
5,95
5,95
• USD should further profit from the
expectations
of
Fed
interest
rate
normalization. Current USD rates have not
priced in the speed of rate hikes that we
expect.
• The high yielding G10 currencies should
particularly suffer from US rate hikes.
• EUR will remain under pressure due to
increasing likelihood of an ECB QE program.
ECB wants a weaker EUR and is active in
achieving this goal.
• CEE currencies are generally benefiting from
the dovish ECB backdrop, meaning central
banks have room to cut rates further. HUF,
PLN and RON should trade range-bound,
while EUR/CZK will float above the 27.0 floor
set by the CNB.
Source: Bloomberg. Commerzbank Economic Research; bold change on last week; * Treasuries, Bunds, Gilts, JGBs
16
7 November 2014
Economic Research | Week in Focus
Research contacts (E-Mail: [email protected])
Chief Economist
Dr Jörg Krämer
+49 69 136 23650
Economic Research
Interest Rate & Credit Research FX Strategy
Commodity Research
Dr Jörg Krämer (Head)
+49 69 136 23650
Christoph Rieger (Head)
+49 69 136 87664
Ulrich Leuchtmann (Head)
+49 69 136 23393
Eugen Weinberg (Head)
+49 69 136 43417
Dr Ralph Solveen (Deputy Head; Germany)
+49 69 136 22322
Alexander Aldinger
+49 69 136 89004
Lutz Karpowitz
+49 69 136 42152
Daniel Briesemann
+49 69 136 29158
Elisabeth Andreae (Scandinavia, Australia)
+49 69 136 24052
Rainer Guntermann
+49 69 136 87506
Peter Kinsella
+44 20 7475 3959
Carsten Fritsch
+49 69 136 21006
Dr Christoph Balz (USA, Fed)
+49 69 136 24889
Peggy Jäger
+49 69 136 87508
Thu-Lan Nguyen
+49 69 136 82878
Dr Michaela Kuhl
+49 69 136 29363
Peter Dixon (UK, BoE), London
+44 20 7475 4806
Markus Koch
+49 69 136 87685
Esther Reichelt
+49 69 136 41505
Barbara Lambrecht
+49 69 136 22295
Dr Michael Schubert (ECB)
+49 69 136 23700
Michael Leister
+49 69 136 21264
Dr Michael Schubert (Quant)
+49 69 136 23700
Equity Markets Strategy
Eckart Tuchtfeld (German economic policy)
+49 69 136 23888
David Schnautz
+1 212 895 1993
Cross Asset Strategy
Dr Marco Wagner (Germany, France, Italy)
+49 69 136 84335
Benjamin Schröder
+49 69 136 87622
Bernd Weidensteiner (USA, Fed)
+49 69 136 24527
Dr Patrick Kohlmann
(Head Non-Financials)
+49 69 136 22411
Andreas Hürkamp
+49 69 136 45925
Ted Packmohr
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Economic Research | Week in Focus
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