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(Bloomberg Opinion) — “They call him Britain Trump!” Such was the U.S. president’s ungrammatical reaction to Boris Johnson’s nomination as the U.K.’s new prime minister. “They like me over there…He’ll get it done.” If “it” means channeling the fire an…
July 25, 2019Read More
(Bloomberg) — Germany’s economy is sinking deeper and deeper into trouble, but there appears little chance of home-grown support from Chancellor Angela Merkel.Signs of economic malaise are becoming increasingly hard to ignore amid a series of profit warnings in the country’s marqee automotive sector and an intensifying industrial crisis. The latest alarm bell — a sharp drop in executive sentiment — came just days after Merkel defended the country’s tight-fisted spending, a policy that’s riled European neighbors and the U.S.What that means is that despite free money available on credit markets, the government of Europe’s engine plans to ride it out rather than try to give the economy a steroid shot.“Germany’s resistance to loosening fiscal policy represents a major downside risk to the global economy,” said Neil Dutta, head of economics at Renaissance Macro Research in New York. “A couple of years ago, the U.S. was ridiculed for loosening fiscal policy with the unemployment rate so low. Maybe the Germans should try it.”While Germany has the financial muscle for a boost, especially with negative interest rates that means it gets paid to borrow, Merkel’s government takes the approach that a slowdown after a period of historic growth is normal, and the headwinds will ease when U.S. President Donald Trump’s trade wars get resolved.“My personal view is that an investment offensive would be more important than a balanced budget,” Olav Gutting, a lawmaker in Merkel’s CDU party, told Bloomberg. While such a package could include spending for digital infrastructure, tax cuts and incentives for research, “I’m fairly alone in my caucus group on that point.”That’s leaving the heavy lifting to the European Central Bank, which is expected to signal on Thursday that monetary stimulus is on the way. But governments’ reluctance to provide backup is a major frustration for central bankers who’ve spent a decade pumping life back into the euro-area economy.Slowdown ArrivedBefore trouble started in the middle of 2018, Germany’s export-driven economy had racked up 13 straight quarters of growth. What was expected to be a temporary blip — stemming from car-emissions tests and clogged shipping on the Rhine river — has failed to disappear.Expansion in 2019 may slow to just 0.5%, which would be the worst in six years, and Bloomberg Economics estimates the economy shrank in the second quarter, holding euro-area growth to a below-trend 0.2% pace.And Germany can’t expect other countries to pull it out of its funk. The International Monetary Fund this week cut its 2019 forecasts for economic growth and world trade, and said a projected pickup next year looks “precarious.”‘Fiscal Stimulus’“This is all about fiscal stimulus,’’ said Julian Emanuel, BTIG’s chief equity and derivatives strategist. “If I was running a country with a growth rate of half a percent, a surplus of close to 2% and rates negative — wouldn’t you be borrowing and spending money?’’While Berlin holds out for the storms to pass, the fallout from the slowdown is spreading. Some of the nation’s biggest corporate names from BASF SE to Daimler AG and Continental AG have had to come to terms with the changing dynamics, resetting profit expectations.The good news is the strength of the labor market, though job cuts are starting to pile up, and the Bundesbank has warned that unemployment may rise. That could increase pressure on Merkel to act.The auto industry represents a tougher challenge. In addition to battling the fallout from trade tensions and softening demand in the U.S. and China, carmakers and their suppliers are laboring under deeper structural changes. The transition to an era of self-driving, electric cars and winding down the combustion engine has hit Germany particularly hard.Mercedes-Benz maker Daimler AG has issued two profit warnings this year. Parts maker Continental, in the midst of a structural overhaul, reined in profit forecasts because of a previously unexpected slowdown in global auto production.The German government has struggled to formulate a response. Headway on efforts to establish domestic battery-cell production is slow. Meanwhile, the auto industry is pleading for help to make the tens of billions of euros spent on developing electric cars pay off.“We need strong partners in politics and society for this transformation process,” including initiatives to build up charging infrastructure for electric cars, said Bernhard Mattes, president of German auto lobby VDA.With Germany marking 30 years since reunification — an event that involved absorbing a bankrupt economy — the country has shown it can bounce back from adversity. And even if the government is reluctant to tap into its resources, that financial might is there, which is more than many other countries can say,“We’re not taking that pessimistic a view on the German economy,” said James von Moltke, chief financial officer of Deutsche Bank AG, which is in the midst of a major restructuring focused on returning to its roots as a financier of the country’s exporters. “If there’s a thaw in terms of global trade discussions, that may be helpful in the second half.”(Updates with Ifo business confidence in second paragraph.)\–With assistance from Jonathan Ferro, Nicholas Comfort, Christoph Rauwald, Arne Delfs, Zoe Schneeweiss, Vonnie Quinn, Simon Kennedy and Patrick Donahue.To contact the reporters on this story: Chris Reiter in Berlin at [email protected];Kristie Pladson in Frankfurt at [email protected] contact the editors responsible for this story: Fergal O’Brien at [email protected];Chad Thomas at [email protected] more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
July 25, 2019Read More
The European Union on Thursday flatly rejected an aggressive push by Britain’s new prime minister Boris Johnson to rewrite the Brexit agreement. Chief Brexit negotiator Michel Barnier warned EU member states that Johnson was trying to divide them by a…
July 24, 2019Read More
From Donald Trump to Boris Johnson, the group of world leaders with an anti-system stance bordering on populism grows ever more powerful, crashing over global diplomacy and threatening multilateralism and international cooperation. For many observers,…
July 24, 2019Read More
Iran’s detention of a UK-flagged tanker presents new British Prime Minister Boris Johnson with an early leadership test — does he side with the US “maximum pressure” campaign against the Islamic republic or back EU efforts to salvage its nuclear pact….
July 24, 2019Read More
(Bloomberg) — A U.S. naval ship sailed through the Taiwan Strait amid growing tensions with China over American military support for Taipei, one of the biggest sticking points between the two powers as they restart trade talks.The guided-missile cruis…
July 24, 2019Read More
North Korea says its recent weapons test was of a “new-type tactical guided weapon” and was meant as a “solemn warning” over South Korean weapons development and plans to hold military exercises. The message Friday was carried on state media and relea…
July 24, 2019Read More
President Donald Trump on Wednesday vetoed a trio of congressional resolutions aimed at blocking his administration from selling billions of dollars of weapons to Saudi Arabia and the United Arab Emirates. Secretary of State Mike Pompeo last month cit…
July 24, 2019Read More
North Korea fired two short-range missiles into the sea early on Thursday from its eastern coast, in a sign of its growing impatience with the lack of progress in talks with Washington over its nuclear weapons programme. The South’s Joint Chiefs of Staff said the missiles that were fired from near the eastern coastal town of Wonsan flew about 270 miles before landing in the waters off the country’s east coast. A South Korean defence official told AP that an initial South Korean analysis showed both missiles were fired from mobile launchers and flew at a maximum altitude of 30 miles. Some analysts speculated that it could be the test of a KN-23, a “quasi ballistic missile.” A senior US official said the Trump administration was aware of the reports of a short-range projectile launched from North Korea. The official said the administration had no further comment at this time. South Korean Defence Ministry spokeswoman Choi Hyunsoo urged Pyongyang to stop acts that are “not helpful to efforts to ease military tensions on the Korean Peninsula.” If North Korea fired ballistic missiles, it could have ramifications because UN Security Council resolutions ban the North from engaging in any launch using ballistic technology. Still, the UN Security Council has typically imposed fresh sanctions on North Korea only when it conducted long-range ballistic missile tests. “If they were ballistic missiles, they violate the UN sanctions, and I find it extremely regrettable,” Japan’s Defence Minister Takeshi Iwaya told reporters in Tokyo. The launch was the first weapons test since Donald Trump, the US president, took a historic few steps into North Korea at its heavily armed border with the South in Panmunjom late last month, and indicates that the unprecedented gesture did not win much capital with Pyongyang. The leaders agreed to resume talks to disarm Kim Jong-un’s nuclear and missiles programme, which Mike Pompeo, the US secretary of state, said would likely begin in mid-July when the two sides had agreed their negotiating teams. However, tensions escalated again last week when North Korea threatened to call off its suspension of its 20-month nuclear and missile tests, and the talks remain deadlocked. The warning pre-empted a planned joint US-South Korea military exercise in August, which it called “a rehearsal of war, aimed at militarily occupying our Republic by surprise attack.” A foreign ministry statement said Mr Trump had pledged to suspend the military drills at his first historic summit with Kim Jong-un in Singapore last year, which he reiterated at their short meeting on the border. It added: “With the US unilaterally reneging on its commitments, we are gradually losing our justifications to follow through on the commitments we made,” stressing the military drill would also affect talks if it went ahead. North Korea has shown increasing signs of dissatisfaction with the direction of its relations with the US and South Korea since a summit between Kim and President Trump in Hanoi in February ended in failure. North Korean leader Kim Jong Un visits a submarine factory in an undisclosed location, North Korea Credit: Reuters It also tested weapons in May, including both short-range missiles as well as smaller rockets. At the time, Kim oversaw the first flight of a previously untested weapon – a relatively small, fast missile experts believe will be easier to hide, launch and manoeuvre in flight. On Tuesday, North Korea’s state news agency KCNA reported Kim inspected a large, newly built submarine, accompanied by missile programme leaders. It potentially signalled continued development of a submarine-launched ballistic missile (SLBM) programme. Vipin Narang, a securities professor at MIT, tweeted that “if it is KN-23, it isn’t long range and ROK (South Korea) can still call it a “quasi ballistic missile”, so Kim can go tit-for-tat with impending exercises while Trump and Moon live in denial.” He added: “What it does show..is Trump’s trip to Panmunjom may not yet have had its desired effect.”
July 24, 2019Read More
North Korea fired two short-range missiles into the sea on Thursday, complicating efforts to resume stalled nuclear talks with Washington and signalling its anger over planned US-South Korea joint military exercises. It was Pyongyang’s first missile t…
July 24, 2019Read More
North Korea fired a new type of short-range ballistic missile in two launches into the sea Thursday, South Korean officials said. The South’s Joint Chiefs of Staff said the missiles were fired from near the eastern coastal town of Wonsan and flew abou…
July 24, 2019Read More
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