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February 22, 2024
Global growth expected at 2.9% in 2024, rising to 3.2% in 2025. We no longer expect a recession in the US & the EU.
Inflation possibly peaked, yet upside risks persist due to ongoing price pressures.
Geopolitical risks elevate supply chain vulnerabilities, particularly in the Red Sea, Middle East and Ukraine.
Intensifying US-China competition adds to the challenges.
In 2024, around half of the world's population will be heading to the polls including the US (Nov), India (Apr/May), and the EU (Jun). [more]
February 21, 2024
Analyst:
Dive into the world of hedge funds with Quantcraft's latest study, "Navigating the Hedge Fund Maze." We delve deep into the complexities of hedge fund investing, offering valuable insights into strategies, performance trends, and innovative portfolio construction methods. The report also explores how hedge funds compare to bank QIS strategies, examining how they can potentially complement or even replace each other within your portfolio. Ultimately, this study equips you with a refined perspective to navigate this rewarding but complex alternative asset class. [more]
February 20, 2024
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Analyst:
Two large German industrial sectors have experienced significant losses in domestic production during the last few years: the automotive and the chemical industries. In the automotive industry, production level in Q4 2023 was 21% below the former peak reached in autumn 2017. Chemical output in Germany was 27% lower than at its the former peak.
Compared to the significant drop in domestic production, employment in both sectors has remained quite stable during the last few years. The number of employees in the automotive industry declined moderately between 2018 und 2022 but has stabilised since. Employment in the chemical industry was even only 2% below its peak at the latest reading.
In our view, production volumes in both sectors are unlikely to return to former peaks. Thus, we expect employment in these sectors to decline before long, as an adaptation to lower production volumes and probably also as a result of more automatisation and efficiency gains. [more]
February 15, 2024
Current EU Commission President von der Leyen is expected to announce that she is running for a second term on Monday. With less than four months to go until the June 6-9 European parliament elections, we provide an update on current developments and address the following questions: What is the likelihood of a von der Leyen 2.0 Commission and what could be the main policy priorities of the next Commission? To what extent could the prospect of a Trump 2.0 administration be a catalyst for an EU defence capability and spending boost? What do current polls tell us about a possible right-wing shift of the European parliament? How would this impact EU policy making? Which legislative proposals might still be finalised in the current legislative term? [more]
February 13, 2024
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Analyst:
Production in the manufacturing industry in Germany dropped by 1.2% in 2023 in real terms. This was the second decline in a row (2022: -0.2%) and the fourth decline in the last five years. Thus, industrial output was roughly 9% below the record level of 2018. Since manufacturing output dropped significantly in both Q3 and Q4 2023 (-2.0% and -2.2% qoq respectively), 2024 starts with a significant negative statistical overhang. Sentiment indicators seem to have reached a bottom, but business expectations are still far in negative territory. The negative impact of the recent increase in interest rates on domestic industrial production will likely become visible with a time lag because companies have been able to partly compensate the downturn in new orders by working off the orders booked before 2023. We have revised our forecast for manufacturing production in Germany in 2024 to -2.5% down from -1.5%. In this report, we also look at the economic development in major industrial sectors in Germany. [more]
February 12, 2024
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In early February, the German parliament approved the 2024 budget, ending a prolonged period of uncertainty and provisional budget management. But, torn between the intensifying consolidation requirements under the debt brake and the need to solve the economy's cyclical and structural challenges, the coalition government has already started to debate the upcoming 2025 budget. This fiscal policy debate appears unlikely to be settled anytime soon. In this note we discuss three possible scenarios for how the budget 2025 process might play out. [more]
February 8, 2024
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Analyst:
The German government this week agreed on the main features of a new power plant strategy. It is intended to address the problem that there will continue to be phases in the future when weather-dependent renewable energies are unable to cover the entire demand for electricity. Back-up power plants with base load capability are currently a necessary building block of an energy strategy based on renewables. German government has decided to bank on hydrogen-ready gas-fired power plants. The government aims to establish a new capacity mechanism by 2028 whereby power plant operators are remunerated for providing secured capacity via tenders. In a first step, 10 gigawatts (GW) of capacity are to be put out to tender in the short term (4 x 2.5 GW). This corresponds to around 20 power plant units. Pending further details, we believe that these plans for a capacity market are a positive development. In our view, it promises greater investment and thus energy security than the alternative of relying on market incentives, i.e., electricity prices remaining temporarily high enough in future to be able to operate such power plants profitably even at low capacity utilisation. One of the major challenges of the future is to obtain sufficient (green) hydrogen for the operation of power plants and industrial processes. [more]
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