The blue and yellow flag flies over liberated towns. Abandoned tanks stand in the swamp. Russian soldiers desperately try to flee on foot: The pictures and news of the Ukrainian advance in the east of the country are impressive.
But my joy at the success of the Ukrainian army is mixed with trepidation. Not just because of the sacrifices on both sides. But also because of the possible reaction of the Kremlin. Russia has already responded with artillery and rocket attacks. A power plant was hit in Kharkiv, and there were power outages in large parts of eastern Ukraine. That won’t be all.
Will mobilization now follow Russia’s military defeat? If the Russian army called up its reservists and sent them to the front, they would have a vast superiority, at least numerically. However, the past few days have also shown how little the balance of power says on paper when, on the one hand, an entire people is desperately fighting for its freedom. And on the other side is a battered Russian soldier who often doesn’t know what he’s risking his life for in Ukraine.
Top jobs of the day
Find the best jobs now and
be notified by email.
With mobilization, war and death would finally arrive in every Russian family, and the tall tale of limited “military action” would be exposed. What begins as a military liberation could be the beginning of the end of the Putin regime.
However, it is not that far yet. As expected, the Putin party is in the lead in the results of the Russian regional elections that arrive in the evening. Either the citizens still support the president – or at least the vote counters.
For some agitators in Moscow’s media, the prospect of mobilization is no longer enough. They demand that Vladimir Putin use nuclear weapons against Ukraine. We don’t know how far the Russian president is from such a ludicrous order. Our Eastern Europe expert Mathias Brüggmann sees a third Russian course of action: terrorist attacks on Ukrainian cities up to and including their complete destruction. It would be the procedure known from Syria and Chechnya. Brüggmann’s conclusion: Ukraine now needs more weapons quickly, only Western determination can prevent Putin from escalating further.
The three most profitable US companies Apple, Microsoft and Alphabet are expected to earn around $245 billion net in 2022 – converted that is twice as much as all 40 Dax companies together. And the most profitable European group? According to Gazprom, that will most likely be in 2022. In the first half of the year, the natural gas company made a record profit of almost 42 billion euros. The increased gas prices are reliably flushing the money into the accounts of the Russian state-owned company (and thus the Russian war machine), and all Western sanctions are apparently unable to change that.
Even in the year before sanctions, 2021, Gazprom was almost the European leader in terms of profits. And somehow, when you compare it with the US tech companies, you get an idea of which side of the Atlantic has more of a future.
But it’s not just about tech. Whether pharmaceuticals, industry, retail: US companies generate the highest profits and have the best returns on sales. The top 500 in the USA should earn a good 60 percent more than those in Europe this year. The backlog is not a snapshot – it has existed for years and is constantly growing. According to a study by the consulting firm McKinsey, the sales of large European companies grew 40 percent more slowly between 2014 and 2019 than their counterparts in the United States.
What is this class difference? For once, the answer to this question is simple. On average, Europeans invested eight percent less and spent 40 percent less on research and development during the period under review than US companies. The more complicated question is how to get Europe’s corporations to finally believe in themselves again and invest in their future, rather than in share buyback programs. Or as we used to say in the village: nothing comes from nothing.
The answer to the question of whether you should put your savings on the stock exchange in the old or the new world is also quite clear. The stocks in the US top 500 are faster in terms of growth and returns than their European counterparts, but are also valued significantly higher. And German companies are once again at a significant valuation discount compared to the other European champions. But most analysts warn against the supposed bargains from Good Old Europe. As Marc Decker, deputy head of equities at Quintet Private Bank, the parent company of Merck Finck: “Looking forward, we expect that euro zone equities will come under increasing pressure compared to US equities.”
And then there are the billions of British coins and stamps all bearing a profile picture of the late Queen Elizabeth II. The coins are now gradually being exchanged for coins with the likeness of Charles III. exchanged. Small difficulty: Neither at the post office nor at the British Mint are there any employees who have ever been through such a change of ruler. Over the weekend we learned that there are ancient traditions for this, along with the corresponding exceptions: since Charles II in the 17th century, regents on coins have always looked in the opposite direction to their predecessors.
Only Edward VIII wanted to look to the left as well, supposedly because he wanted to show off his sweet side. This was of no practical importance – after almost a year as king, Elizabeth II’s uncle resigned.
I wish you a day that is at its best.
Best regards
Her
Christian Rickens
Editor-in-Chief Handelsblatt
You can subscribe to the Morning Briefing here: