The deputy editor-in-chief’s weekly recap

Good morning everyone,

last Monday our morning conference started with a picture and a sentence: “At the moment the Dax is falling quite steeply”, wrote our team leader Investment & Markets, Andreas Neuhaus, in teams under a screenshot of the leading index. It was day one after the rescue of Credit Suisse through an emergency merger with UBS – and we thought, as Harvard economist Kenneth Rogoff puts it: “There’s that 2008 feeling again.”

We discussed long and hard whether this was a new financial crisis. But when the Dax turned positive again after reassurances and reassurances from all sides, and even the European bank stocks recovered after the friendly opening of the US stock exchanges, cautious confidence spread. Also with us in the editorial office.

one thing is certain: The Credit Suisse crisis is home-made and also an isolated case in the European banking landscape. Our Zurich correspondent Jakob Blume impressively describes the drama surrounding the Schweizerische Kreditanstalt, founded in 1856, in seven acts.

But that doesn’t change the fact that nothing is normal in the banking world anymoresince the Silicon Valley Bank, a rather small institute from California specializing in start-ups, went bankrupt and Credit Suisse ended up with UBS for a bargain price of three billion francs – certainly not on the global financial markets.

This was shown once again on Friday: Deutsche Bank shares collapsed and, together with Commerzbank shares, were among the weakest values ​​in the Dax. The titles of other European banks were also clearly in the red. The heads of government gathered in Brussels for the EU summit tried to calm down. And ECB President Christine Lagarde also assured that the banks had more than enough capital and liquidity.

The massive price slide at Deutsche Bank even called Chancellor Olaf Scholz onto the scene, who demonstratively expressed his confidence in the institute. “There is no reason to worry about anything,” said Scholz after the EU summit.

However, it cannot be denied that many investors still fear that the crisis of confidence could spread to other financial institutions. The question of how a banking system must be designed so that these crises do not recur is all the more urgent.

Our weekend title deals with the ideas – from significantly more equity, also for government bonds, to a separate banking system. And also with UBS, which is no longer just too big to fail, but also too big to bail.

What else kept us busy this week:

1: “Probably the biggest current negative factor is the banking crisis”, also writes our stock expert Ulf Sommer, who analyzed the balance sheets of the 40 Dax companies. The most important listed companies in Germany achieved their second-best result in history in 2022 with a combined net profit of 117 billion euros. But the prospects are anything but rosy: The end of the corona effects, which had boosted business last year, as well as rising prices and interest rates are likely to weigh on results this year. And last but not least, the banking crisis.

2: “At the latest when banks are on their knees, it is worth taking a critical look at your portfolio again”, advises Maik Bolsmann from asset manager B&K Vermögens in Cologne. Said and done. Our chief investment reporter, Markus Hinterberger, asked money professionals how they assess the current situation and how 10,000, 50,000 and 100,000 euros should be invested in the short, medium and long term.

3: Microsoft speaks of “price harmonization”, experts of “proof of market power”which is likely to increase with the integration of ChatGPT into numerous products from the tech group. No matter how you justify why Office 365 office software and other Microsoft offerings are becoming more expensive (in some cases by eleven percent in the euro area): The price increases are making business customers uncomfortable.

Speaking of ChatGPT: The artificial intelligence writes homework and chores in seconds. Pupils and students are enthusiastic, teachers and politicians helpless – for now. For our education expert Barbara Gilmann, the question arises: What is education?

4: Thick air is a good keyword. “Our farewell to the combustion engine is certain”Audi boss Markus Duesmann clarifies in the Handelsblatt interview. Also the dispute with the EU Commission in Brussels and the Greens in Berlin about the ban on internal combustion engines, initiated by the FDP and its Transport Minister Volker Wissing, does not change Audi’s decision. Although the signs in Brussels are pointing towards rapprochement, one sometimes wonders why – or rather for whom – politics makes politics at all.

5: It is an image that leaves no doubt: Xi Jinping and Vladimir Putin, glasses raised, look deep into each other’s eyes and toast each other. For three days, China’s head of state visited his “dear friend”, the Russian President, in the Kremlin – for dinner on Monday there were reindeer and quail pancakes, among other things. The meeting made it clear: Beijing stands by Moscow.

The sobering realization of my colleague Mareike Müller in Riga: Europe and the USA should now back Ukraine in the fight for their sovereignty and territorial integrity – namely closed. “Xi is not an honest broker in this conflict.”

6: The historical trend reversal on the real estate market is now also reflected in black and white figures. Last year, the prices for apartments and single and two-family houses in Germany fell from October to December compared to the fourth quarter of 2021 – for the first time since 2010. This was announced by the Federal Statistical Office on Friday, so it couldn’t be more official.

A week earlier, the authority had reported the sharpest decline in building permits since 2007. “There is fear in housing construction”, states Felix Leiss, researcher at the Munich Ifo Institute. That too can be proven. According to the Ifo, more and more residential construction orders are being canceled due to higher interest rates and rising construction costs.

7: It must have been a shock: In the Sunday trend, which the opinion research institute Insa collects weekly for “Bild am Sonntag”, the Greens came to just 15 percent just under a week ago – and were even behind the AfD with 16 percent. With projects such as the ban on oil or gas heating from 2024, led by Robert Habeck, the party is antagonizing many. No wonder the economics minister’s mood hit rock bottom at the start of the week.

In the “Tagesthemen” he then burst out: The draft law on the replacement of the heating system was “leaked to the Bild newspaper – I must assume deliberately – at a very early stage in order to damage trust in the government”. As a result, talks between the coalition partners were “probably destroyed on purpose, because of the cheap tactical advantage”. However, he assumes that this can be patched up again at the coalition committee on Sunday. I’d say wait and see.

8th: Incidentally, one critic of the planned ban on oil and gas heating is Veronika Grimm. that be “just no sustainable climate protection”, says the economy in an interview with the Handelsblatt. “We can already see that countless households want to quickly install a new gas heating system. That ties up the scarce specialists – at the wrong time.” Our energy expert Catiana Krapp also has a clear opinion on hasty panic buying: “Keep your hands off oil and gas heating.”

9: The German travel industry may have a data scandal. A story by our reporter René Bender begins with this sentence. The FTI Group, the third largest European provider with an annual turnover of 1.6 billion euros, is said to have received sales figures from travel agencies and competitors over the years. Bender learned from insider circles that FTI was apparently using the data for a sales offensive at the expense of competitors. Their outrage is great.

I wish you a weekend with little outrage and lots of serenity. You will need your peace of mind for Monday’s Mega Strike!

Best regards
Her

Kirsten Ludowig

Deputy Editor-in-Chief Handelsblatt

You can receive the Morning Briefing plus free of charge as part of your Handelsblatt digital subscription or subscribe separately here.