“Never say never,” said James Bond. And central bankers would do well to stick to this agent’s wisdom. When Christine Lagarde announced a 0.75 percentage point hike in interest rates in September, one point was important to her: the President of the European Central Bank (ECB) made it clear that this was not the norm. After all, interest rates had never been raised so sharply in one fell swoop.
The central bank could now add the same amount just under six weeks later. At least that’s what most economists are expecting ahead of the Council meeting this Thursday. Above all, the further increase in the inflation rate speaks in favor of another large interest rate hike. In September it reached a new record of ten percent in the euro area.
Michael Hünseler, bond expert at asset manager MEAG, says with regard to the Opec oil cartel’s decision to reduce global production volumes: “In Europe, the drivers of inflation have not decreased, but have become even stronger with the latest Opec decision.”
Top jobs of the day
Find the best jobs now and
be notified by email.
And so the ECB must now quickly gear its monetary policy to fighting that stubborn inflation that many euro central bankers had previously dismissed as the obsession of exaggerated regulatory politicians.
What’s it called on Bond? “You only live twice – once in your life and once in your dreams.”
In Europe, the new heads of government in the UK and Italy kept us on our toes this week. It almost went unnoticed that the G20 state of Brazil is facing a directional decision that could hardly be more extreme: On Sunday, citizens have to choose between the ruling President Jair Bolsonaro and ex-President Luiz Inácio Lula da Silva, who wants to return to power.
Nationalist stands against socialist, ex-military against union leaders. Bolsonaro denies man-made climate change, Lula has persistent suspicions of corruption. No wonder the country’s business elite is just as divided as the rest of the population. The result of the decisive second round of the presidential election is completely open.
Incidentally, Brazil’s most important trading partner is China, both in terms of imports and exports, and in both categories at a clear distance from the USA, which is geographically much closer. Another indication of how systematically China is expanding its network of contacts around the world.
In Germany, the Chinese state shipping company Cosco is now allowed to hold a 24.9 percent stake in the smallest container terminal in the Port of Hamburg. The federal cabinet decided that yesterday – under protest from the Foreign Office and other ministries led by the FDP and the Greens.
It is quite common in the shipping industry for large shipping companies to invest in cargo terminals in order to secure better handling for themselves. The process seems pretty far removed from a sell-out of critical infrastructure. But it is possible that decisions about dealing with the People’s Republic have now reached the state of aggregation that we in Germany like best: It’s about the principle.
After years of unhesitatingly placing half of our natural gas supply in the hands of a Russian autocrat, we definitely don’t want anything similar to happen to China again.
German companies must therefore also rethink in relation to China. Being overly dependent on the Chinese market and the whims of the Chinese Communist Party is no longer in vogue among investors and the public. At the same time, there is far too much and far too good business to be done in China for corporate executives to carelessly jeopardize this market.
A balancing act that Siemens also has to master. In the past fiscal year, the group generated 13 percent of its sales in China – and wants to further expand business in the People’s Republic, as the “Handelsblatt” has researched. Ironically, the area of ”digital industries” – with industrial software and factory automation the most important and sensitive sector – is to be geared even more closely to China.
According to company circles, Siemens wants to double the sales of the group division in China compared to 2020 by 2025 and also create new jobs there. According to information from group circles, CEO Roland Busch has started a project specifically for the project. Codename: “Marco Polo”.
(Photo: Argo AI via REUTERS)
The Volkswagen Group and its US partner Ford are withdrawing from the joint project involving robot cars at the software company Argo AI. The group surprisingly announced yesterday evening that Volkswagen will no longer invest in Argo. The US automaker Ford is going out of business directly and booked a write-down of 2.7 billion dollars for it, as it announced yesterday after the US stock market closed.
The two partners previously each held 40 percent of Argo and agreed in 2019 on a broad-based joint development of the technology. VW intends to present a new partner for its robot taxis previously planned with Argo, which are to be launched for the mobility subsidiary Moia in Hamburg in 2025.
And then there is probably the most prestigious order in the entire aircraft industry, which is currently causing a lot of trouble for Boeing. The US aircraft manufacturer has to write off a further 766 million US dollars because the construction of the new “Air Force One” is more expensive than expected. Last year, Boeing had to write off 1.1 billion dollars on the two new jumbo jets for the US President. The aircraft are based on the 747-8 model, but are extensively modified, including self-defense and communications systems designed to function even in a nuclear war.
The purchase price of a total of 4.3 billion dollars is too low, Boeing boss Dave Calhoun told the CNBC TV station yesterday. The biggest mistake made by his predecessor, Dennis Muilenburg, was to allow himself to be carried away by pressure from then-President Donald Trump to promise a fixed price for the presidential jets. Shortly before taking office in 2016, Trump expressed his displeasure with the costs and tweeted “Cancel order!”.
Can this negotiation trick be used to lower the price of the next used car purchase?
Christian Rickens
Editor-in-Chief Handelsblatt