#Weekly #Review - Financial Markets & Economics: Commentaries by Fabian Wintersberger

Everyone looked at the German elections last Sunday. It also marked the end of an era: While modern time is separated between before  and after Christ , the German political landscape in the 21st Century can be separated into before and after Angela Merkel . I do not know if you remember September 18th of 2005, which marked the beginning of the Merkel Era . After being in lead by a wide margin in all national polls, election day has been a disaster for CDU/CSU. It only slightly came in at first, only one percentage point ahead of the governing social democrats. It was the second-worst result for the conservative party in history.  Gerhard Schroeder, leader of the social democratic party and chancellor back then gained hope for another, third period as chancellor of the Federal Republic of Germany. As always, political leaders came together on national television to discuss the election results. The rest was history: Schroeder was aggressive during the debate, claiming that he ...

While I was enjoying the Sun at Rhodos last week, I am really happy that I can write about actual market events again and am able to give you my thoughts about it.  There are several things I want to talk about: Firstly, there was the September meeting of the Federal Open Market Commitee, where markets expected to get some guidance about the future path of monetary policy ( Spoiler: They did not get much ) Secondly, there was a lot of talking about Evergrande. The Chinese property developer got into liquidity problems and as a result markets freaked out slightly at the beginning of the week. However, in retrospect it was only a brief downmove before everyone jumped on the bandwagon again and bought the dip.  However, I would like to start with THE topic of 2021, a topic that nearly has been forgotten in previous decades. You already know it, it is Inflation . Last week we got US-inflation numbers for August and a big sight of relief from the Tranisitory camp.  For the fir...

For the last several decades, one can observe a worrying trend when it comes to economic growth: All of those countries are experiencing a slowdown of growth. The 'good years' are getting worse and worse for quite a while now. While most observers point out that this tendency is vastly a result of structureal problems like high regulation, taxes, growing bureaucracy, demographics and debt, the slowdown in economic growth is accompanied by a continuing decrease in interest rates. Altough some people claim that the fall in interest rates has nothing to do with central bank policy and is due to other factors (recently,  some economists put the cart before the horse and claimed that it is because of rising inequality ), we cannot let central bank policy makers of the hook on that.  Nearly all schools of economic thought (at least the neoclassical and Keynesian mainstream) propose that, if the economy falls into recession, interest rates should be lowered (neoclassics) and governme...

The summer is over (at large), but the debate whether the current inflation numbers are a temporary phenomenon or if the price increases will become more permanent and the deflationary cycle ended in 2020. I wrote a little bit about the arguments of the Deflation Camp already back in July ,  and that one should always consider their arguments to evaluate the current economic conditions.  I know, I may repeat myself, but the two main arguments of the deflation camp  are that price increases have taken place in very special sectors of the economy, like rental cars, used cars, energy prices or plane tickets, just to name a few, and that we will only observe a substantial increase in inflation when wages pick up. ( addendum:  Although no one mentions that ' Over the past four quarters, the United States has generated more wage inflation than at any point over the past 40 years. ' ) A brief look into recent data shows that price inflation in those affected sectors ha...

After a short summer break I welcome all readers back to my weekly review and hope that, despite the not so sunny weather, everyone of you had a 'great summer'. However, summer was good for most investors if one was invested in European and American markets. There are not many days, where the big indices are not making all-time highs.  On the other hand, the summer was not that good for those who invested into Asian markets: Japan has been struggling with a rise in covid cases, which may has led to a four per cent decrease in the Nikkei compared to the beginning of the summer.  In recent weeks, China has started to lock down some regions again due to an increase in covid cases which may be a bad sign for the world economy. Although much more negative has been the rising interference of the communist party to specific chinese enterprises. As a result, they faced an intense sell-off of their stock. As the main engine of the world economy is struggling, and this has implications ...