Finance

Future strategy will primarily depend on the further course of the pandemic

The US Federal Reserve will probably confirm its loose monetary policy this Wednesday. The Fed can wait for the first meeting since the new US president took office, as the government wants to react to the crisis with an additional stimulus package. Future monetary policy is likely to depend primarily on the further course of the corona pandemic.

On January 20th, Joe Biden was named President of the USA. It should be important for the Fed that a 1.9 trillion dollar (1.6 trillion euros) fiscal program is being worked on. The new finance minister Janet Yellen stands for a business cycle-friendly financial policy. This should relieve the Fed in combating the severe consequences of the corona crisis.

The number of infections in the USA has been high until recently. This has a negative impact on the economic recovery. “At the same time, the medium-term prospects are relatively good since the vaccinations are progressing at a relatively high pace compared to many other countries,” writes Commerzbank economist Bernd Weidensteiner. It is therefore important to bridge the coming months. According to Weidensteiner, the instruments of financial policy are more suitable here than those of the central bank.

The Fed should therefore confirm its key interest rate in the range of 0 to 0.25 percent. The low interest rates are to be maintained until the employment target is achieved. In terms of inflation, the Federal Reserve wants to allow the target mark to be exceeded by two percent for a certain period of time.

Barometer climbed to its best value since October

The mood among German exporters brightened significantly in January, regardless of the second corona wave among important trading partners. The corresponding barometer climbed by 4.1 to 6.0 points, as the Ifo Institute announced on Tuesday in its monthly survey of 2,300 industrial companies. This is the best value since October.

“Clarity on Brexit and the US presidency, a robust industrial economy and the global vaccination start led to cautious optimism in the German export industry,” said Ifo President Clemens Fuest.

The manufacturers of computers and electrical equipment expect significant increases in exports. The machine builders and the chemical industry are also confident about their foreign business. Expectations among manufacturers of food and beverages have recovered significantly. They are currently assuming a constant export business. “The foreign market for the clothing industry remains difficult,” it says. “The furniture manufacturers are also assuming declining foreign sales.”

German exports slumped last year due to the corona recession at key trading partners such as the USA, France and Great Britain. Most experts predict a recovery for 2021 as the global economy is likely to grow again.

Leiner flagship on Mariahilferstrasse is being demolished. Before that, the furniture retailer starts a mega auction

Kika / Leiner boss Reinhold Gütebier

The end for the furniture store “Leiner” on Vienna's Mariahilfer Strasse is getting closer and closer: The Signa Group wants to build a department store based on the model of the Berlin “KaDeWe”, the excavators are to open in March. To make this possible, the goods that are still in the store – from kitchens to oriental carpets to laundry racks – will now be auctioned, as the commissioned auction platform aurena.at announced in a broadcast on Tuesday. Anyone can bid.

More than 40,000 articles should come under the hammer within 25 working days. The first bids will be awarded from January 31st – the objects will be sold in several auctions. The plan is to get the furniture store empty within five weeks, by the end of February, it said.

The broadcast also gave an impression of what kind of goods should be brought to the man or woman: “A good 900 carpets, 40 bathrooms, 100 sofas, 50 beds, 15 kitchens, countless lamps and household appliances, tons of decorative Articles, crockery or baby equipment: all this and much more is going under the hammer. ” The spectrum ranges from valuable oriental carpets and leather trimmings to bathtubs and dining table groups to laundry baskets, vacuum cleaners and toilet lids.

Exhibition kitchens are also auctioned – the starting prices usually start at around ten percent of the conventional sales price, it said. In addition to the furniture store's range, the building equipment, such as shop lighting, shelving systems and sales booths, must also be removed. The furniture for the furniture store restaurant and light boxes with the company logo are also available.

The first offers are already online at www.aurena.at. The offer will be gradually expanded over the next few days, it was announced. Whoever wants to bid must first register on the platform.

The real estate and retail group Signa had taken over the furniture dealers Kika and Leiner in June 2018 as part of an emergency sale from the ailing German-South African furniture company Steinhoff. The Leiner location on Mariahilfer Strasse served as the company's flagship.

The building is to be demolished from March onwards, although the historic facade will be retained. A department store based on the model of the famous Berlin department store “KaDeWe” and a hotel will then be built at the location. The opening is planned for autumn 2024.

The US company Apple is the most valuable brand in the world. This emerges from a study published on Tuesday by the brokerage firm Brand Finance. In second and third place are Amazon and Google, also based in the USA.

“A brand is first of all an intangible asset, we try to give it a value,” said the general manager of Brand Finance, Bertrand Chovet, to the news agency AFP. The basis for this is on the one hand the profit prospects, on the other hand other parameters such as investments or the reputation of the brand.

According to the information, iPhone manufacturer Apple achieved the top spot for the first time after its top placement in 2016. The main reason for this is the company's successful diversification strategy. According to Brand Finance, the brand value rose by 87 percent to 263.4 billion US dollars (around 217 billion euros).

In general, technology companies have come through the corona crisis relatively well so far, it said. This applies in particular to the online trading platform Amazon, which even grew massively during the pandemic. Companies such as Google or the streaming service Netflix would also have benefited significantly. In contrast, companies in the travel and tourism sector, including airlines, performed worse.

In his official WEF opening speech, China's President Xi Jinping warned of a “new cold war”.

China's President Xi Jinping has warned political and business leaders of a “new Cold War”. Such a confrontation will “end in a dead end,” said Xi on Monday in a digitally broadcast address to the participants of this year's World Economic Forum (WEF). Without naming the US directly, Xi presented himself as a defender of multilateralism and globalization.

The formation of small cliques, a “new cold war” set in motion, and threats and intimidation of others would only drive the world into division, warned Xi. He cited the disruption of supply chains and sanctions aimed at isolation as examples.

The World Economic Forum (WEF), which traditionally takes place at the end of January in the Swiss ski resort of Davos, will take place in a purely virtual manner this year. From Monday to Friday there should be important debates about the economic and social recovery after the coronavirus pandemic at the exchange, where hundreds of representatives of the global political and business elite usually meet.

Rate reached 5.0 percent from September to November

In Great Britain, unemployment continued to rise against the backdrop of the corona crisis. In the three months to November, the unemployment rate rose by 0.1 percentage points to 5.0 percent, as the ONS statistics office announced in London on Tuesday. This is the fifth increase in a row and the highest rate since 2016. Analysts had expected a slightly stronger increase to 5.1 percent on average.

A comparison with February 2020, the month before the introduction of tough measures in the fight against the corona pandemic, shows how much the corona crisis is now burdening the British labor market. At that time the unemployment rate was only 4.0 percent.

The number of employees fell in the three months to November by 88,000, as the message also said. In the three months to October, the decline was significantly greater at 144,000.

Despite the higher unemployment, the statistics office reported an unexpectedly strong increase in the pay of employees. As the announcement said, weekly wages and salaries rose 3.6 percent in the three months to November, a little more than analysts had expected.

The Swiss pharmaceutical company Novartis earned more last year despite the corona-related subdued demand for drugs. Profit climbed 13 percent to $ 8.07 billion in 2020. The shareholders should therefore receive a dividend of three francs per share – 0.05 francs more than in 2020. CEO Vasant Narasimhan assumes that the virus pandemic will continue to affect business in the first half of the year. The forecast for the current year is correspondingly cautious: On Tuesday, excluding exchange rate fluctuations, the Basel-based company is forecasting a low to mid single-digit percentage increase in sales. The operating profit adjusted for special factors is expected to grow by a mid-single-digit percentage and faster than sales.

In 2020, sales were $ 48.66 billion, up 3 percent on a currency-neutral basis. Adjusted operating profit rose 13 percent to $ 15.42 billion. Novartis thus fulfilled its own specifications. The two waves of the coronavirus pandemic and the measures taken to contain it dampened the demand for Novartis products: hospitals that had stocked up on medicines as a precaution at the beginning of the pandemic made fewer purchases and fewer patients went to the doctor. In the core business with patented drugs, called Innovative Medicines, therapies for the treatment of skin and eye diseases sold less well and the generics subsidiary Sandoz struggled with declining sales.

The engines of growth were the remedy Cosentyx against psoriasis – with annual sales of four billion dollars, the drug with the highest sales – and the heart drug Entresto. Zolgensma's gene therapy for the treatment of muscle wasting contributed $ 920 million in sales. At a price of a good two million dollars per single dose, the most expensive drug in the world is used to treat the mostly fatal hereditary disease spinal muscular atrophy (SMA) in young children. There was greater demand for Novartis drugs, especially in growth markets, especially China, where sales revenue rose by 14 percent after adjusting for currency effects.

Novartis has to wait for an important growth driver. When the cholesterol-lowering drug Leqvio will be approved in the world's largest healthcare market, the USA, is “beyond our control”, according to CEO Narasimhan. Although the FDA has no concerns about the effectiveness or safety of the agent, an inspection by the Italian contract manufacturer Corden Pharma Caponago is pending. In the EU, Leqivo, who Narasimhan believes in sales worth billions, was approved at the beginning of December.

CDU-Braun: “Not to be complied with” due to the crisis – constitutional amendment would be necessary

The German Chancellery chief Helge Braun wants to suspend the debt brake anchored in the constitution for the coming years because of the corona crisis and thus shakes a taboo of the CDU / CSU. The CDU politician writes in a guest article in the “Handelsblatt” that a corresponding amendment to the constitution is necessary for this. “The debt brake cannot be adhered to in the coming years, even with otherwise strict spending discipline,” says the guest post.

“That is why it makes sense to combine a recovery strategy for the economy in Germany with an amendment to the Basic Law, which provides a reliable degressive corridor for new borrowing for the coming years, and a clear date for the return to compliance with the debt rule.”

So far, the Union has always rejected requests from the SPD and the Greens to shake the debt brake. Green leader Robert Habeck had called for a constitutional amendment and an investment clause to be added to the debt brake. SPD politicians like Lower Saxony's Prime Minister Stephan Weil had called for a reform or even a move away from the debt brake, which is too rigid in times of crisis. CDU and CSU politicians, on the other hand, had called for a return to the debt brake or even a balanced budget as early as 2022. Due to the massive increase in new debt in the Corona crisis, the Bundestag has again suspended the debt brake for 2021.

If necessary by special procedure

The US Democrats want to try to get President Joe Biden's targeted 1.9 trillion dollar corona aid package through at least in large part in an accelerated process in the face of opposition from the Republicans. Majority leader in the Senate, Chuck Schumer, tells MSNBC that if the Republicans block the plan in Congress, he will resort to the so-called reconciliation process.

This would limit speaking time in the Senate and thus the possibility of blocking. In addition, large parts of the legislative package could be passed by a simple majority.

A tailor-made start for the new UBS boss Ralph Hamers: Thanks to the stock market boom, the largest Swiss bank increased its profits by 54 percent to 6.6 billion dollars last year. The institute thus achieved the best result since 2015. According to a survey by the bank, analysts had expected a surplus of 5.9 billion dollars. “Our strong result in 2020 is clear evidence of the fundamental strength of our market position,” said Hamers on Tuesday at his earnings premiere. Nevertheless, he promised changes. “We have to remain agile and make UBS even fitter for the future,” said the Dutchman, who had taken over the helm at the beginning of November from long-time company director Sergio Ermotti.

With the first annual financial statements of a large European investment bank, the Zurich financial institution has set the bar high. Trading in stocks, bonds and currencies in particular was booming. But also in the core division, asset management for wealthy private customers, as well as in business with professional investors such as pension funds (asset management), the bank sometimes earned massively more. Only in the business with smaller Swiss private and corporate customers did the result fall because value adjustments for credit risks hit the office. Overall, UBS was one of the winners of the coronavirus crisis with its good performance in recent quarters. The pandemic caused many customers to reallocate their investment positions or take up new funds. That made for a hefty fee income at the bank. Assets under management in wealth management and asset management climbed to a record $ 4.1 trillion.

Previously, the Wall Street houses had already shone thanks to leaps in earnings in their capital market sectors. For example, Morgan Stanley, which is most comparable to the major Swiss banks UBS and Credit Suisse, achieved record results. Experts assume that Deutsche Bank, which plays a leading role especially in bond trading, has also significantly increased its income in investment banking. The largest German financial institution presented its figures in early February.

In view of the good result, UBS boss Hamers wants to distribute billions to the shareholders. He announced a new share buyback program. Own titles worth up to four billion Swiss francs are to be bought back over three years. After the boom in 2020, analysts expect the institute's profits to decline this year. The bank itself was only cautious about the further course of business. Seasonal factors are likely to lead to increased customer activity in the first quarter of 2021 and have a positive effect on the earnings situation. At the same time, the coronavirus pandemic could have a dampening effect.