🤑 Günstiger wird‘s nicht. Jetzt schnell 60 % RABATT am Black Friday sichern, bevor es zu spät ist ...JETZT ZUGREIFEN

DGAP-News: Silvia Quandt & Cie. AG, Merchant & Investment Banking: In-between the lines - Bernhard Eschweiler (deutsch)

Veröffentlicht am 04.04.2012, 09:16
Aktualisiert 04.04.2012, 09:20
Silvia Quandt & Cie. AG, Merchant & Investment Banking: In-between the lines - Bernhard Eschweiler

DGAP-News: Silvia Quandt & Cie. AG, Merchant & Investment Banking /

Schlagwort(e): Sonstiges/Sonstiges

Silvia Quandt & Cie. AG, Merchant & Investment Banking: In-between the

lines - Bernhard Eschweiler

04.04.2012 / 09:15

---------------------------------------------------------------------

- EU 'fire wall' cannot replace ECB - no matter how large

- ECB liquidity drive is like providing emergency medical support

- Lessons from Japan: push reforms and avoid premature monetary

tightening

Market attention over the last 10 days has moved back to the fiscal

performance in the Euro-zone periphery. A key concern is Spain, which

reported a larger than expected deficit for 2011 and announced a wider

deficit target for 2012. The problem is not a lack of effort, but poor

economic performance. PIIGS bond spreads over German Bunds widened on

average by 50 basis points. Only Portuguese spreads managed to narrow.

The correction is modest given the tightening since the start of the year

and is probably not the start of a new trend. Indeed, spreads stabilized

over the last couple of days. Nevertheless, the fiscal jitters serve as a

reminder that the Euro debt crisis is not yet resolved.

Market commentators gave the extension of the ESM to EUR800 billion credit

for what calmed markets at the end of last week. That may be true, but is

not proof that an increased ESM will be more effective than the current

EFSF. The clout of policy tools is also unlikely to be improved by liking

them with lethal weapons. This can even backfire. Examples of such

analogies are the famous 'Bazooka', first introduced by former US Treasury

Secretary 'Hank' Paulson, and Mario Draghi's 'Dicke Bertha'. France's

finance minister François Baroin topped the arms race by comparing the ESM

firewall with a 'nuclear option in military planning'. The deterrent

should be big enough so that speculators would not dare to attack weak Euro

members. Unfortunately, the nuclear deterrent strategy does not work for

the ESM.

- First, the nuclear deterrent strategy is based on the premise that the

firepower is sufficient to kill the enemy several times over. The

upsized ESM contains only EUR500 billion of fresh funds. The rest of

the funds are already committed. The money is enough to deal with

problems in Greece, Ireland and Portugal, but not Spain and Italy.

Even an in-

crease to EUR1 trillion or more would not be enough to defend Italy and

Spain in case of a market panic. Besides, further increasing the size

undermines the fiscal position of the countries that contribute to the

fund, undermining the overall credibility.

- Second, the nuclear deterrent strategy depends critically on the

premise that the arms are in position, aimed and ready to fire. The

ESM, on the other hand, first has to mobilize the funds, which means

raising money in the market place. That is difficult in times of

market turmoil.

The EFSF has had the mandate to intervene in the market for some time, but

so far has failed to make a difference for these reasons. The ESM will not

do better. Only the ECB can make a difference. It has unlimited firepower

and can pull the trigger at any time.

The German government resisted the increase of the firewall. It believes

that larger firewalls are not the solution to the underlying fiscal

problems. Domestic political consideration also played a role as well as

the worry that larger commitments would undermine Germany's credit rating.

The final compromise was only acceptable for Germany, because the headline

figure was well below the EUR1 trillion that France and others had

demanded. Second, the German consent was probably tactical as the

government believes that in case of a market attack the ECB would have to

step in and the ESM funds would not get mobilized.

Super gun, drug or just the right thing to do?

Mario Draghi's comparison of the ECB's 3-year LTROs with the famous German

WWI super gun, called 'Dicke Bertha', demonstrated how badly such analogies

can backfire. Critics quickly pointed out that the 'Dicke Bertha' was

ineffective and too expensive. However, comparing the liquidity operations

with dangerous drugs that have lethal side effects and make addictive, as

some economists argue, is also misplaced. Only history will tell how

expensive or perhaps profitable the ECB liquidity operations will really

be. Yet, the effectiveness should not be in doubt.

The European banking system was about to collapse and with it the Euro had

the ECB not stepped in. The famous Target2 balances show that banks in the

periphery had failed to refinance more than EUR800 billion in the interbank

market by the end of last year due to massive capital flight. Even

Bundesbank President Jens Weidmann admitted in a recent newspaper article

that preventing a liquidity crunch was the right thing to do. Thus and at

the risk of falling into another analogy trap, the ECB's liquidity

operations should be seen as necessary life-saving emergency measures.

What has to follow is a cure to fix the root cause of the illness and that

is the job of the Euro-area governments and not the ECB.

Two lessons from Japan

A look at Japan shows the importance of reforms as well as ample monetary

support. Japan's problems are not identical with those of the Euro-area

periphery. Japan has a very competitive export sector and runs a trade

surplus. The fiscal situation is a mess, but the initial problem was an

asset bubble and not fiscal profligacy. However, Japan faces similar

deleveraging pressures and the failure to address the structural root

problems and provide sufficient monetary support has pushed it into a

deflationary spiral.

Japan is largely a closed economy despite its strong export sector. In

fact, not only does Japan prevent competition from abroad, it also prevents

internal competition, which leads to structural rigidity. The government

has so far failed to break these structural rigidities. Second, the

government and the central bank recognized too late that easy monetary

policy was needed

after the asset bubble had burst. And even when monetary policy had been

relaxed, the central bank tightened twice prematurely, further compounding

deflationary pressures.

Merkel keeps Euro periphery on reform path

What does that mean for the Euro zone? First, the ECB is right to think

about an exit strategy and maintain sound prudential standards for its

operations. Furthermore, the ECB should work closely with governments and

regulators to ensure that fundamentally insolvent institutions are

recapitalized, merged or taken out of business. However, reversing the

current policy stance should be approached with extreme caution. Not only

Japan is a negative example. The ECB's own decision to hike rates last

spring was clearly a mistake. At the time, the ECB was too focused on

current inflation figures and underestimated the economic impact of the

fiscal adjustment in Europe.

The current economic data from the periphery makes it unlikely that any

sane central banker is thinking about tightening. March car sales in

Italy, for example, were down 26.7% from a year ago. And the weakness is

not just limited to the periphery. French car sales were down 23.5%.

Given fiscal and even private-sector deleveraging as well as an impaired

banking system, inflation is not a major risk. Yet, that thinking may

change if rising oil prices lead to higher headline inflation. Against

that background, the small decline in March Euro-area inflation was welcome

news.

Second, governments should lose no time to push through fiscal and

structural reforms. Germany led by Angela Merkel sees it increasingly as

its job to make sure the Euro-area periphery stays on the reform path. The

German government believes strongly that only structural reforms and not

stimulus programs can revive growth. The message from Berlin is becoming

surprisingly blunt: 'reform or no more money'. And indeed, there are some

encouraging developments. Italy and Spain, for example, are pushing for

far-reaching labor market reforms. Unions in both countries are fighting

back, but the governments have remained firm. Other news from Spain is

also better. After Ireland, Spain has made the most progress in reducing

unit labor cost and trimming the current account deficit.

Disclaimer

This analysis was prepared by Bernhard Eschweiler, Senior Economic Advisor,

and was first published 4 April 2012, Silvia Quandt Research GmbH,

Grüneburgweg 18, 60322 Frankfurt is responsible for its preparation. German

Regulatory Authority: Bundesanstalt für Finanzdienstleistungsaufsicht

(BaFin), Graurheindorfer Str. 108, 53117 Bonn and Lurgiallee 12, 60439

Frankfurt.

Publication according to article 5 (4) no. 3 of the German Regulation

concerning the analysis of financial instruments (Finanzanalyseverordnung):

Number of recommendations Thereof recommendations for issuers to which

from Silvia Quandt Research investment banking services were provided

during

GmbH in 2012 the preceding twelve months

Buys: 95 35

Neutral: 54 6

Avoid: 11 0

Company disclosures

Article 34b of the German Securities Trading Act (Wertpapierhandelsgesetz)

in combination with the German regulation concerning the analysis of

financial instruments (Finanzanalyseverordnung) requires an enterprise

preparing a securities analysis to point out possible conflicts of interest

with respect to the company or companies that are the subject of the

analysis. A conflict of interest is presumed to exist, in particular, if an

enterprise preparing a security analysis:

(a) holds more than 5 % of the share capital of the company or companies

analysed;

(b) has lead managed or co-lead managed a public offering of the

securities of the company or companies in the previous 12 months;

(c) has provided investment banking services for the company or companies

analysed during the last 12 months for which a compensation has been or

will be paid;

(d) is serving as a liquidity provider for the company's securities by

issuing buy and sell orders;

(e) is party to an agreement with the company or companies that is the

subject of the analysis relating to the production of the recommendation;

(f) or the analyst covering the issue has other significant financial

interests with respect to the company or companies that are the subject of

this analysis, for example holding a seat on the company's boards.

In this respective analysis the following of the above-mentioned conflicts

of interests exist: none

Silvia Quandt Research GmbH, Silvia Quandt & Cie. AG, and its affiliated

companies regularly hold shares of the analysed company or companies in

their trading portfolios. The views expressed in this analysis reflect the

personal views of the analyst about the subject securities or issuers. No

part of the analyst's compensation was, is or will be directly or

indirectly tied to the specific recommendations or views expressed in this

analysis. It has not been determined in advance whether and at what

intervals this report will be updated.

Equity Recommendation Definitions Silvia Quandt Research GmbH analysts rate

the shares of the companies they cover on an absolute basis using a 6 -

12-month target price. 'Buys' assume an upside of more than 10% from the

current price during the following 6 - 12-months. These securities are

expected to out-perform their respective sector indices. Securities with an

expected negative absolute performance of more than 10% and an

under-performance to their respective sector index are rated 'avoids'.

Securities where the current share price is within a 10% range of the

sector performance are rated 'neutral'. Securities prices used in this

report are closing prices of the day before publication unless a different

date is stated. With regard to unlisted securities median market prices are

used based on various important broker sources (OTC-Market).

Disclaimer This publication has been prepared and published by Silvia

Quandt Research GmbH, a subsidiary of Silvia Quandt & Cie. AG. This

publication is intended solely for distribution to professional and

business customers of Silvia Quandt & Cie. AG. It is not intended to be

distributed to private investors or private customers. Any information in

this report is based on data obtained from publicly available information

and sources considered to be reliable, but no representations or guarantees

are made by Silvia Quandt Research GmbH with regard to the accuracy or

completeness of the data or information contained in this report. The

opinions and estimates contained herein constitute our best judgement at

this date and time, and are subject to change without notice. Prior to this

publication, the analysis has not been communicated to the analysed

companies and changed subsequently. This report is for information purposes

only; it is not intended to be and should not be construed as a

recommendation, offer or solicitation to acquire, or dispose of, any of the

securities mentioned in this report. In compliance with statutory and

regulatory provisions, Silvia Quandt & Cie. AG and Silvia Quandt Research

GmbH have set up effective organisational and administrative arrangements

to prevent and avoid possible conflicts of interests in preparing and

transmitting analyses. These include, in particular, inhouse information

barriers (Chinese walls). These information barriers apply to any

information which is not publicly available and to which any of Silvia

Quandt & Cie. AG and Silvia Quandt Research GmbH or its affiliates may have

access from a business relationship with the issuer. For statutory or

contractual reasons, this information may not be used in an analysis of the

securities and is therefore not included in this report. Silvia Quandt &

Cie. AG and Silvia Quandt Research GmbH, its affiliates and/or clients may

conduct or may have conducted transactions for their own account or for the

account of other parties with respect to the securities mentioned in this

report or related investments before the recipient has received this

report. Silvia Quandt & Cie. AG and Silvia Quandt Research GmbH or its

affiliates, its executives, managers and employees may hold shares or

positions, possibly even short sale positions, in securities mentioned in

this report or in related investments. Silvia Quandt & Cie. AG in

particular may provide banking or other advisory services to interested

parties. Neither Silvia Quandt Research GmbH, Silvia Quandt & Cie. AG or

its affiliates nor any of its officers, shareholders or employees accept

any liability for any direct or consequential loss arising from any use of

this publication or its contents. Copyright and database rights protection

exists in this publication and it may not be reproduced, distributed or

published by any person for any purpose without the prior express consent

of Silvia Quandt Research GmbH. All rights reserved. Any investments

referred to herein may involve significant risk, are not necessarily

available in all jurisdictions, may be illiquid and may not be suitable for

all investors. The value of, or income from, any investments referred to

herein may fluctuate and/or be affected by changes in exchange rates. Past

performance is not indicative of future results. Investors should make

their own investment decisions without relying on this publication. Only

investors with sufficient knowledge and experience in financial matters to

evaluate the merits and risks should consider an investment in any issuer

or market discussed herein and other persons should not take any action on

the basis of this publication.

Specific notices of possible conflicts of interest with respect to issuers

or securities forming the subject of this report according to US or English

law: None

This publication is issued in the United Kingdom only to persons described

in Articles 19, 47 and 49 of the Financial Services and Markets Act 2000

(Financial Promotion) Order 2001 and is not intended to be distributed,

directly or indirectly, to any other class of persons (including private

investors). Neither this publication nor any copy of it may be taken or

transmitted into the United States of America or distributed, directly or

indirectly, in the United States of America.

Frankfurt am Main, 04.04.2012

Silvia Quandt Research GmbH

Grüneburgweg 1860322 Frankfurt

Tel: + 49 69 95 92 90 93 -0

Fax: + 49 69 95 92 90 93 - 11

Ende der Corporate News

---------------------------------------------------------------------

04.04.2012 Veröffentlichung einer Corporate News/Finanznachricht,

übermittelt durch die DGAP - ein Unternehmen der EquityStory AG.

Für den Inhalt der Mitteilung ist der Emittent / Herausgeber

verantwortlich.

Die DGAP Distributionsservices umfassen gesetzliche Meldepflichten,

Corporate News/Finanznachrichten und Pressemitteilungen.

Medienarchiv unter http://www.dgap-medientreff.de und

http://www.dgap.de

---------------------------------------------------------------------

163850 04.04.2012

Aktuelle Kommentare

Installieren Sie unsere App
Risikohinweis: Beim Handel mit Finanzinstrumenten und/oder Kryptowährungen bestehen erhebliche Risiken, die zum vollständigen oder teilweisen Verlust Ihres investierten Kapitals führen können. Die Kurse von Kryptowährungen unterliegen extremen Schwankungen und können durch externe Einflüsse wie finanzielle, regulatorische oder politische Ereignisse beeinflusst werden. Durch den Einsatz von Margin-Trading wird das finanzielle Risiko erhöht.
Vor Beginn des Handels mit Finanzinstrumenten und/oder Kryptowährungen ist es wichtig, die damit verbundenen Risiken vollständig zu verstehen. Es wird empfohlen, sich gegebenenfalls von einer unabhängigen und sachkundigen Person oder Institution beraten zu lassen.
Fusion Media weist darauf hin, dass die auf dieser Website bereitgestellten Kurse und Daten möglicherweise nicht in Echtzeit oder vollständig genau sind. Diese Informationen werden nicht unbedingt von Börsen, sondern von Market Makern zur Verfügung gestellt, was bedeutet, dass sie indikativ und nicht für Handelszwecke geeignet sein können. Fusion Media und andere Datenanbieter übernehmen daher keine Verantwortung für Handelsverluste, die durch die Verwendung dieser Daten entstehen können.
Die Nutzung, Speicherung, Vervielfältigung, Anzeige, Änderung, Übertragung oder Verbreitung der auf dieser Website enthaltenen Daten ohne vorherige schriftliche Zustimmung von Fusion Media und/oder des Datenproviders ist untersagt. Alle Rechte am geistigen Eigentum liegen bei den Anbietern und/oder der Börse, die die Daten auf dieser Website bereitstellen.
Fusion Media kann von Werbetreibenden auf der Website aufgrund Ihrer Interaktion mit Anzeigen oder Werbetreibenden vergütet werden.
Im Falle von Auslegungsunterschieden zwischen der englischen und der deutschen Version dieser Vereinbarung ist die englische Version maßgeblich.
© 2007-2024 - Fusion Media Limited. Alle Rechte vorbehalten.