Commerzbank chief economist Joerg Kraemer , "The German stock market has fundamentally the best prospects. " Source: Bernd Roselieb
Mr. Kramer, the U.S. economy weakens , the euro – zone and with it the € catching up for weeks. How sustainable is this trend?
The picture is clear at first glance: The economic data from the U.S. have been disappointing of late, while the data from the euro zone, especially Germany, a small positive surprise . Many now say: The euro area is better than the U.S. and it also benefits the euro. But this is a fallacy.
The economic expectations for the U.S. to come down . Also, we have lowered our forecast for U.S. growth this year of 3.3 to 2.8 percent. But this is still significantly more than the 1.2 percent economic growth, we expect the euro area. Even after the downwards revisions in the U.S. so it looks a lot better .
Does it look as good too ?
No, it looks good in any Western country. Given the sharpness of the previous break- even growth rates of around three per cent are basically disappointing. Like all countries, the United States to work slowly from the crisis, but they come here faster than other states , in particular most Europeans.
How big is the risk of a backlash ?
A double dip scenario I think is unlikely , but already speaks the extremely expansionary monetary policy in the United States. The current weakness is typical of this phase of the business cycle. After has made in the first phase of the storage building for strong growth, these impulses running from now and the speed decreases. The next pulse comes when the business cycle reached the real economy. This process of rising corporate profits , rising investment and rising employment is already under way, albeit very modest. A relapse into recession threatens my opinion, only when the debt crisis should escalate .
Center of the debt crisis is Europe. Make the euro countries progress?
The states have promised to runterzubringen their deficits and exceed almost all countries are on track or even the targets . The crisis has become less dramatic. This builds confidence , especially in the background is the 750 -billion rescue package. On the bond market sees the show as the risk premiums have declined. And the euro exchange rate reflects that. The real test is still on .
In what way?
In countries like Greece in 2011 is the third consecutive year of recession . The economic pain is growing and this at a time in which decreases the severity of the crisis. The willingness to endure further pain is likely to decline gradually and with it the confession of consolidation. However, the States must be clear that there is no alternative to debt reduction .
How big is the risk that the cuts slow economic growth?
The savings programs burden the periphery countries also , no doubt . But the alternative is an escalation of the debt problems that would be a mega – crisis after themselves. We need to accept the fact that European countries for years hinterhinken . The mixture of housing crisis , private and public indebtedness and rising unemployment has built up over many years. The dissolved not happen overnight.
How strong a negative impact on the German economy crisis ?
Germany has no Teflon economy, run off to the global problems easily. But between Germany and the rest of the euro area a huge gaping chasm. We assume that the German economy grows by 2.5 percent in 2010 and this is forecast after the recent sharp rise in the indicators we Ifo index is conservative.
What does this mean for investors?
The German stock market has fundamentally the best prospects. The German companies are underpin the clear winners of globalization, the current quarterly reports on how well they stand .
The Dax still occurs on the spot?
This is due to the double – dip discussion. The fear is paralyzing investors. If my expectations and confirmed the feared check fails , the stock market should , however, have potential to top. We currently have a very low valuation , the Euro Stoxx is evaluated on the basis of expected profits for 2010 with a P / E of 10.7 . That is significantly below the historical average.
The European and German companies in particular have benefited in recent months by the weakness of the euro. Now, the Euro has risen back above 1.30 dollars. If there is no support?
The current gains of the euro is due to the situation described above , that the expectations in the U.S. are taken anything down. This trend should continue for a while. We see the euro at the end of the third quarter at $ 1.31 , so at a similar level as currently . In the medium term , the superior growth in the U.S. but will also enforce the foreign exchange market. In mid 2011, we expect a euro level of $ 1.20 .