Two trends from Germany this morning

All,

Two random themes from Germany this morning: Car Industry Investments and Consumer Rates.

1) Car Industry Investments:

The German car industry could be shedding some 10% of employees in the next 12 months. Investors and companies alike have been looking to phase out certain products / manufacturing lines/tools/ technologies / etc. and the (WC/Opex/Capex) investment required to rebound from the current downturn is oftentimes not justified before this background.

Electric vehicles are eliminating moving parts per vehicle and thus jobs at the same time.

-> Stronger shift of CapEx towards new products than before, including electric and hybrid vehicles. The likes of SGL Carbon should be beneficiaries (medium-term - and won’t by itself resolve Portuguese crisis). Manufacturers of more traditional parts may fave a wave of new product launches (the likes of which Adient are suffering from these days).

2) Negative rates for consumers:

Germany’s first bank imposes negative interest rates on all deposits (not just above E100k). Volksbank Raiffeisenbank Fuerstenfeldbruck, Bavaria, has been the first to impose -0.5% on all its savers.

-> Buy Gold? Yes it’s high, but it's cheaper to store wealth than -0.5%. Also might appreciate as we might have to re-think our financial system in the next years.

Source: Macrotrends.com, Gold Price Logarithmic Scale, Constant Currency / (CPI deflated backwards)

Wolfgang