News Bites

European Central Bank experts said ECB’s massive bond purchases in connection with quantitative easing pushed down the exchange rate for the euro. The joint currency fell 20% against the dollar in the period 2014 to 2016 as a result. (Reuters)

Tesla presented its Model 3 for the first time in Europe, allowing customers in Düsseldorf, Munich, Zürich and other European cities to sit behind the wheel — but not drive. The electric carmaker has not yet announced when it will begin selling the new car in Germany.

Berlin is not expecting a recession in Germany after the economy’s decline in the third quarter, citing the negative one-off in the car industry. A recession is defined as two consecutive quarters of economic contraction.

The euro zone’s economy grew by 0.2% quarter-on-quarter in the July-to-September period, the lowest level in four years’ time and half the level in spring. Germany’s shrinkage and Italy’s stagnation weighed on the 19-nation bloc’s expansion.

The car industry was not the only cause of the third-quarter contraction, Clemens Fuest, head of the Ifo think tank, said. Economic growth this year will not reach the 2.2% level from 2017 because of uncertainties over Italy, US protectionism and Brexit, he said.

Mercedes-maker Daimler will build a second research and development center in China to test vehicles and components. The location will cost €145 million and employ up to 600 people from 2020.

Public broadcaster ZDF will join ProSiebenSat.1’s online video platform 7TV, a rival to Netflix. TV stations Eurosport, TLC, Welt and Sport1 are among the other partners.

The three top candidates to succeed Angela Merkel as CDU leader have all voiced ideas to reform income or corporate taxes to support citizens and businesses. (Bild/Süddeutsche Zeitung)

VW will re-model two plants in Emden and Hannover to build electric cars from 2022 and move most or all the production of combustion-powered vehicles to other locations. The factories will become VW’s second and third German electric car sites in addition to one in Zwickau.

The European Parliament voted for tougher CO2 reduction targets on new trucks, going five percentage points above the European Commission’s proposal. Trucks would emit 20% less CO2 in 2025 compared to 2019 and 35% less in 2030. Brussels now needs to devise a compromise.

Deutsche Börse, operator of the Frankfurt exchange, wants to pursue bigger takeovers worth several billion euros to catch up to rival stock exchange operators, especially CME and ICE from the US, CEO Theodor Weimer told Handelsblatt.

Europe would retaliate with counter tariffs if Donald Trump decided to hike the levy on cars imported from Europe into the US, EU Trade Commissioner Cecilia Malmström said. (Zeit)

Deutsche Wohnen, Germany’s second-largest owner of residential property, benefited from the country’s rising rents and housing prices. Rental income minus costs rose 11% in the first nine months to €367 million.

The Bundesbank warned of risks to Germany’s financial system, with banks possibly underestimating the chance of credit defaults. Furthermore, real estate might also be overpriced and interest rate changes could affect lenders.

State-owned bank NordLB is making progress in unloading its bad shipping loans. US investors such Cerberus and Lone Star have shown interest in portfolios worth €2.5 billion and €4 billion. (Reuters)

Friedrich Merz, a candidate to succeed Angela Merkel as CDU leader, said euro-zone members should stick to budget rules if the single-currency region is to survive in the long run. Europe would ultimately need its own source of tax, he said. (Bild)

Berlin is the capital of car accidents, with one in six drivers, or 15.5%, reporting fender benders every year. The annual average is 11.7%. People with powerful cars report damages more often, with BMW drivers topping the list. (Berliner Morgenpost)

The June death of 63-year-old George Funke, Germany’s poster child for the 2008 financial crisis, was announced Tuesday. Funke, who died of cancer, led mortgage lender Hypo Real Estate, which was nationalized, and had several notorious nicknames, including “bankster,” a play on gangster and banker, and a German form of “swank-banker.”

Jens Spahn, a 38-year old candidate to succeed Angela Merkel as CDU chair, attacked rival politician Friedrich Merz, suggesting the 63-year old has had little contact with the party’s members and may be too old to embody generational change. (RND)

A veteran of Angela Merkel’s party backed Annegret Kramp-Karrenbauer’s bid to become the new leader of the Christian Democratic Union. Kramp-Karrenbauer is closest to the party of all the candidates, Kurt Biedenkopf said.

Italy ignored the EU’s request to lower its budget deficit next year, sticking to plans to increase spending and hike the shortfall to 2.4% of GDP. Italian 10-year government bond yields rose 7 basis points to 3.51%.

Merck Group cut its 2018 profit outlook due to negative exchange rate developments. However, the German drugs and chemicals maker raised its full-year revenue estimate. Its shares gained almost 4%.

Wirecard, which offers technology used in Apple Pay and to make online purchases, again raised its full-year outlook. Its shares, however, fell 6% as the number of transactions disappointed some investors.

Utility E.ON beat analysts’ forecasts with an 11% increase of adjusted operating profit to €2.4 billion in the first nine months this year. It was optimistic about its full-year results.

Adjusted operating profit at RWE fell by a quarter to €1.3 billion as the utility suffered from low wholesale electricity prices and suspended operations at a nuclear power plant. It confirmed its full-year outlook and dividend.

The German economy shrank by 0.2% in the third quarter compared with the preceding three-month period, the first contraction since the start of 2015 as exports and consumption fell. Economists blamed a drop in car production and predicted an economic rebound this quarter.

Seven camels were spotted loitering in a discount supermarket parking lot after they escaped from a circus near the north German town of Celle. Police cordoned off a road while a circus employee escorted them back to their stable. (Deutsche Welle)

The Italian crisis could prompt the European Central Bank to continue its bond purchase program, known as quantitative easing, beyond the planned expiration at the end of the year, DWS investment strategist Georg Schuh said. (Reuters)

EU and British negotiators say they have reached agreement on modalities for Brexit and handed it over to the British cabinet, which will meet Wednesday to discuss it. Even this preliminary agreement has a long road ahead of it, and then detailed talks on the future relationship will take place after the official Brexit in March.

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