Morning Briefing

Balance Sheet Bluff

In the fight against terrorism, German Interior Minister Thomas de Maizière wants sweeping new powers. In an interview with Handelsblatt he announced plans to monitor both Facebook and WhatsApp. “One of our central duties is to integrate the digital age into our legal system,” said de Maizière. With that, he has kicked off a fresh debate over the limits of liberty in times of terror. What yesterday’s citizens considered unimaginable could save lives today. And what saves lives today could be paid for tomorrow with the most valuable asset we have: our freedom.

The US has sought Interpol arrest warrants for another five former Volkswagen managers and product developers. Two of the men sought are believed to be confidants of former VW head Martin Winterkorn, and none are now able to leave Germany without risking arrest. The Dieselgate emissions scandal has escalated once again and hurt the reputation of the entire German auto industry. Donald Trump’s “America first” policy is rearing its ugly face. In international trade these days you don’t need heavy tariffs in order to discriminate against the competition.

Relations between British Prime Minister Theresa May and German Chancellor Angela Merkel couldn’t be frostier. During yesterday’s EU summit in Brussels, May reiterated that Britain would concentrate on carrying through with Brexit. Merkel responded by emphasizing that the fate of the EU, not that of Britain, was the actual focus of yesterday’s talks. While the entire Brussels establishment nodded their heads, Britain suddenly seemed to be the loneliest nation under the sun. May’s proud isolation recalls the 1966 Kinks classic: “I’m not gonna take this all lying down / ‘Cause once I get started I go to town / ‘Cause I’m not like everybody else.”

Low interest rates are driving companies to expensive takeovers. The result: an increasing number of corporate balance sheets no longer consist of hard assets like machines or patents but rather the purchase prices of acquired companies. Whether these companies are as valuable as their asking price remains to be seen. What is indisputable, however, is the debt they come with. Handelblatt has analyzed the balance sheets of blue-chip DAX companies in detail and come to some shocking conclusions – a must-read for investors who don’t like nasty surprises. Shareholders of Fresenius SE, Fresenius Medical Care, Deutsche Post, Merck, RWE, E.ON and ProSiebenSat1 take note.

Siemens CEO Joe Kaeser possesses a rare ability to not only impart knowledge but expertly listen to others. Born in Bavaria and having lived for a time in the US, Kaeser knows that success is about acquiring trust. A good example: the foyer and cafeteria of the new Siemens headquarters in Munich are open to the public. As large corporations go, that’s an anomaly. While Kaeser is also a motor for digitalization and a proponent of free markets, he is keen on emphasizing the protective duties of the welfare state. He makes deals with the Americans but also travels to Mexico to speak out against Donald Trump’s proposed border wall. For these reason and more we would like to wish him a very happy 60th birthday!

Picture of the Day

A sign post at the Glastonbury Festival in Somerset, UK, encourages revelers, ravers and music lovers to choose a path. Source: Reuters A child plays in a fountain of water to cool off from the heat at the Miroir d'Eau (Mirror of Water), in Nantes. Unusually high temperatures have hit France and other European countries this week. Source: Reuters
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