Morning Briefing

How America Drove Down the Euro

British Prime Minister Theresa May yesterday called a snap general election on June 8. With her surprise move, she hopes to kill three birds with one stone: to strengthen her political backing in the Brexit negotiations, to exploit the weakness of the Labour Party and to seek democratic legitimacy for her occupying 10 Downing Street, where she moved in last year after her predecessor, David Cameron, resigned. Where Cameron was klutzy, May is starting to show savvy.

Economist Hans-Werner Sinn takes issue with President Donald Trump’s accusation that Germany has manipulated the euro and harmed the US economy. One of the reasons for the euro’s undervaluation, he argues in a guest column, is the ECBs’ super-lax monetary policy. Within just three years, it printed 2.3 trillion euros in fresh money, forcing down the currency’s value. “One has to admit this is indirect currency manipulation,” Sinn writes. The irony, he adds, is that America pushed for this policy, whereas Germany’s Bundesbank resisted it. If Trump can muster an attention span that exceeds 140 Twitter characters, he should read this essay: It’s fair and balanced.

Big trouble is brewing in Turkey. The narrow victory for Recep Tayyip Erdogan’s authoritarian presidential system, which will distort democracy beyond recognition, is being contested. Opposition parties, lawyers and EU election observers point to election irregularities, claiming that as many as 2.5 million votes may have been tampered with. Turkish society is racing toward a warning sign. Danger: Division Ahead!   This reminds me of a sentence the Austrian novelist and playwright Peter Handke wrote in his novel “A Sorrow Beyond Dreams”:  “I would really like to write about nicer things, but there’s nothing there.”

Last year 870,000 electric and hybrid cars were sold globally –  507,000 in China alone. Electric vehicles are expected to get a big boost at the Shanghai Motor Show, which opens today, and put even more pressure on the industry. Klaus Rosenfeld, CEO of automotive supplier Schaeffler, told Handelsblatt the future is electric. To see a combustion engine in a few years, you might have to go to North Korea.

But until then, the good ole´ gas engine will still let some people make plenty of money, as Volkswagen shows. Yesterday, the automaker posted a first-quarter profit of €4.4 billion. Its share price is up 11 percent since the start of the year. That’s giving the VW board, which has been choking on the carmaker’s Dieselgate scandal, some more room to breathe. The numbers are also good for the German economy as a whole. The scandal has hit the country’s largest industrial sector hard but hasn’t crushed it. VW is steering ahead, eyes on the road.

Image of the Day

04-19
British Prime Minister Theresa May arrives outside 10 Downing Street in London to announce a general election. Source: Simon Dawson/Bloomberg