Morning Briefing

The Trump Effect

Wall Street is talking itself into a veritable Donald Trump market boom. Since the real estate baron was elected president, U.S. stocks have rallied 15 percent. There’s talk Trump may play nice with big banks to further stoke the markets. Even Trump’s announcement yesterday that the U.S. would walk away from the Trans-Pacific Partnership has not rattled the markets. Japan’s Nikkei was up today. Such market massaging may not be what rank-and-file voters expected when Trump promised to shake up the status quo. But then again, it may all be show business.

Here’s a small experiment: Assuming Germans could directly elect a chancellor, like voters do in France, who would be the likely Social Democratic nominee to face Angela Merkel next year? Truth be told, few would spontaneously name SPD leader and vice chancellor Sigmar Gabriel. Instead, many would think of Martin Schulz, the E.U. Parliament president. And therein lies the big problem for the Social Democrats, who once again are saddled with a Merkel challenger who cannot motivate the SPD’s own base. This more than anything is Merkel’s strongest card going into 2017.

It’s been debated to death for years, but has never become reality: The creation of a special stock market home for German startups. “We want to start a new market segment that targets small and young companies,” said Hauke Stars, a member of the board of the Deutsche Börse. If the Börse’s merger with the London Stock Exchange is going to fall victim to Brexit and other obstacles, maybe it’s time to focus in Frankfurt on youth, the future and double-digit growth fantasies again. But this time please avoid the hocus-pocus of the late, not-great Neuer Market, a similar market segment that collapsed in 2003, leaving a pile of debt, penny stocks and unrealistic business models.

One shouldn’t leave the future of Europe to right-wing populists such as Geert Wilders of the Netherlands or Marine Le Pen of France, warns Benoît Cœuré, a French economist and board member of the European Central Bank. “The future is in your hands,” Cœuré told almost 1,000 students at Munich’s Technical University, urging them to get politically active. By the way, the ECB is not yet ready to shut down its €1.7 trillion bond-buying program. “The time will come when we begin to reduce the program, but not now, because we are dealing with very low inflation,” he said.

Europe has as much in common with Turkey these days as Montesquieu, the French enlightenment philosopher, had with a banana republic. Today, the European Parliament will discuss the sad state of freedom in Recep Tayyip Erdoğan’s Turkey. A majority are apparently ready to suspend Turkey’s negotiations to enter the 28-nation E.U. bloc. Parliamentarians are to vote on Thursday, and with that, may also seal the fate of the E.U.’s controversial refugee deal with Turkey’s sultan-like ruler.

Whoever plans to fly on business today or tomorrow in Germany should consider skyping instead. Eurowings, Lufthansa’s discount carrier, is striking today in Düsseldorf and Hamburg, and most flights have been cancelled. Unions also plan to bring life to a halt for Lufthansa itself on Wednesday. Pilots are demanding 22 percent more money; the airlines are offering 2.5 percent. With that kind of difference in barometric pressure, the chances for a perfect storm are rising rapidly – and with it a pre-holiday maelstrom of delays, cancellations and grumpy consumers.


Picture of the Day

A participant lit a candle yesterday during a commemoration ceremony at a Kiev monument for the people killed during the 2014 Ukrainian pro-European Union mass protests. Source: Reuters
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