Julius Baer: sobre macroeconomía en la Eurozona y Alemania y petróleo

Redacción - Jueves, 26 de Marzo

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ECONOMICS: Positive eurozone macroeconomic data fails to support the euro

Yesterday, the German Ifo business survey improved significantly and - similar to other eurozone economic indicators in the past weeks - surpassed expectations. The surprise index for economic data out of the eurozone has now been in positive territory for two consecutive months and is still constantly rising. The EUR/USD has hardly reacted to the positive news flow, which would be understandable if economic data out of the US was as positive as that from the eurozone. But this is not the case. Yesterday, US durable goods orders disappointed and this is not the only weak US economic data point.

 

·         SME performance would only slightly benefit from lower oil prices, as SMEs would be more likely to pass lower costs on to their clients and households are leaning toward saving in the current environment.

The muted EUR/USD reaction can be best explained by the prevailing uncertainty around the monetary policy outlook. Will the US Federal Reserve (Fed) hike interest rates when inflation is non-existent and growth is slowing? Will the European Central Bank (ECB) continue its asset-purchasing programme although bank profitability will start to suffer due to the negative rates for safe and liquid assets that banks are required to hold? With this un-certainty regarding prevailing fundamental developments, we refrain from forecasting a stronger euro in the coming three months and revise our EUR/USD forecast to 1.08; we also take these risk factors into account for our 12-month forecast, which we revise down to 1.15.

Prevailing macroeconomic uncertainty regarding the all-important monetary policy of the Fed and the ECB argues for a neutral EUR/USD outlook in the short term and for a more moderate euro comeback over the longer period.

David Kohl, Chief Currency Strategist and Head Economist Germany, Julius Baer

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EQUITIES: Ifo German Business Climate Index is further rising

Yesterday’s publication of the most recent Ifo showed an unbroken trend in the German economic climate. The Ifo business climate index has not only printed higher figures since the last publication but also overtaken market expectations. As can be seen in the chart, a positive development of the Ifo is supportive for German equities. We remain positive for the overall environment for equities and are thus keeping our overweight stance in Germany. Our price target for the DAX 30 remains at 13,000 points.

Positive Ifo readings underpin our constructive view for German equities. Remain overweight.

Christoph Riniker, Head Equity Strategy Research, Julius Baer

 

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COMMODITIES: Geopolitics in the driving seat: Oil surges on Yemen conflict

Following a gain of 3.6% yesterday, West Texas Intermediate (WTI) oil prices rose another 4% and jumped above USD50 per barrel in today’s early morning trading, pulling Brent prices higher in their slipstream. Saudi Arabia conducted air strikes in Yemen which raised concerns about an escalation of the conflict and a deepening religious Shia-Sunni divide in the region. Yemen itself is no oil supplier of great importance and the long lasting conflict has substantially reduced production already for years. Geopolitics have become more influential on oil markets recently but the possible impacts from Libya’s turmoil, the Iran nuclear talks and now Yemen are somewhat offsetting. Instead, the slowing US oil production and the strength of global and particularly US oil demand are building a solid support cushion to oil prices.

 

We still believe that the market underestimates the imminent slow-down of US shale supplies on the back of the sharp drop in drilling activity. Concerns about record US crude oil storage are overdone. There is sufficient storage capacity and the seasonal up tick of refinery activity will stop the continued swelling of storage. We see prices above USD60 per barrel over the coming months and reiterate our positions in oil producers, pipeline operators and oil volatility carry strategies.

 

The escalation in Yemen adds to the bullish geopolitics tone on oil markets. We see prices climbing above USD60 per barrel throughout summer as slowing US production and firming global demand are set to rebalance the market.

Norbert Ruecker, Head Commodities Research Analyst, Julius Baer

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