Prices rise by five percent Highest US inflation since 2008

Status: 10.06.2021 5:44 p.m.

In the USA, consumer prices have risen as sharply as they did almost 13 years ago – which is felt above all by car buyers. The European Central Bank also expects higher inflation in the euro countries. Is it just a short-term phenomenon or is inflation now making its big comeback? In the USA there is a growing fear of ever higher prices. Some are already pulling Parallels to the 1970s when President Jimmy Carter failed to get a grip on high inflation and job misery. Although the USA is still a long way from the double-digit inflation rates of that time, the price jumps are getting bigger from month to month. After inflation had risen above four percent in April, it has now climbed to 5.0 percent in May. That is the highest rate since August 2008. Experts had only expected an increase in the cost of living of 4.7 percent. “The dreaded five has become a reality,” said market observer Thomas Altmann from investment management company QC Partners.

Federal Reserve under pressure

The strong growth impressively proves that the price surge in April was not a slip-up, said LBBW analyst Dirk Chlench. “The US Federal Reserve is coming under increasing pressure to reconsider its view that the recent price hikes are only of a temporary nature.” As in April, the prices for used cars turned out to be the biggest inflation driver. They rose again strongly – and, according to the US Department of Labor, accounted for around a third of the monthly price increase.

Core inflation at its highest level since 1992

Particularly alarming is core inflation, which excludes volatile components such as energy and food. It climbed 3.8 percent in May. The last time there was such a sharp increase was in 1992. In April, the core inflation rate was 3.0 percent. The end of the corona lockdowns and the trillion dollar cash injections by the US government have been driving inflation in the US for months. Prominent economists like Larry Summers, Olivier Blanchard and Mohamed El-Erian warn against underestimating the danger. According to Blanchard, the high government spending under US President Joe Biden could overheat the economy.

Just a passing trend?

Most economists are still looking at the trend with serenity, however. In their opinion, the development is mainly based on temporary factors. The US service sector is back in normal mode in many places. Prices for air travel and hotel accommodation are picking up again and are well above the previous year’s level, says chief economist Thomas Gitzel from VP Bank. “So there are so-called base effects at work once more.” At the same time, the shortage of semiconductors is now at least indirectly affecting consumer prices. If there are no new cars due to a lack of semiconductors, customers switched to used cars. These would have become significantly more expensive. Gitzel predicts that the price level will slowly drop from a high level in the summer months. The US Federal Reserve (Fed) claims that inflation will only pick up temporarily. Because compared to the previous year, the economic downturn in the Corona year 2020 resulted in high rates of price increase. That is why the central bank has not yet seen itself under pressure.

Little movement on Wall Street

Wall Street barely reacted to the renewed surge in inflation. The Dow Jones rose by 0.6 percent, the S&P 500 even jumped to a record high. The US dollar gained against the euro. So investors do not anticipate a tightening of monetary policy in the US for the time being. In the eurozone, too, the money locks are still strongly open. The European Central Bank (ECB) is sticking to its trillion-dollar anti-corona crisis program (PEPP) and plans to expand bond purchases in the next quarter compared to the first three months of the year. In doing so, the central bank wants to avoid tightening the financing conditions for companies, states and private households.

ECB raises inflation forecast

The rising inflation hardly worries the euro watchdogs . The higher euro will dampen inflation, said ECB President Christine Lagarde. Nonetheless, the ECB raised its inflation forecast. According to the central bank, inflation should be 1.9 percent in 2021. In March, the ECB was still assuming an increase of 1.5 percent. For 2022, the monetary authorities expect an annual price increase of 1.5 percent and for the following year unchanged at 1.4 percent. According to the ECB, inflation that is too high can lead to a price spiral. Higher prices mean consumers get less goods for their money. So they demand higher wages in order to be able to maintain their standard of living. In turn, in order to pay the higher wages, companies continue to raise the prices of their products. On the other hand, permanently low prices are seen as a risk for the economy: companies and consumers could then postpone investments – in the hope that it will soon become even cheaper. In the medium term, the ECB is aiming for an annual inflation rate of just under two percent. In Germany, the inflation rate is already above this level. In May the Consumer prices compared to the same month last year by 2.5 percent , the highest value since September 2011.

When devices with screens cast screens to each other to build a super terminal, when devices without screens call system resources on demand, this is Hongmeng’s revolutionary breakthrough in distributed soft bus, distributed calls, and distributed security. The good news for Huawei is constantly coming out!

1. Huawei Hongmeng HarmonyOS 2 has been officially released on June 2. In just one week, the number of HarmonyOS upgrade users has exceeded 10 million, and there are still a large number of users waiting for the upgrade. Of course, one of my own p30s has already applied for internal testing. , Just wait for the results to be announced on the 17th! We also noticed that the number of HarmonyOS users that Huawei expects this year has ranged from 200 million originally conservative by Xu Zhijun to 300 million by Wang Chenglu. Recently, Wang Chenglu has updated the expected number of users to 360 million. Now Huawei R&D engineers are working overtime, 3 shifts, many mobile phones to be upgraded next year have been scheduled for the fourth quarter of this year, and some have already begun internal testing!

   

2. HUAWEI CLOUD ranks first in the container software market in China. International Data Corporation (IDC) recently released a report “PRC SDC Market Overview and Analysis, 2020H2/2020”, which shows that HUAWEI CLOUD ranks among China’s container software with a market share of 24.3%. Market first.

3. Huawei Hongmeng formally reached a cooperation with Mercedes-Benz. Although it does not have much material significance, Mercedes-Benz, as a benchmark for the automotive industry, is Huawei’s pavement for Hongmeng’s next car deployment. At the same time, Turkey’s TOFAS Automobile Company uses Huawei’s computing, network and The storage integration program completed the database infrastructure transformation project and won the IDC “Annual Best Data Infrastructure Project” award. TOFAS is a joint venture of Fiat Chrysler Automobiles (FCA) and is the only company in Turkey that has made it to the Fortune Global 500 list. The project won the “Best Data Infrastructure Project of the Year” award at the Smart Manufacturing Summit hosted by IDC and became an industry benchmark.

1. Huawei’s largest cyber security transparency center was officially opened today in Dongguan, China. At the launching ceremony, Huawei released the “Huawei Product Security Baseline” white paper, which for the first time announced the product security requirements baseline framework and management practices to the industry, communicated with customers, suppliers, industry standards organizations and other stakeholders to jointly improve the overall industry network Safety level.

   

   Ren Zhengfei once said that as long as it can be the most advanced in the world, then we are the standard, and others will move closer to us!

Wave of closures expected in Europe Thousands of bank branches before the end

As of: June 8th, 2021 8:58 am

For many European private banks, running a tightly knit network of branches is no longer worthwhile. According to a new study, almost half of the stores will close in the coming years. A study by the business consultancy PwC predicts a wave of branch closings by European banks. According to this, up to 40 percent of the branches could be on the verge of closure by 2023. This means that drastic cuts are imminent for employees and customers of the branches. Study author Andreas Pratz and his colleagues looked at around 50 private customer banks and banking groups with a total of 690 million customers as well as estimated private customer deposits and loan volumes of 18 trillion euros. Banks from 15 countries in Europe and, for comparison purposes, also in North America and Australia were included.

Too little income from the branches

The main reason for the expected closure measures is the poor profitability of the branches for the banks. According to the study, the average profit per customer in the past year 2020 dropped again by eight percent to 193 euros. There is also less and less business being done in the branches. For example, fewer and fewer bank customers are making international transactions, and the demand for consumer credit has also continued to decline. The income per customer is below average in branches in Germany, it is 172 euros. In contrast, a customer in Switzerland brought an average profit of 444 euros, in Austria slightly above average 208 euros. In Italy and Spain, too, the yields are significantly higher than in Germany. According to the study author Pratz, higher bank fees are charged there or salary accounts are better linked to other bank offers such as construction financing. According to Pratz, there are also major differences in Germany. The “associations”, ie the Volksbanks and the savings banks, achieved better earnings than the branches of private commercial banks.

Cancellation programs launched

Only a quarter of European commercial banks managed to increase their sales in the past year. This increases the cost pressure considerably and directs the bank managers’ attention to their own branch networks. Many of the big banks have already launched job cancellation programs in recent months and in some cases tightened them again, including Deutsche Bank and the French Société Générale. Commerzbank and Postbank had also announced drastic branch closings in the past few weeks. The study assumes that bank branches in Europe will shrink from just under 60,000 to just 36,000 in 2023. More and more new sales channels are taking the place of the branches: “Instead of luring as many customers as possible into the branches through the best locations, customer contacts will in future be gained through targeted online marketing”, according to the author of the study, Pratz.

Emissions from a factory in Scunthorpe, UK. Photo: AFP/VNA The UK’s Emissions Trading Scheme officially became operational two weeks ago, replacing the UK’s participation in the EU’s common system. The UK government has announced that the new CO2 trading scheme will make a significant contribution to achieving the goal of being CO2 neutral by 2050. British Prime Minister Boris Johnson also plans to reduce emissions by 78%. pollutant emissions by 2035 compared to 1990 levels. UK prices start at around £50 ($71) per tonne of CO2, slightly higher than European prices. Meanwhile, the average selling price in the world’s third largest market, California (USA) is about 20 USD/ton. Observers say the supply of CO2 credits is dwindling in the UK to meet the Government’s environmental targets. Therefore, CO2 prices in this market are expected to continue to rise. According to Tim Atkinson, director of sales and brokerage at CF Partners, CO2 trading is one of the cornerstones of climate change policy. He considers this the most important tool to cut emissions in the power sector and heavy industries. For example, the UK has largely phased out the use of coal, largely because CO2 quotas make it too expensive to produce electricity this way. Meanwhile, other tools such as subsidies have fueled the boom of wind farms in the country. The efforts come as the UK, host of the G7 summit this month, is urging the world’s richest nations to facilitate for the “green” global economic recovery after the COVID-19 pandemic. London will also host the United Nations climate summit (COP26) in Glasgow in November.

Intel CEO Pat Gelsinger (Pat Gelsinger) said that the global chip supply shortage may continue for two more years. Kissinger said that the supply constraints will continue until more production capacity goes online to meet chip demand. Data center business is challenged Data center business has become the main source of bad earnings this time. Intel’s financial report shows that the data center group’s revenue in the first quarter was US$5.6 billion, a 20% decrease from US$7 billion in the same period last year. The decline in demand for cloud computing chips and the decline in government and enterprise demand caused by the epidemic have all triggered a decline in data center revenue . As the group’s highest profitability business, the decline in data center profits also dragged down the overall gross profit margin, which fell by 5 percentage points year-on-year to 55.2%. From the industry perspective, Intel is undergoing a transformation from a “PC center” to a “data center”. But in the era when data has become the “new oil”, it is not only Intel that sees the cake of data centers, but Nvidia and AMD are trying to further seize this market through mergers and acquisitions. On the other hand, Intel’s customers in the data center field, Google, Amazon, and Alibaba, have all begun to develop their own chips. “Any customized chip is a differentiated competition for them. For them, the chip is a strategy, not a route choice.” Vice President of Intel Marketing Group and General Manager of China Industry Solutions Department Liang Yali responded to this earlier. On April 8, Intel launched the third-generation Xeon scalable processor and a series of related product portfolios, which were regarded by the outside world as a counterattack to AMD’s attack. Among them, Ice Lake is Intel’s first server chip using 10nm. In addition, in the financial report data, Intel’s personal computer chip business revenue was 10.6 billion US dollars, an increase of 8% over the same period last year. The overall demand for this major notebook computer market has increased. However, it is also worth noting that the past high-end product line cooperation On the other hand, Apple has also begun to use more self-developed chips in the Mac product line. In the entire Intel’s quarterly report, the biggest bright spot is that the autonomous driving system company Mobileye’s revenue rose by 48% year-on-year to 377 million US dollars, and its operating profit rose by 67% year-on-year. “Lack of core” trend will continue At present, the shortage of chips has gradually spread from some links such as foundry, packaging and testing to the entire industry chain, involving multiple consumer fields such as automobiles, mobile phones, and notebooks. As one of the main players in the chip supply chain, Intel claims that the global chip supply shortage may continue for two more years. Prior to this, in order to reverse Intel’s decline in competition in the semiconductor industry, Kissinger proposed the IDM 2.0 plan. In the financial report statement, Kissinger also stated that this year will be an “important year” for Intel. From an industry perspective, Intel represents the IDM (Integrated Device Manufacture) model. The manufacturer is responsible for the entire process of the chip from design to finished product. This model can ensure the integration of the product from design to manufacturing. But in terms of iteration efficiency and cost, the Foundry model represented by TSMC is currently more mainstream. In order to change the current foundry pattern based on TSMC, Intel plans to invest approximately US$20 billion in the construction of two new factories (fabs) in Arizona, the United States. Intel stated that it hopes to become a major provider of foundry production capacity and provide services to customers around the world from the United States and Europe. Research organization TrendForce said that Taiwan Semiconductor Manufacturing Company (TSMC) will begin using the 5nm process to produce Intel’s Core i3 chips in the second half of this year. But judging from the latest news, Intel seems to want to increase its manufacturing capacity centered on the United States in order to reduce its dependence on Asian manufacturers. For Intel at the moment, the biggest problem is that the expansion investment plan may take several years to provide profits for it. In the financial report, Intel expects Q2 revenue of US$17.8 billion, slightly higher than the expected US$17.55 billion; however, the EPS forecast of US$1.05 is slightly lower than expected, and the company explained that it was affected by production capacity expansion expenses. As of press time, Intel reported $62.57 per share. It placed an order of 1.77% on Thursday and dropped 2.17% after the market.

Despite increased lockdown and persistently high incidence rates, the federal government expects higher economic growth this year than before. In his spring projection presented in the morning, Federal Minister of Economics Peter Altmaier is now assuming an increase in gross domestic product (GDP) of 3.5 percent. In January he had estimated a mere 3.0 percent. An increase of 3.6 percent is expected for 2022. “We will have regained our old strengths by 2022 at the latest,” said Altmaier. “Our economy is strong, robust and ready for a new start.” Last year it fell by 4.9 percent because of the Corona crisis.

Export is the mainstay

Nevertheless, Germany lags behind the USA and most of its European neighbors. The US economy is likely to grow by 6.5 percent this year, while France, Italy and Spain each expect an increase of between five and six percent. The recovery in Germany is said to be supported primarily by exports. These are expected to grow by 9.2 percent in view of the rapid recovery in important sales markets such as the USA and China. As a result, the ministry expects higher investments. “Catch-up effects also play a role, as investments have been postponed because of the crisis,” it said. The construction boom is also likely to continue, “due to the low interest rate environment and high demand for housing”.

Export expectations at a ten-year high

The hopes for the export industry in particular are justified. German exporters are currently as optimistic as they were last in January 2011. The barometer for industry’s export expectations climbed by 0.8 to 24.6 points in April, according to a recent survey by the Munich Ifo Institute. “In many countries, industry is hardly affected by the pandemic,” said Ifo President Clemens Fuest. “The demand for German export goods will benefit significantly from this.” The upswing in the USA and China, the most important export customers, is providing a boost. According to the ifo data, the outlook has improved across almost all branches of industry. In the electrical industry, expectations are very optimistic. In mechanical engineering, too, the indicator rose to its highest value in more than a decade; the chemical industry is also on the upswing. “The only problem children are manufacturers of clothing and other vehicle construction,” it said. “You are expecting a decline in foreign sales.”

The domestic economy is only slowly gaining momentum

The gradual easing of the corona restrictions should also gradually give the domestic economy and private consumer spending a boost. After the difficult start to the year, the labor market is expected to gradually pick up. Nevertheless, there is likely to be a decrease in the number of people in employment by 60,000 in 2021. An increase in employment of 290,000 is to follow in 2022. Altmaier’s optimism about the economy is shared by Finance Minister Olaf Scholz. “The third corona wave is currently requiring all of us to make another great effort,” said the SPD candidate for chancellor. “Nevertheless, it is clear: things are slowly improving and the aid policy is working.” The council of experts for assessing macroeconomic developments, colloquially known as the “economic methods”, is significantly more pessimistic than the government. The committee had only revised its forecast downwards two weeks ago and is only expecting an increase in gross domestic product of 3.1 percent for 2021. In the autumn, the economic wise men had assumed 3.7 percent.

The European Union’s Corona Reconstruction Fund has a total volume of 750 billion euros. With the help of the money, the member states should lead their respective economies out of the coronavirus valley and at the same time provide impetus for important future investments and reform measures. The federal government expects EU subsidies of 25.6 billion euros (net without VAT). The gross expenditures mentioned in the federal budget are then a total of almost 28 billion euros. The Federal Cabinet approved Finance Minister Olaf Scholz’s plan of what exactly should be financed. Around 90 percent of the money is to be invested in climate protection and digitization.

Greens: Not new, just financed differently

“Climate protection is the greatest challenge of our time,” said Scholz at a joint press conference with France’s Finance Minister Bruno Le Maire. Around 11.5 billion euros are therefore earmarked for climate-friendly mobility, hydrogen and building modernization. More than 14 billion euros are expected to flow into the digital transformation. These investments should in turn have a positive effect on overall economic output and employment. The Greens criticized that Germany is now financing measures that are already planned – just differently. In addition, hardly any money flows into structural reforms. 80 percent of the measures in the development plan are already part of the German economic stimulus program, said Green European politician Sven Giegold. They are therefore not spending more on climate protection or digitization.

EU members commit to implementation

The construction aid agreed in summer 2020 is intended to help the 27 EU countries get back on their feet after the pandemic. Part of the money is available as grants and part as a loan. For the first time, the EU Commission is allowed to take on large amounts of debt for the 750 billion package. The largest sums are earmarked for Italy and Spain, which were particularly hard hit by the pandemic. Each individual state has to ratify the program and apply to the EU Commission for the specific use of the money in a development plan. EU Commission chief Ursula von der Leyen announced a detailed examination of whether the plans of the EU states meet the common high standards. “We know exactly where we want to go,” said von der Leyen. The goal is a greener, more digital and more crisis-proof Europe.

Money should flow in before the end of summer

Scholz wants to present Germany’s plan to the EU Commission this week – as do France, Spain and Italy. Italy, which is receiving more than 190 billion euros, wants to invest the money in high-speed trains, organic agriculture and judicial reform, among other things. Prime Minister Mario Draghi said it was about building the “Italy of tomorrow”. France’s Finance Minister Le Maire complained that the EU had lost too much time since the agreement on the reconstruction fund in July last year. China’s economy is already growing again and the US is booming. The EU must stay in the race. The EU Commission must therefore examine the national development plans as quickly as possible so that they can be approved by July at the latest. The money could then flow in before the end of summer.

In view of the progressing vaccinations, the German industry expects the economy to pick up significantly in the coming months. In terms of production, he expects “a strong plus of eight percent compared to the previous year,” said the President of the Federation of German Industries (BDI), Siegfried Russwurm, at the opening of the Hanover Fair. At the start of the corona-related digital industrial fair, the BDI, the Association of German Mechanical and Plant Engineering (VDMA) and the Central Association of the Electrical and Electronics Industry (ZVEI) presented their annual forecasts.

When will the upswing come?

In the past few months, German industry has been an important driving force behind the economic recovery in Germany. That is why the current forecasts of the three major industry associations were awaited with great excitement. And although the big upswing is likely to be a long time coming, the prospects for the industry are better than feared – provided, according to the unanimous assessment of the associations, that the lockdown measures do not need to be tightened any further. The forecasts are based on the assumption that the previous restrictions will be scaled back in the coming months and that vaccination will be successful.

“No further conditions”

Many companies received significantly more orders again, said BDI President Russwurm. There are already more incoming orders than before the crisis. A prerequisite for recovery is “largely reducing pandemic-related restrictions by early autumn” – and that there are no further requirements for the manufacturing industry. With the help of general practitioners and company doctors, Germany must also become more flexible and speed up when it comes to vaccinating. Russwurm also pointed out that the extended lockdown would have consequences in a number of areas. According to the updated BDI forecast, economic output is likely to increase by three percent in 2021. That is half a percentage point less than initially assumed.

Increased prognosis

The Association of German Mechanical and Plant Engineering (VDMA) has increased its forecast for the production volume in 2021 by around three percentage points to up to seven percent. Above all, the good demand from Asia, especially from China, is encouraging. In the USA, impulses would come from the economic stimulus program launched by President Joe Biden. “The EU is also recovering step by step, albeit a little more slowly,” said association president Karl Haeusgen. However, he restricted the fact that Corona still unsettled and burdens companies. In addition, there would be structural change in the automotive industry and, in some cases, delivery problems. “However, mechanical engineering is showing itself to be resilient even in this difficult phase.” The VDMA boss warned politicians to implement uniform pandemic regulations and develop a long-term strategy. “However, it now also needs unity, clarity and concrete political plans for the time after.”

Positive mood in the electrical industry

ZVEI President Gunther Kegel was also confident for the electrical industry. “The electrical industry got off to a positive start in 2021,” said Kegel. This year a production increase of five percent could be achieved. “If you look at the orders received in the first three months, things can possibly go even better.” Capacity utilization was almost back at the previous year’s level at 82 percent in the first quarter of 2021. Incoming orders also generated optimism. In February alone there was an increase of 13 percent over the previous year. On the debate about mandatory corona protection requirements in the industry, Kegel said that over 90 percent of the companies in his industry were already testing. “This means that another tightened lockdown is not only unnecessary for the industry, it also makes no sense.”

Networking and automation as a topic

The fair in Hanover is considered to be the largest industrial show in the world. In online presentations, live streams from exhibitors, numerous video conferences and a new networking tool, the companies focus on technologies for networking and automation in production and logistics. In particular, contributions for more energy efficiency are to be shown. Economic policy rounds, specialist lectures and panel discussions are also planned.

VinFast expects a higher price than Ford

On April 12, Bloomberg reported that Vingroup was considering bringing VinFast on the US stock exchange to raise $ 2 billion. According to this source, the car company is currently working with consulting units to IPO (initial public offering) right in the second quarter of 2021.

The source of Bloomberg confirmed that if successful, the IPO could push VinFast’s valuation up to $ 50 billion. At that time, VinFast will immediately close to the top 10 largest car manufacturers in the world, on par with famous manufacturers such as Hyundai (51.38 billion USD), Honda (50.86 billion USD) and surpass Ford (49, 47 billion USD).

With a scale of $ 2 billion, VinFast’s IPO will be the largest ever IPO of a Vietnamese company, after Vinhomes’ first share sale worth $ 1.4 billion in 2018. This could also become the first Vietnamese company to list in the US.

Although VinFast is a fledgling company, the valuation may outstrip traditional Asian carmakers like Suzuki ($ 21.29 billion) and Japan’s Nissan ($ 20.63 billion).

VinFast IPO details including the size and timing may change as discussions with the consultant are in progress. Bloomberg also said that Vingroup representatives declined to comment on this information.

The top 10 car manufacturers with the highest market capitalization are currently Tesla of the US, Toyota of Japan, Volkswagen of Germany, Daimler of Germany, General Motors (GM) of the US, BMW of Germany, BYD and Nio of China. , Stellantis and Ferrari.