Day's Agenda is Busy: Meetings with Scholz, Deutsche Post, Rheinmetall, Shell, among others scheduled.
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Scholz under the Spotlight: Cum-Ex Scandal Hits the Parliament
Chancellor Olaf Scholz is about to stand before the investigative committee of the Hamburg Parliament this Friday, embroiled in the heated Cum-Ex scandal. His past dealings with Warburg Bank are under intense scrutiny. The SPD politician has persistently denied any implication in the financial debacle.
In the controversial Cum-Ex transactions, investors used banks' help to claim multiple capital gains tax refunds on dividend payments, inflicting billions in losses on the state.
Germans Sweating over Soaring Inflation
New data from the Federal Statistical Office reveals a strong tightening of German manufacturers' price screw in July. Experts predict an average price increase of 32.0 percent year-on-year, compared to 32.7 percent in June. Consumer prices rose by 7.5 percent in July, after a sharper jump of 7.8 percent in June.
Companies in the Spotlight
DAX:
- Deutsche Post's Letter Postage Dispute: The Administrative Court of Cologne has annulled the fee permit for 2019-2021, declaring it unlawful in five proceedings. This ruling has no impact on consumers; only the plaintiffs, including the industry association BIEK, can now reclaim overpaid postage from the post office.
MDAX:
- Rheinmetall Readies Panther Combat Tank: Rheinmetall CEO Armin Papperger reveals strong demand for the new Panther combat tank, aimed at capturing about half of the 8,000 combat tanks to be replaced across Europe by 2030. Production will begin within two years if a key customer is secured.
- Shell Takes a Hit from Rhine's Low Water Levels: The oil giant is scaling back production at its Energy and Chemicals Park Rheinland refinery due to the Rhine's low water levels.
- Gas Suppliers Demand Additional Costs: In addition to Uniper, EnBW, and EWE, the former Gazprom Germania (rebranded as Sefe), Austrian OMV, and Swiss energy trading company Axpo have also claimed additional costs via the gas surcharge.
- Strabag Set for a New Syndicate: The core shareholders of the Vienna construction group have agreed to a new syndicate excluding the previous Russian partner Oleg Deripaska. Together, the insurer Uniqa, Raiffeisen Holding, and the Strabag CEO Hans Peter Haselsteiner's family foundation will submit a public mandatory offer of 38.94 euros per Strabag share. Strabag itself intends to participate in the offer and acquire up to ten percent of its own shares.
- Auto Industry skips Geneva Motor Show 2023: The well-known Geneva Motor Show has been canceled for February 2023 due to global geopolitical and economic uncertainties, deterring several brands from preparing for the exhibition. The Geneva Motor Show will return in Doha, Qatar, in November 2023.
Qualcomm Weighs Server-Market Comeback: Reports suggest that Qualcomm is contemplating a return to the server market with a new chip. The U.S. semiconductor giant aims to reduce its reliance on the smartphone market, with its acquisition of chipmaker Nuvia last year fueling this potential move. Amazon's cloud division is already investigating Qualcomm's new product.
Applied Materials Impresses Markets with Revenue Forecast: The chip supplier has earned kudos from the markets for its revenue forecast. Applied Materials expects revenues of $6.65 billion, plus or minus $400 million, for the current fourth fiscal quarter. Analysts anticipated $6.57 billion, according to Refinitiv data. In the third quarter, revenue rose by five percent to a record $6.52 billion, surpassing the average analyst estimate of $6.28 billion.
Central Banks and Economy in Focus
USA/FED: James Bullard, head of the St. Louis Fed branch, advocates for a 0.75 percentage point increase in interest rates at the U.S. central bank's next meeting in September. Bullard believes the Fed should continue to move swiftly to an interest rate that significantly reduces inflation. He expressed skepticism about delaying rate hikes until 2023. It would take approximately 18 months for inflation to return to the Fed's target of two percent.
Germany/Taxes: Bund and Länder tax revenues in Germany increased only marginally in July. They rose by a minimal 0.3 percent year-on-year to €60 billion, as per the Federal Ministry of Finance's monthly report. The low increase, compared to previous months, was primarily due to the German government's measures to mitigate higher energy costs, including the €100 Child Bonus 2022 and increased basic and employee allowances.
- The Cum-Ex scandal, involving multiple capital gains tax refunds on dividend payments and causing billions in losses for the state, has also brought the finance industry and various business dealings of Chancellor Olaf Scholz into question.
- In the midst of soaring inflation, the German economy is under scrutiny, with manufacturers tightening their price screw and companies like Deutsche Post, Rheinmetall, Shell, and Strabag facing challenges in their respective industries.
