Stocks rallied yesterday as solid earnings results filled the sales of bulls who are desperately trying to stay off the rocks. Continued simmering tension in the middle east has crude oil traders with one finger on the buy button… and another finger on the sell button.
Expand your view. Guten Morgen, liebe Freunde! Germany is the 4th largest economy by GDP in the world, slotting in just above India and right below Japan. Even if I didn’t just provide you with those numbers, I am sure that you would have guessed Germany would be in the top 5. It’s because of those delicious gummy bears and snazzy luxury cars, right? Of course, not, Germany is recognized as a solid industrial economy which is nestled right on the cusp between eastern and western Europe. Amongst G7 nations, Germany’s GDP has the highest percentage of Industry. You can say that Germany is well… industrious. They are also in the top 3 largest exporting countries… it shares the podium with the US and China. Being that Germany is so reliant on industrial output and export, it would be reasonable to assume that its economy is very sensitive to economic pullbacks. Put down your extra-large coffee mug, pick up a nice Tasse of espresso, drop your egg sandwich and take up a piece of rustic bread slathered with butter and jam, and take a look at this chart.
This a chart of the German DAX Index. It is similar to the US S&P500. It is made up of 40 of Germany’s biggest blue-chip stocks. It has some obvious members like Mercedes-Benz, BMW, Porsche, and Siemens, and some… which you might have suspected but weren’t quite sure, like Adidas and DHL Group. Just by eyeballing the chart, you can see that the DAX had a similarly challenging year to the US last year. The DAX’s 2023 performance direction was similar to the US’s indexes, with 1 major difference. Germany entered a technical recession in May after 2 quarterly declines in its GDP. It came out of that recession, but its economy has since slowed once again, and experts are beginning to expect another recession. Germany’s 10-year Bund is currently yielding 2.82% compared to the US 10-Year Note yield of 4.85% (and ever on the move ). Germany too has its yield curve inverted at the moment. Germany’s national debt is around 46% of GDP, which is relatively conservative… compared to the US with a 110% percentage (according to the IMF’s calculations). What does this all mean to your stocks? Well, not really much at the moment, but it is important to note that despite all the turmoil in the US markets and the economy, the S&P500 is still up by +10.63% year to date while the DAX is up by +6.97%. I just thought that maybe a little diversion would be appreciated. Let’s call it… economic tourism. It is true that Germans are fond of wearing sandals and socks (it is practical), and it is true that Birkenstock sandals are from Germany. However, Birkenstock trades here in the US… it had its IPO a few weeks back. Go on, you can pick up your big coffee again, though it’s probably cold by now. Bis Morgen, auf Wiedersehen!
WHAT’S GUT AND WHAT’S NICHT GUT
Alphabet (GOOG/GOOGL) shares are lower by -6.4% after it announced that it beat EPS and Revenue estimates last quarter. Its cloud unit, however disappointed analysts with less than expected profits. IN the past 30 days 33% of analysts have modified their price targets 15 up, 5 down, 28 unchanged, and 1 dropped. Potential average analyst target upside: +10.8%.
Microsoft Inc (MSFT) shares are higher by +4.05% after it announced that it beat EPS and Revenue estimates by +12.63% and +3.62% respectively. In contrast to Alphabet, analysts were pleased with the performance of Microsoft’s cloud business. Dividend yield: 0.90%. Potential average analyst target upside: +21.3%.
YESTERDAY’S MARKETS
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