Independent Strategy


The ongoing slump in German industrial activity isn’t likely to end soon. Many of the problems are structural and result from a failure to adapt to changing times. The crux of the problem is the auto sector. Much of its earlier capital investment is stranded and many tens of billions need to be ploughed into catching up. The balance of German industry might not face an identical problem, but the conservative mindset issues and dependency on the carbon economy are shared. Significant fiscal stimulus is needed to help the economy rebalance. But the political will to abandon balanced budgets is unlikely to come without a fully-fledged downturn. We remain short the euro with a $1.04 target by year end.

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