Global Investing

When I walked into the dome of Berlin’s Bode Museum in July for Escada’s Pink Party at the Berlin fashion week, it seemed no one was quite sure whether we were celebrating the resurrection of Escada or whether this was a bombastic way of saying good-bye.

Today, we know it was the latter. Escada failed to get the support it needed from its bondholders to restructure its debt, which was a precondition for further capital injections from shareholders, like the Herz brothers — owners of coffee franchise Tchibo.  

Escada admitted defeat late on Tuesday and said it would file for insolvency this week. Is this the end of an era, the end of Germany’s sole glamorous answer to Armani, Chanel and Versace? 

Escada’s Pink party clearly made an impression. The broad staircases to the left and right of the museum’s entrance were draped with mannequins wearing outfits from all stages of the company’s 33-year history.

Brightly-coloured duvet jackets, diamond-studded jeans, fur coats, lavishly embroidered evening gowns and eighties-style leather jackets dazzled fashionistas and enraged anti-fur protestors outside the swanky soiree, which drew guest such as actress Diane Kruger, super model Nadja Auermann and designer Wolfgang Joop.

Five things to think about this week:

APPETITE TO CHASE? 
- Equity bulls have managed to retain the upper hand so far and the MSCI world index is up almost 50 percent from its March lows. However, earnings may need to show signs of rebounding for the rally’s momentum to be sustained. Even those looking for further equity gains think the rise in stock prices will lag that in earnings once the earnings recovery gets underway, as was the case in past cycles. The symmetry/asymmetry of market reaction to data this week — as much from China as from the major developed economies — will show how much appetite there is to keep chasing the rally higher. 

TAKING CONSUMERS’ PULSE 
- A better picture of the health of the consumer will emerge this week as U.S. retailers’ earnings coincides with the release of U.S. July retail sales data and the UK BRC retail survey comes out on the other side of the Atlantic. With joblessness still rising, the reports will show how willing households are to spend and whether deep discounts, which eat into retailers’ profit margins, are the only thing that will tempt them to shop — both key issues for the macroeconomic and corporate outlook. 

CENTRAL BANK WATCH 
- After last week’s Bank of England surprise, all eyes turn to what sort of signals the U.S. Federal Reserve and Bank of Japan will send on the outlook for their respective economies and QE programmes. After the BOE’s expansion of its QE programme the short sterling strip repriced how soon UK rates would rise. But the broader trend recently in the U.S., euro zone and the UK has been to discount rate rises in 2010 — and possibly as soon as this year in Australia. Benchmark interbank euro rates have risen for the first time in two months, and central bankers everywhere, including China, face the delicate balancing act of managing monetary tightening expectations in the months ahead.