Olaf's Feed
Sep 16, 2014
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No-debt mania continues to dictate German policies

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Angela Merkel’s rhetoric on higher public investment is changing for the better. But the German chancellor remains unruffled by growing calls from her euro partners and the European Central Bank to change tack on fiscal policy. Germany’s excessive focus on balanced budgets remains unchanged and is likely to prevent any swift and significant increase in public infrastructure spending.

Aug 12, 2014
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German stocks price in sanctions tail-risk

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The German economic mini-miracle is on hold. Thursday’s announcement of second quarter GDP, which was not affected by Russian trade hostilities, will probably show a decline from the weather-boosted beginning of the year. Investors are looking for worse. The 8.7 percent drop in the DAX stock index since July 3 puts it among the worst performers of major European stock markets.

Jun 30, 2014
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Evonik in $400 mln soccer deal it doesn’t need

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Evonik’s 300 million euro ($400 million) tie-up with Bundesliga soccer team Borussia Dortmund (BVB) has little merits for the company’s shareholders. Germany’s third-largest chemical company hopes that the alliance with the club will turn its brand into a global household name. The snag is that Evonik doesn’t do any business with end users.

Jun 24, 2014
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Next stop: Siemens-Alstom train merger

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Once the dust settles over the Alstom bidding war, Siemens and its French rival may want to revisit the most compelling aspect of the German company’s losing bid: a merger of both groups’ train-making units that would create the train equivalent of Airbus, the European aircraft maker.

Jun 11, 2014
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Siemens needs more than Mitsubishi to win Alstom

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Siemens is smart to team up with Japanese engineering peer Mitsubishi Heavy Industries in a potential bid for Alstom’s power assets. But this probably won’t be enough for the German group to see off rival interest from America’s General Electric.

Jun 11, 2014
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New Lufthansa chief starts with crash landing

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Lufthansa’s problems go much deeper than the 2014 revenue miss that just forced the group to issue a profit warning. The German airline’s ambitious medium-term cost-cutting programme “Score” also lies in tatters. So does Lufthansa’s credibility with investors, which sent the share down 14 percent on June 11.

May 15, 2014
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Good German growth covers up bad economic policies

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Germany’s pleasant growth surprise comes with a hidden cost. The stronger-than-expected upswing allows Angela Merkel, the chancellor, to carry on with some misguided policies.

May 7, 2014
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Alstom chase is distraction from Siemens revamp

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Joe Kaeser has hammered out a plausible new strategy for Siemens. The new chief executive’s focus on internal reforms could make the unwieldy engineering giant less complex and more efficient. But Kaeser is simultaneously mulling a bid for the power assets of French rival Alstom – a big-bang acquisition that could foil “Vision 2020.”

May 6, 2014
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Tax steroids justify Bayer’s $14 bln Merck deal

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By Olaf Storbeck
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Bayer’s $14.2 billion acquisition of Merck’s consumer care business is less pricey than it looks. Non-prescription pharmaceuticals are among the most sought-after assets in global healthcare. Demand for “over the counter” drugs, driven by emerging markets, is growing at 4 percent to 5 percent a year. Revenue is unthreatened by patent cliffs and less vulnerable to regulatory interference. Strong OTC brands earn EBITDA margins of 30 percent and more.

Apr 25, 2014
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Alstom split would energise business units

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Ending the days of Alstom as an unwieldy conglomerate would end many of its headaches. Given time, the group could probably take care of its problems on its own. Outside help would allow it to speed up the recovery. And General Electric could be a powerful catalyst for the transformation.