Daybreak Weekend: Housing Data, German Elections, Alibaba Earnings
Feb 14, 2025
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Oliver Crook, Bloomberg's Germany correspondent, shares insights on the dynamic landscape as Germany approaches its elections. He discusses the rise of the far-right AFD party and how this shift could affect coalition negotiations and economic policies. The conversation also delves into key issues such as migration and defense spending. Meanwhile, housing data trends and challenges surface in the US, alongside Rivian's strategic moves in the EV market, making for a thought-provoking analysis of current global economic conditions.
The U.S. housing market is facing a significant downturn, with a projected 7% decline in housing starts due to economic pressures and rising interest rates.
The upcoming German elections present a competitive atmosphere with the Conservative party leading, highlighting the rising political polarization and its implications on investor confidence.
Deep dives
Emirates Airline Recognition and Global Reach
Emirates Airlines has recently been named the best airline in the world, highlighting its luxurious in-flight experience that includes onboard bars, showers, and award-winning entertainment. The airline serves over 140 destinations worldwide and partners with numerous carriers to connect travelers to an additional 1,700 cities across six continents. This extensive network demonstrates its leadership as the largest international carrier, emphasizing its commitment to providing seamless travel options for passengers. The combination of top-tier services and a broad global reach contributes to its esteemed reputation.
Housing Market Challenges
The upcoming housing data indicates significant challenges in the U.S. real estate market, with expectations of a 7% decline in housing starts due to economic pressures. Public builders are adopting a cautious approach by matching production with waning demand created by rising interest rates, currently around 7.15%. The existing home sales market is experiencing pressure from high prices and low urgency from buyers, leading to fears of declining sales ahead of the spring buying season. The impact of labor availability, especially considering immigration policy changes, is compounding these challenges for builders attempting to keep pace with market demands.
Rivian's Earnings and Future Outlook
Rivian is expected to report better-than-expected sales in its fourth quarter, potentially achieving a positive gross margin in its auto business for the first time. The company aims to leverage its partnership with Volkswagen to secure a billion-dollar funding boost, contingent on meeting gross profit targets. Rivian faces challenges due to ongoing economic uncertainty and changing policies affecting the electric vehicle (EV) market, including potential tariff implications and the elimination of tax credits. Additionally, plans to build a new assembly plant in Georgia might be reconsidered based on customer demand for upcoming vehicle models, emphasizing strategic financial management.
German Elections and Political Landscape
The upcoming German elections reveal a competitive political landscape, with significant polling suggesting a lead for the Conservative party, led by Friedrich Merz. The Social Democrats, under Olaf Scholz, are struggling to close the gap as voter indecision appears high, complicating coalition dynamics in the post-election scenario. Rising political polarization, notably with the far-right AFD gaining traction, has altered traditional party alliances and voter behavior, signaling a fracturing of the political discourse. This electoral uncertainty underscores the potential impacts on investor confidence and Germany’s role within the broader European stability amid economic challenges.