Above the Fold

U.S.-China Manufacturing Experiencing Tortoise and Hare Situation 

Recent data suggests a slowdown in China’s manufacturing sector. Despite the country’s quick jump back to productivity after the COVID-19-related lockdown in 2020, Chinese purchasing managers indexes have been trending lower since December. There have been a few localized lockdowns in northern cities that may be weighing on data, but that weakness should be offset by more migrant workers staying on the job due to travel restrictions. Top-line factory PMI slipped to 50.6 from January’s 51.3, still indicating a modest expansion in business activity, but the weakest one since last May.

Here in the states, a slower return to normal seems to be working. Recent domestic manufacturing activity picked up with February PMI clocking in at 60.8, 2.1 percentage points higher than January. And it’s not just a restocking of inventories left low from the pandemic’s effects, as the pace of new orders is also quickening. Expect to see manufacturing remain strong as high savings rates, improving weather and further stimulus are all expected to spur consumer demand. 

Three Things 

1. Did VW Just Create “Another” Tesla Killer?
The “People’s Car” company Volkswagen is getting back to its roots after a credibility stumble related to its “Dieselgate” emissions scandal. New for 2021, the German car maker has released the highly affordable, well-reviewed ID4 electric SUV. The compact SUV starts around $33,000, after federal tax credits, which are now expired for Tesla due to its number of vehicles sold. And while the ID4 is a viable competitor, VW isn’t the only company with its sights set on Tesla’s lower-end vehicles. Look for an exponential increase in EV competition in the future as years of research and engineering bear fruit for the major manufacturers. 
2. Blacklane to Challenge Upper Reaches of Lyft, Uber, Others 
German startup Blacklane, heavily backed by Daimler AG, will launch a new premium black car service in select urban centers globally. Previously focused solely on rides to and from airports, Blacklane will expand its services to include inner-city and city-to-city rides, starting in New York City. Unlike most competitors, its business will center around the high-end niche rideshare market which mainly caters to business travelers and upscale consumers. 
3. Germany to Consumers: Don’t Bank Here
Traditionally, banks have spent big money to drive consumers to move funds into savings and checking accounts, but in an ironic twist, the largest German banks are asking them to take their money elsewhere. Interest rates have been negative in Europe for years now, but most banks did not pass the costs to consumers until recently. With the pandemic driving savings rates higher (this would normally be viewed as a positive), some German banks like Commerzbank AG and Deutsche Bank are not only charging customers to deposit their money, but flat-out requesting that savers withdraw their funds. The problem is that certain banks need to not only deposit a portion of those funds with the central bank, but also pay interest on those excess deposits. 

Did You Know?

Happy New Year (Ancient Romans)! 

Prior to 150 B.C., March was the first month of the year, which ran until December. In fact, several months reveal their original calendar placement in their names, like December, which is derived from the Latin decem, meaning 10; septem, meaning seven, and so on. The two-month period that we now know as January and February was basically a nameless span during the cold and unproductive months of winter.