Morning Briefing Siemens: No. 1 in Germany Inc.

Since becoming CEO of Siemens, Joe Kaeser has provided proof his restructuring is bearing fruit: Former U.S. Treasury Secretary Larry Summers is also taking aim – at Trump’s own economic policies.

The Trump administration is going into combat mode against Iran. Following its temporary ban on Iranians arriving in the United States, new national security advisor Michael Flynn rattled his saber yesterday over Iran’s military strategy. He called the country’s recent missile tests provocative and a violation of the U.N. resolution on nuclear non-proliferation. He put the Islamic republic officially "on notice." And the world noticed.

Former U.S. Treasury Secretary Larry Summers is also taking aim – at Trump’s own economic policies, which are taking the United States in “a reckless, nationalist direction’’ internationally. Summers called on U.S. companies to break their silence and call out Trump as being bad for business. But he joined Trump in criticizing America’s big trade deficit with the German export machine. We will have a tough time defending our export-oriented model. Others like our products but dislike our surplus.

Chancellor Angela Merkel yesterday received a civil courage award for her refugee policies from Cardinal Reinhard Marx. The Roman Catholic chairman of the German Bishops Conference said her actions were anchored in Merkel’s Christian faith. Voters see it differently. They are no sheep following the good shepherd.

Joe Kaeser’s moment has arrived. Three and a half years after becoming CEO of Siemens, the Bavarian provided proof his restructuring is bearing fruit: Profit surged by 25 percent in the fourth quarter. The market’s reaction boosted Siemens market cap to €104.8 billion, catapulting the firm ahead of business software giant SAP as Germany’s most valuable DAX company. Shareholders lavished praise on Kaeser; one urged him to run for chancellor. But such an outpouring of love can be dangerous for a chief executive. Kaeser would be well advised to do what every successful CEO does – keep both feet on the ground.

By contrast, Daimler CEO Dieter Zetsche wants to reduce friction on the ground. The automaker’s shares were down nearly 4 percent today after Zetsche gave a restrained profit forecast for 2017. The costs of developing a fleet of e-cars is weighing on Daimler’s solid core luxury car and truck business, and overshadowed a 3 percent increase in fourth-quarter profits. But Daimler, which passed BMW to become the world's biggest-selling premium automaker in 2016, is well positioned for an e-car recharge: Unit sales rose 5 percent in the quarter.

And Deutsche Bank CEO John Cryan hit another bump in the bank’s long and winding road to profitability. Germany’s biggest bank today posted a bigger-than-expected €1.9 billion fourth-quarter loss amid mounting litigation costs. The bank’s shares, after nearly doubling in value over the last four months, were down almost 5 percent. Deutsche Bank is still sitting on billions in debt, piled up under former CEO Josef Ackermann. If Deutsche Bank awarded bonuses for courage and undeserved misfortune, Cryan should be the first in line.

President Trump is a big supporter of Prime Minister Theresa May’s effort to lead Britain out of the European Union. The two were spotted holding hands in the White House during May’s recent trip. Russian President Vladimir Putin on the other hand is becoming a constant companion of Hungarian Prime Minister Victor Orban, who opposes Merkel’s refugee policies. The two are to meet again today for the third time in just a few months. The lesson: Nationalism isn’t dead, as many would like to believe, but is showing signs of vigorous life. And the European Union? The bloc is back to where it once was: the plaything of big powers.


Image of the Day

Labour MEP Seb Dance (left) held up a sign as U.K. Independence Party MEP Nigel Farage addressed the European Parliament in Brussels yesterday.