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Closing Market Summary: Shortened Week Ends on Slightly Lower NoteThe stock market ended the week on a lower note, though the final standing represented a significant improvement from morning action when the S&P 500 was down as much as 0.9%. The benchmark index narrowed its loss to 0.2% by the close while Nasdaq (-0.1%) and Russell 2000 (+0.2%) outperformed. The Dow Jones Industrial Average (-0.2%) settled in line with the benchmark index.
Equities stumbled out of the gate after a much stronger than expected headline reading of the June Employment Situation report (actual 224,000; Briefing.com consensus 160,000) dashed hopes for aggressive action from the FOMC.
The solid report served as another reminder that the U.S. economy continues holding up well against a backdrop of slowing activity elsewhere. Today's news weighed on Treasuries, sending the 10-yr yield higher by ten basis points to 2.05%, while the implied likelihood of a 50-basis point rate cut fell to just 4.9% from 29.2% on Wednesday. The fed funds futures market remains certain that a 25-basis point cut will take place on July 31.
In addition to weighing on Treasuries, the jobs report boosted the dollar, lifting the U.S. Dollar Index to its 50-day moving average (97.27). The Index gained 1.2% this week and is now within 0.6% of its high from June.
The major averages retreated through the first hour of the session, but the market found support shortly after the S&P 500 dipped to its starting level from Monday. The next few hours saw a steady rebound, which ran into resistance near Wednesday's closing levels.
Seven out of eleven sectors ended the day in negative territory. Countercyclical real estate (-0.6%) and health care (-0.7%) settled at the bottom of the leaderboard with health care pressured by biotech names after President Trump said that his administration is preparing a "favored-nations clause" that would reduce prices that Medicare pays for drugs. The iShares Nasdaq Biotechnology ETF (IBB 109.22, -1.71, -1.5%) narrowed this week's gain to just 0.2%.
The top-weighted technology sector (-0.2%) settled in line with the broader market as relative strength in largest sector components outweighed continued weakness among chipmakers. The PHLX Semiconductor Index lost 0.6% with 24 of its 30 components ending in the red. AMD (AMD 31.50, +0.31, +1.0%) was among the outperformers amid speculation that the company's newest video cards that will become available on Sunday will challenge corresponding offerings from NVIDIA (NVDA 160.23, -2.52, -1.6%) when it comes to price and performance.
On the upside, financials (+0.4%) spent the bulk of the session in the green, as the uptick in Treasury yields and the continued strength in employment data fostered the thought that banks may be able to keep their net interest margins at healthy levels.
The communications sector (+0.2%) also outperformed, ending the week ahead of the remaining ten groups with a gain of 2.7%.
Today's investor participation was well below average, as fewer than 600 million shares changed hands at the NYSE floor.
Reviewing the June Employment Situation Report:
- June nonfarm payrolls increased by 224,000 (consensus 160,000). Over the past three months, job gains have averaged 171,000 per month. May nonfarm payrolls revised to 72,000 from 75,000
- June private sector payrolls increased by 191,000 (consensus 147,000) while May private sector payrolls revised to 83,000 from 90,000
- June unemployment rate was 3.7% (consensus 3.6%), versus 3.6% in May
- Persons unemployed for 27 weeks or more accounted for 23.7% of the unemployed versus 22.4% in May
- The U6 unemployment rate, which accounts for unemployed and underemployed workers, was 7.2%, versus 7.1% in May
- June average hourly earnings were up 0.2% (consensus +0.3%), after increasing an upwardly revised 0.3% (from 0.2%) in May
- Over the last 12 months, average hourly earnings have risen 3.1%, versus 3.2% for the 12 months ending in May
- The average workweek in June was 34.4 hours (consensus 34.4), unchanged from May
- Manufacturing workweek was up 0.1 hour to 40.7 hours
- Factory overtime was unchanged at 3.4 hours The labor force participation rate was 62.9% in June versus 62.8% in May
Monday's economic data will be limited to the 15:00 ET release of May Consumer Credit (consensus $17.70 bln; prior $17.50 bln).
- Nasdaq Composite +23.0% YTD
- S&P 500 +19.3% YTD
- Russell 2000 +16.8% YTD
- Dow Jones Industrial Average +15.4% YTD
Christian Sewing, a company man going back to basics
The Deutsche Bank chief executive is planning a dramatic transformation of the business
When Christian Sewing attended a conference for bond investors at a luxury hotel outside London last week, he invited one of Deutsche Bank’s clients to give a presentation to the attendees.
The executive he brought along was not a hedge fund manager or a freewheeling real estate developer, but rather Klaus Rosenfeld, head of Schaeffler Group, one of the world’s leading suppliers of ball bearings and car parts.
According to those in the room, the message could not have been clearer: after more than two decades during which the lender tried to become a European rival to Wall Street titans such as Goldman Sachs, Mr Sewing wants to return Deutsche to its roots as a bank for large corporates in Germany and beyond.
The transformation will not be easy. Mr Sewing will soon unveil one of the most ambitious restructurings of a global bank since the financial crisis, complete with up to 20,000 job cuts and a radical downsizing of Deutsche’s ailing trading business.
He hopes that a smaller, more focused Deutsche will be able to boost paltry profitability after years of poor performance while dispelling nagging questions about whether the bank has a long-term future.
Colleagues say the 49-year-old — who has spent almost his entire career at Deutsche — is deadly serious about making the deep cuts that several of his predecessors contemplated but failed to deliver.
“If someone is able to come to grips with Deutsche Bank’s situation, it’s him,” says Mr Rosenfeld.
A talented tennis player and avid Bayern Munich football fan, Mr Sewing in his youth harboured hopes of becoming a sports journalist. But his father urged him to pursue something more solid. In 1989, he joined Deutsche as an apprentice at a branch in the Westphalian town of Bielefeld.
“Back then, the ethos at Deutsche Bank was that everyone always strived to be the best,” he once said. On his first day, a superior told Mr Sewing that Deutsche apprentices were expected to get the best marks in regional exams: he did not disappoint.
With the exception of a two year hiatus at a co-operative lender in Hamburg, Mr Sewing has stayed at Deutsche ever since. Now married with four children, he worked his way up through a series of roles in the legal department before becoming head of the retail unit — and an obvious candidate for future chief executive.
“You could commission him with any task, even a highly complex one, and be sure things would run smoothly, that nothing would go pear-shaped,” recalls Hugo Bänziger, a former chief risk officer at Deutsche and Mr Sewing’s erstwhile boss.
Friends and colleagues describe Mr Sewing as a demanding, methodical manager who obsesses over punctuality and has little time for small talk. “If you have a time slot you stick to it, and you get straight to the point,” says one former executive.
Unlike many of his counterparts at rival banks, Mr Sewing has little direct experience of the trading floor, where critics say camaraderie and the pursuit of large annual bonuses has taken precedence over stability and investor returns.
“Within Deutsche there’s been this sense of loyalty because people who were in the trading ranks had too much of a good lifestyle, so no one ever wanted to take tough decisions” says Davide Serra of Algebris Investments, a Deutsche bondholder.
As a veteran of Deutsche’s legal department, colleagues say Mr Sewing has sometimes taken a dim view of the lender’s investment bank, which has been the source of a string of expensive scandals.
On a holiday shortly before he became CEO in 2018, he sketched out a vision for a different Deutsche, which would return to glory by becoming less reliant on traders in London and New York.
While 20,000 job losses certainly sounds dramatic, some doubters fear that Mr Sewing’s cuts will not go deep enough. One former executive says Mr Sewing should shut the bank’s Wall Street operation altogether and pull out of most types of trading.
“Based on everything I’ve heard so far, I don’t find anything particularly radical,” the person says.
A second challenge is that while Mr Sewing’s lack of trading experience makes him less emotionally attached to the business, it also means he must rely heavily on advisers as he attempts the tricky task of shrinking unprofitable activities without choking off parts of the lender he wants to preserve.
“I see a potential gap of knowledge that can’t be breached in the short-term,” says another former executive, who nonetheless insists that Mr Sewing must press ahead. “At this point, it’s better to take action rather than wait for another three years to try to get it perfect.”
After a looming management reshuffle that will result in a smaller executive board manned by confidants loyal to Mr Sewing, he will become one of the most powerful CEOs in the country.
“The new management board will be totally geared to him,” says one regulator, who warned that while the bank needs a powerful CEO, it now has a key-man risk. “If he gets hit by a bus tomorrow, we’d have a real problem.”
Deutsche Bank gambles on a last throw of the dice
Mired in controversy for years, the lender is set to reveal yet another radical overhaul. But is Christian Sewing’s plan ‘too little too late’?
June 4 1999 was a warm, sunny day in Frankfurt — perfect for the open-air party that Deutsche Bank was throwing in front of its twin-tower headquarters in the heart of Germany’s financial capital.
Hundreds of staff gathered in front of a vast video screen beaming footage back and forth from New York. They swigged Miller beers, snacked on hamburgers and watched giant balloons rise into the sky.
The display of Americana was a celebration of Deutsche’s $10bn acquisition of Bankers Trust, a Wall Street institution that propelled Germany’s biggest lender into the global big league.
Two decades on and Deutsche Bank is about to announce a dramatic untangling of that zealous expansion. After five years of continuous decline in the group’s investment banking business — and a concomitant collapse of its share price — chief executive Christian Sewing is expected to ask his supervisory board this weekend to authorise a radical restructuring of the group that in 2007 was briefly the biggest bank in the world but which today is struggling for relevance against its global rivals.
The root and branch restructuring could see as many as 20,000 jobs lost, the creation of a €50bn “bad bank” — Deutsche’s second since the global financial crisis — and cost as much as €5bn, potentially driving the bank back into the red this year.
It will be the fifth strategic plan in just seven years, reflecting the difficulty that Deutsche has found in coming to terms with tougher regulations, a string of scandals and the bald truth that without a top five investment bank, which drove its profits for 15 years, it has few other franchises to fall back on.
One top 10 shareholder briefed on the plan appears convinced, describing Mr Sewing’s vision as a “bold strategic reorientation”. The bank’s 90,000 employees, its irate investors and Europe’s biggest economy — in which it is anchored — will hope he is right.
The investment banking adventure was not meant to end this way. When Deutsche unveiled the Bankers Trust deal — the brainchild of buccaneering investment banking boss Edson Mitchell — it ushered in an almost decade long boom up to the 2008 financial crisis.
Undeterred by Mr Mitchell’s death in a plane crash just a year after Bankers Trust was acquired, his protégé Anshu Jain went on to build one of the world’s top fixed-income specialists, riding the wave of ever more complex derivatives structuring that brought Deutsche increasing profits, bulging bonuses and the grudging respect of Wall Street’s more established names.
“It was an inspirational place to work,” recalls one former executive.
But the rapid expansion of Deutsche’s investment banking division overshadowed everything else. The group’s low-profit retail and corporate bank in Germany — which must compete in a market dominated by co-operatives and savings banks that do not seek to maximise returns — was starved of investment, as was its asset management arm.
The pace of investment banking growth also outstripped the group’s ability to control it via effective compliance and risk management functions. And its rapid hiring of staff, made possible by paying them more than rivals, engendered a mercenary culture.
Though Deutsche fared better than many in the teeth of 2008, the regulatory crackdown that followed has proved fatal to its business model. The decision to force banks to fund their operations with less debt and more equity capital from shareholders has proved particularly disastrous for Deutsche, whose pre-crisis balance sheet was one of the most leveraged in the world.
Over the past decade it has had to raise more than €30bn of equity, twice the market value of the bank today. At the same time profits have shrunk amid declining demand for the fixed-income bonds and rate products at which it excelled. The net result: a collapse both in the bank’s return on equity and in investors’ faith that it can recover.
“Deutsche today is uninvestable for most active fund managers and that won’t change fast,” says one top shareholder. “It is a 10-year task to reposition this bank.”
Four chief executives in just over four years have failed to stop the rot. Mr Jain, who was co-chief executive until mid- 2015, was slow to realise how disruptive regulators’ new capital requirements would prove. His successor John Cryan bolstered capital and began some cuts but expanded a lossmaking equities franchise, flip-flopped on strategy and was undermined by senior colleagues.
Deutsche has been lossmaking in three of the past four years, reporting big falls in earnings amid myriad litigation and regulatory compliance failings. It has had to pay $7.2bn in penalties for mis-selling US mortgage securities, and was sanctioned for helping to launder $10bn in dirty money out of Russia.
In April, a government-backed effort to orchestrate a merger with local rival Commerzbank ended in failure. Mr Sewing and his advisers had been working on a “plan B” since mid-December in parallel to the merger talks. The brief was to sketch a plan of how to escape what his own chief financial officer has called a “vicious circle” of declining revenue, stubborn costs, a falling credit rating and rising funding costs.
Shareholders showed their frustration at an angry annual meeting in May. Under fire chairman Paul Achleitner saw off an attempt to oust him, but directors still only garnered the support of three-quarters of shareholders in the annual vote on whether they properly discharged their duties — far short of the 90 per cent-plus approval ratings that are normal at German companies.
Mr Sewing knows that the modest cost-cutting he has engaged in since he began in the job 15 months ago has been far too timid. Even before being appointed chief executive, he was clear that the group’s investment bank was excessively dominant — writing a strategy paper which sketched out most of the looming reshuffle. “We lost our balance,” he told the Financial Times two years ago. “It was good to go international. It was good to expand in investment banking. But we overdid it.”
Emboldened by the accumulating pressure, he appears now to have galvanised his board and regulators for a profound overhaul. He also seems to have the support of a once disparate group of top shareholders — comprising US activists Cerberus and Hudson, two Qatari wealth funds and BlackRock, the world’s biggest asset manager. Indeed several other big investors have been campaigning for just such a plan for many months.
“Everyone knows that there is no time left for incremental tweaks,” says one senior European policymaker. “This has to be a radical plan.”
Directors could debate the detail of Mr Sewing’s restructuring plan as early as Sunday. Assuming it is approved, the Deutsche that emerges from the overhaul will look very different from the bank of the past two decades. Large parts of the group’s ill-fated US expansion will be rolled back and tens of billions of dollars of complex derivatives will be sold off, pivoting the group towards its more prosaic corporate and asset management businesses.
“It de facto kills the misplaced mantra of [Deutsche as] the ‘Goldman Sachs of Europe’,” Davide Serra, founder of one major investor, Algebris, recently said.
The process will be painful. Up to a fifth of its total staff could be axed, with its US and UK operations hardest hit.
But the shrinkage appears overdue. Deutsche’s investment bank employs 38,300 people, the same number as the whole of Goldman Sachs, even though the Wall Street bank makes 1.5 times the revenue of its German peer, JPMorgan analyst Kian Abouhossein points out. Operating costs in the investment bank swallowed 95 per cent of its revenues last year, compared with 55 per cent at market leader JPMorgan. Between 2012 and 2018 the overall group made a cumulative net loss of €6bn.
In its German retail operations, where Deutsche has been shedding 2,000 jobs a year through attrition and voluntary redundancies since late 2017, extreme cuts are difficult, given the country’s strict labour laws and the powerful role that unions have on Deutsche Bank’s supervisory board. The group has promised the unions that it will avoid forced lay-offs at least until mid-2021.
The investment bank cuts will focus in particular on the equities trading business outside continental Europe — estimated to be losing €600m a year. Deutsche may close the unit entirely. Executives have held talks with rivals such as BNP Paribas and Citigroup over selling assets or entire units, people familiar with the discussions say, though potential buyers play down the likelihood of deals.
A number of Deutsche’s top New York executives are gone already or are expected to leave as a result of the restructuring, adding to the drain of top-level staff that has hit the bank in recent years. Mr Sewing and his team are also looking to shrink or close other international hubs such as Dubai and Johannesburg.
The other main plank of the restructuring will see the bank hive off more than €50bn of risk-weighted assets into a new bad bank. Mr Sewing — a former risk officer who joined Deutsche as an apprentice in a branch in the Westphalian town of Bielefeld — wants to free the bank from long-dated derivatives written in the boom years. Profits from those transactions were booked upfront, generating big bonuses for those who arranged the deals. But they will continue to tie up capital for the 20 or 30 years that they still have to run.
The most high-profile victim of the rejig so far is Deutsche’s top investment banker Garth Ritchie, an equities trader who has been with the organisation for 23 years. Deutsche Bank said on Friday that Mr Ritchie was leaving by mutual consent with Mr Sewing to take responsibility for his division. Chief regulatory officer Sylvie Matherat, who has presided over a string of embarrassing and costly money laundering issues, is also set to go, two people briefed on the matter told the FT.
Some worry that the severity of cuts to the international business could undermine Deutsche’s ability to service clients at home. “There is a substantial difference between downsizing and outright closure of Deutsche’s non-European equity capacity,” says Goldman Sachs analyst Jernej Omahen. “An outright closure [of the US operation] would raise questions about its capacity to act as a global investment bank to its European corporate client base.”
But one former member of the executive board thinks Mr Sewing’s overhaul is too little, too late: “Deutsche’s problem has always been a lack of decisiveness,” he says, adding that he lobbied for swift action during his tenure. “I said ‘bite the bullet, take the losses, move on and stop wasting time — free up our minds and balance sheet’, but we were ignored.”
To counterbalance the swingeing cuts in the investment bank, Deutsche plans to expand its asset management and transaction services businesses, comprising cash management and trade finance. The latter unit is aiming to double profits to €2bn by 2022 while in asset management Mr Sewing has declared an ambition to build its DWS brand into “one of the world’s top 10”. That would mean doubling assets under management to €1.4tn.
Merging DWS with a rival asset manager such as the comparable division of Swiss bank UBS would be one way to do this. Talks have been under way for months though they have become bogged down in a dispute over valuation and control.
According to people close to the process, the bank has convinced regulators that its common equity tier one capital ratio — the most important measure of financial strength — should be allowed to dip roughly one percentage point to around 12.7 per cent, freeing up €3.5bn. Hiving off €50bn of risk-weighted assets via the new bad bank could free another €6bn in capital, Citi analysts estimate.
Whether the plan can really fix the deep-seated problems at Deutsche is the biggest question of all. Despite the support expressed by some of the bank’s largest investors, other leading shareholders have told the Financial Times they remain concerned the lender lacks sufficiently profitable other businesses.
“The core bank returns would still be low, so questions will remain on the ability to generate organic capital,” says Citi analyst Andrew Coombs, pointing out that a new wave of still tougher capital regulations is pending.
“This [restructuring] is the final bullet,” a top regulatory official says, adding that there is widespread optimism among supervisors that the plan can succeed. As it prepares to mark its 150th anniversary in March, the party atmosphere of 1999 seems unlikely to return: the share price is brushing record lows and is more than 80 per cent down on the level of 20 years ago. But if Mr Sewing’s plan can at least restore the stability of the 130 years that preceded the Bankers Trust deal, that may be cause enough for celebration.
Amazon’s Deliveroo Investment Attracts U.K. Watchdog’s Attention
Food-delivery startup Deliveroo raised $575 million in a funding round led by the e-commerce giant
Britain’s competition regulator is reviewing Amazon.com Inc.’s AMZN -0.39% investment in U.K. food-delivery startup Deliveroo, as global regulators scrutinize potential antitrust issues amid an expansion by Silicon Valley giants into more markets.
The U.K. Competition and Markets Authority said Friday it had served an initial enforcement order in relation to the Amazon-Deliveroo deal, preventing the companies from integrating their operations while the regulator considers launching a formal investigation.
Deliveroo said in May that Amazon would lead a $575 million funding round in which the U.S. tech giant would become one of its biggest investors.
The CMA said Friday it was examining the deal because it believed the two companies had either “ceased to be distinct” or had made plans to that effect.
The specific antitrust issue about which the regulator is concerned is unclear. The enforcement notice didn’t give specifics and Amazon closed its own restaurant-delivery service in the U.K. late last year. It said it would shut a similar service in the U.S. in June.
A person close to Deliveroo expressed surprise at the CMA’s decision and said it was unclear how the regulator had determined that the two companies were merging parts of their operations.
“There’s no operations to merge,” the person said. “There’s not going to be any integration of the depth they’re suggesting.”
A spokesman for the CMA declined to comment beyond the enforcement notice.
The U.K. has been particularly aggressive in scrutinizing Silicon Valley firms, considering, for example, setting up a new regulator to look at a wide spectrum of online content. The European Commission has taken the lead in pursuing antitrust action against tech firms, taking aim at Alphabet Inc.’s Google and others.
Amazon in particular is also facing increased scrutiny from U.S. regulators, which could throttle the pace of its acquisitions, The Wall Street Journal has reported.
The company, whose deal-making style is to act quickly and quietly, has spent more than $20 billion on acquisitions and investments since the start of 2017, including its $13.7 billion purchase of WholeFoods.
The CMA’s initial enforcement order prevents the companies from taking action that might prejudice the outcome of any investigation or impede the regulator from ordering remedies.
A spokesman for Deliveroo said the U.K. company and Amazon had been working closely with regulators to obtain regulatory approvals and noted there were a number of other major companies in the food-delivery market.
An Amazon spokesman said its investment would enable Deliveroo to expand its services, benefiting consumers through increased choice and creating new jobs.
Deliveroo, whose delivery bikes are almost as common a sight on the streets of London as the city’s black cabs and double-decker buses, competes with Uber Technologies Inc.’s Uber Eats and other services in the U.K.
The service, which generates revenue by charging restaurants a commission and customers a flat fee on each order, launched in London in 2013. It doesn’t have a presence in the U.S. but operates in various countries across Europe, Asia-Pacific and the Middle East.
BMW announced today that it is accelerating its electric car plans by two years as it unveils new electric vehicle concepts – showcasing its latest EV technology.
At its ‘NEXTGen’ event in Munich today, the German automaker said that it now plans to have 25 electrified models in 2023 – two years ahead of schedule.
Harald Krüger, CEO of BMW, said about the announcement:
“We are moving up a gear in the transformation towards sustainable mobility, thereby making our company fit for the future: Over the past two years, we have consistently taken numerous decisions that we are now bringing to the roads. By 2021, we will have doubled our sales of electrified vehicles compared with 2019. We will offer 25 electrified vehicles already in 2023 – two years earlier than originally planned. We expect to see a steep growth curve towards 2025: Sales of our electrified vehicles should increase by an average of 30 percent every year.”
As we previously reported, BMW hasn’t released a new all-electric vehicle since the launch of the BMW i3 in 2013.
Now it plans to release a series of new all-electric vehicles over the next few years.
They have the Mini Electric coming by the end of the year. They also have the BMW iX3, an all-electric SUV, which is due to go on sale next year. The BMW i4, an all-electric sedan, and the BMW iNEXT, an all-electric crossover, are also being brought to market in 2021.
Earlier this year, BMW revealed the latest iX3, i4, and iNext electric vehicle prototypes during winter testing.
While the automaker s talking about all those EVs hitting the market, BMW is talking about 25 “electrified” models and that includes plug-in hybrids, which are still an important part of the automaker’s electrification plans.
With BMW’s fifth generation electric powertrain technology, the automaker is able to produce the same series cars with different powertrains (all-electric, gas, or plug-in hybrid) on the same production line.
Along with the announcement of the acceleration of its electrification plans, BMW unveiled 3 new electric concepts vehicles at its ‘NEXTGen’ event today:
- BMW Vision M NEXT: BMW unveils electric concept that looks like next-gen i8 sports car
- BMW ‘Power BEV’ 5th GEN Powertrain test vehicle: BMW’s Power BEV is a 720-hp trial vehicle with three electric drive units
- BMW Motorrad Vision DC Roadster: BMW unveils its latest electric motorcycle concept: The Vision DC Roadster
Fendi couture review AW19: Karl Lagerfeld, emperors, new clothes
In Rome, the LVMH brand stages a lavish homage to the late designer
In his last gesture of collaboration with Silvia Venturini Fendi, the female scion of the Rome-based LVMH-owned furrier house founded by her grandfather in 1925, Karl Lagerfeld presented her with a book. It was about the Vienna Secession, the Austrian art group formed in 1897 whose members included Gustav Klimt, Egon Schiele and Josef Hoffman. Lagerfeld felt that the graphic, decorative works might be an inspiration for the house at which he worked before his death in February of this year.
Venturini Fendi’s response? An haute couture collection featuring 54 looks inspired, in part, by the 54 years in which Lagerfeld worked in its nam
Staged at the close of couture week, in Rome, and amid the ancient ruins of the Palatine Hill surveying the Coliseum, the show was in part an homage to Lagerfeld, and an opportunity to re-establish the brand’s monumental impression on the Roman landscape. Fendi has been instrumental in helping restore many of the city’s best known landmarks including the Trevi Fountain, which it paid to renovate in 2016, and they had contributed also to protect the Palatine. Even so, it was fitting the house had chosen to honour the late designer in the stamping ground of former emperors and aristocrats.
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In his last gesture of collaboration with Silvia Venturini Fendi, the female scion of the Rome-based LVMH-owned furrier house founded by her grandfather in 1925, Karl Lagerfeld presented her with a book. It was about the Vienna Secession, the Austrian art group formed in 1897 whose members included Gustav Klimt, Egon Schiele and Josef Hoffman. Lagerfeld felt that the graphic, decorative works might be an inspiration for the house at which he worked before his death in February of this year.
Venturini Fendi’s response? An haute couture collection featuring 54 looks inspired, in part, by the 54 years in which Lagerfeld worked in its name.
Staged at the close of couture week, in Rome, and amid the ancient ruins of the Palatine Hill surveying the Coliseum, the show was in part an homage to Lagerfeld, and an opportunity to re-establish the brand’s monumental impression on the Roman landscape. Fendi has been instrumental in helping restore many of the city’s best known landmarks including the Trevi Fountain, which it paid to renovate in 2016, and they had contributed also to protect the Palatine. Even so, it was fitting the house had chosen to honour the late designer in the stamping ground of former emperors and aristocrats.
It was also an appropriate tribute to a relationship in which the Hamburg-born Lagerfeld, with his Mittel European tastes and sensibility, worked closely with a house which has always drawn powerfully on the flavours of antiquity. Venturini had reimagined the graphism of the Secession artists and transposed it onto clothes, furs and prints that echoed the mosaic patterns and marble slabs that cover Roman floors. The clothes were stately and unapologetic — “Roman ladies might have a Caravaggio in their palazzo,” explained Venturini Fendi of the need to bring extravagance into Fendi’s design. “Rome is not bourgeois. It is aristocratic. It is grand. The women must live up to their surroundings, otherwise they cannot be seen.”
Nevertheless, Lagerfeld’s absence was still felt here. As at Chanel, where Virginie Viard has assumed her former boss’s position and this week delivered her second show without his guiding hand, the collections have demonstrated an attenuation in fashion now that he is gone. For a man who lent his vision to so many different brands, Lagerfeld’s design “style” was sometimes hard to define — only now can one appreciate the lightness, the playful details, and the wit that truly signified his look
Fendi’s own creative future is uncertain. Venturini Fendi currently runs the menswear and has long overseen the women’s accessories, with great success. Questions remain as to whether the LVMH group will appoint a successor to Lagerfeld, or whether Venturini Fendi will take on both. Furthermore, in a world in which fur, though still commercially buoyant is an ethical issue, the brand has had to do much to promote its sustainability (some of these catwalk pieces were upcycled, while the faux furs were made of natural materials such as cashmere). Consumer tastes are changing, and the house has had to diversify its offerings in order to stay relevant. This show might have been an ode to the “dawn of Romanity”. But it was staged in the twilight of a decades-long tenure. As Lagerfeld so often said himself: “What happens next.”