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  • Klaus Meitinger

Warning signal from the ifo economic indicator.

(Reading time: 3 - 5 minutes)
The Munich-based ifo Institute's business climate index fell surprisingly sharply in May. The slump in business expectations in industry, which play a decisive role in the private-wealth stock market indicator, was particularly sharp. This index fell from minus 2.3 points in April to minus 13.6 points now (chart above). For us, business expectations in industry are so important because they are not only an indicator for the German economy but also for the DAX. In the past, a decline in the index three times after a sustained rise often indicated a downward trend reversal. At first glance, therefore, the May result is not that dramatic. After all, it is only the first decline after a continuous six-month rise. For a classic sell signal...

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  • Klaus Meitinger

Seismograph goes on the offensive.

(Reading time: 2 - 4 minutes)
  The capital market seismograph delivered a little Easter surprise. In keeping with the festive season, the storm clouds seem to be gradually receding. "The long-lasting dominance of negative turbulence probability has ended. Positive and negative turbulence probability (yellow and red) are now roughly equal. In such a scenario, it is appropriate to overweight stocks in the portfolio," informs Oliver Schlick, who translates the signals of the seismograph into allocation proposals for Secaro GmbH. As you know, the seismograph combines various economic variables - early economic indicators, interest rate developments or price fluctuations on the stock markets. From these, the probabilities for three market states in the next month...

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  • Klaus Meitinger

Thunderclouds continue to dissipate.

(Reading time: 1 - 2 minutes)
  A week ago we informed you here that the probability distribution on the seismograph had improved step by step. In recent weeks, the red probability for turbulent-negative markets had gradually decreased towards two-thirds - to the same extent, "yellow", the probability for positive turbulence, increased. Consequently, the underweighting of equities in the allocation proposal of the model was reduced and the equity quota slightly increased.This trend continued recently. "The probability landscape has shifted further in favour of the "yellow" expression. The new recommendation is to take the share of equities in a mixed portfolio a little further out of the defensive range," informs Oliver Schlick, who translates the signals of...

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  • Klaus Meitinger

Improvement in the seismograph "across the board".

(Reading time: 2 - 4 minutes)
  In the capital markets, things sometimes do not go as they seem logical at first glance. In the past few days, news from the banking sector unsettled investors. Actually, the bank quake represents a new, additional risk factor for the stock markets, which - so the assumption - could also increase the probability of thunderstorms on the capital market seismograph.At the same time, however, yields on US five-year government bonds fell because market participants expect that the interest rate peak in this cycle could now be reached earlier than previously expected in view of the stress in the financial sector. "As US yields have an important influence on the probability distribution on the seismograph, this caused a significant increase...

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  • Klaus Meitinger

Good news from the economy.

(Reading time: 2 - 4 minutes)
Situation better, expectations more optimistic - the Ifo Business Climate in March puts a tick behind the recession fears in Germany. The positioning on the ifo business cycle clock continues to move steadily in the direction of recovery (chart above). And the economic traffic light of the Munich-based economic researchers is green (bottom chart). The index for business expectations in industry, which plays a decisive role in the private-wealth stock market indicator, has recovered particularly dramatically recently. It climbed steadily from minus 40.5 points in October 2022 to just minus 5.1 points (chart below). In plain language: the number of those who expect their business to improve over the next six months is now almost as large...

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