News from the editorial

  • Klaus Meitinger

Seismograph becomes (slightly) less defensive.

(Reading time: 2 - 3 minutes)
It remains exciting with the indicators that determine the private-wealth stock market indicator. On 25 January, the ifo business climate provided an economic buy signal for German shares. Currently, the capital market seismograph, which has been very cautious for a long time, is beginning to loosen its defensive stance somewhat. 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 are distilled. Green stands for the expectation of a calm, positive market. If green dominates, investors should invest in shares. Yellow indicates the probability of a turbulent...

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  • Klaus Meitinger

Turnaround in the economy underpinned.

(Reading time: 2 - 4 minutes)
  The emerging turnaround in the German economy is becoming increasingly clear. The German economy is more resilient than most economists had expected. This underpins the strategic buy signal for German equities from the business cycle component in last month's private-wealth stock market indicator. The latest ifo Business Climate Index for February shows a further improvement in sentiment in the German economy. The positioning on the ifo business cycle clock is now gradually moving in the direction of recovery (Chart above). And the economic traffic light of the Munich-based economists is also green. This recovery is particularly significant for the index of business expectations in industry, which plays an important role in...

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  • Klaus Meitinger

A race against time.

(Reading time: 2 - 3 minutes)
After the business cycle component of the private-wealth stock market indicator delivered a buy signal last week, we received many enquiries from the network. How can it be that the outlook in industry is improving while new orders - an important leading indicator - are declining significantly? Indeed, new orders do not look good. Since the beginning of '22 they have been showing a clear downward trend, both from abroad and domestically. Especially in real terms - i.e. in terms of pure volume - there is a clear slump (see chart below). And because volume is a decisive factor for capacity utilisation and thus to a large extent also for profit margins - this is a development that can cause concern for investors. It is interesting that...

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  • Klaus Meitinger

Strategic buy signal for German equities.

(Reading time: 4 - 7 minutes)
  The economic component of the private-wealth stock market indicator provides a strategic, long-term buy signal for German equities. It is therefore advisable to increase the equity ratio. You know: The equity allocation corridor suggested by the private-wealth stock market indicator is determined by two factors - the economic trend and the valuation of the DAX. Basically, it is about being strategically more invested in equities when the DAX is low and the German economic traffic light is green at the same time. This means that the risk-reward ratio for equity investments is favourable. If the economic outlook deteriorates and/or equities are highly valued, the stock market indicator gradually goes on the defensive. The private-wealth...

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  • Klaus Meitinger

Is the recession over?

(Reading time: 2 - 4 minutes)
The ifo business climate index delivered a positive surprise at the end of the year. For the third time in a row, the business expectations of the 9,000 entrepreneurs surveyed by the ifo Institute rose significantly in December. In ifo diction, this is considered a sign of a turnaround in the German economy. The details: After an almost continuous decline since February 2022, the mood among entrepreneurs has been steadily improving since October. The pointer on the ifo business cycle clock (chart above) is now moving back in the direction of recovery. And the ifo economic traffic light (chart below) even shows green. It thus signals a probability of more than two-thirds for an expansionary development of the German economy in the next...

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