News from the editorial

  • Klaus Meitinger

"The climate in the German economy continues to cool down."

Dear Readers,

the high spirits on the German executive floors are evaporating, writes the Munich-based ifo Institute. The economic researchers report the fifth consecutive decline in business expectations. The ifo traffic light also consistently shows a deep "red" (chart below).

ifo ampel april2018 As the assessment of the current business situation remains at a very high level, expectations and the situation now diverge extremely widely. In the future, either the situation will deteriorate significantly - or expectations will have to recover quickly.

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  • Klaus Meitinger

"The storm has died down."

Dear Readers,

a little more than two weeks ago, the model of the capital market seismograph had suggested cautiously increasing share quotas again. The current evaluation of the team around Professor Dr. Rudi Zagst and Oliver Schlick confirms this. "The storm has passed," Oliver Schlick interprets.

As you know, the capital market seismograph distinguishes between three phases in the US equity market: "green" (quiet market = buy), "yellow" (turbulent market with positive expectation = invest, but with hedge) and "red" (turbulent market with negative expectation = do not invest).

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  • Klaus Meitinger

ifo traffic light continues to show "red".

ifo index may18 Dear Readers,

The downward trend in the ifo business climate has stopped, the Munich economic researchers write. In fact, the overall index remained unchanged for the first time in May after five consecutive declines. However, this is not a signal for an all-clear. Because the most important component - the expectations directed towards the future - continue to fall;

In the manufacturing sector - which has always been an indicator for the trend in the global economy due to its heavy reliance on exports - expectations continue to decline almost unchecked (the blue line in the chart below indicates expectations).

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  • Klaus Meitinger

ifo traffic light continues to show "red".

ifo index june2018 Dear Readers,

The ifo business climate in June does not give the all-clear. The most important component for us - expectations for the future in industry - could not improve after six consecutive declines.

Although the ifo economic clock is still in the boom quadrant, it is moving in the direction of a downturn. And the ifo traffic light continues to be set to "red. It shows the monthly probability of an expansionary phase of the economy. Green traffic light values signal probabilities of more than two thirds and thus indicate expansion. Red traffic light values stand for expansion probabilities of less than one third - so they make a contraction more likely.

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  • Klaus Meitinger

ifo Indicator of Economic Sentiment continues to decline.

ifo index jul18 Dear Readers,

The ifo business climate in July did not bring a turnaround. The most important component for us - the industry's expectations for the future - has now declined eight times in a row.

The fact that the ifo economic clock is still in the boom quadrant is due to the historically high values at the beginning of the year. Step by step, however, this indicator is now moving in the direction of the downturn. For the fifth month in a row, the ifo traffic light has also been set to "red". Red traffic light values make a contraction of the economy more likely than an expansion.

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