ifo traffic light continues to show "red".
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.
As long as there is no turnaround in business expectations, we must continue to assume that we are currently experiencing the beginning of an economic downturn. It is therefore still advisable to remain very cautious when investing in equities.
Parallel to the publication of the ifo business climate for you, we also checked the capital market seismograph of the team led by Professor Dr. Rudi Zagst and Oliver Schlick. We hope that this indicator will provide us with indications of the direction of short-term fluctuations around the long-term trend, which is determined by the ifo data.
As you know, the capital market seismograph distinguishes between three phases: "green" (quiet market = buy), "yellow" (turbulent market with positive expectation = invest, but with hedge) and "red" (turbulent market with negative expectation = do not invest).
The results are interesting: the probability of a calm, positive stock market ("green") remains very high at 92 percent. The probability of a turbulent, volatile market with a positive trend ("yellow") holds at 2 percent. And the probability of a bear market ("red") is only 6 percent lower. "The situation remains positive from our point of view," comments Schlick.
In view of the steady and massive decline in business expectations since the end of February, the private-wealth stock market indicator only suggests an equity quota of between zero and 30 percent. Nothing has changed in this cautious positioning. In view of the positive indications of the capital market seismograph, it is at best appropriate to position oneself closer to the 30 percent.
Note: Despite careful selection of sources, no liability can be accepted for the accuracy of the content. The information provided in private wealth is for information purposes only and does not constitute an invitation to buy or sell securities.