"Downward trend in the economy intensifies".
The future prospects for the German economy continue to cloud over. The Munich-based ifo institute reports the fourth consecutive decline in business expectations. Expectations declined particularly sharply in the manufacturing sector, which has always been a good early indicator of trends in the global economy due to its export-driven nature in the past. Obviously, the threat of protectionism is now putting considerable pressure on the mood.
The German economy is thus still in the boom quadrant of the ifo economic clock. However, it is now threateningly approaching the downturn zone. The ifo traffic light is also set to "red" (graphics below).
After the three-fold decline in ifo business expectations had given the private-wealth stock market indicator at the end of February ein Verkaufssignal . The model thus reacted early to the combination of high valuations on the stock markets and a possible turnaround in the economy. With the current results of the ifo survey, this trend reversal has become a little more probable.
Since the end of February, the private-wealth stock market indicator has only been proposing an equity quota of between zero and 30 percent of the equity share that each investor considers individually appropriate for the long term. This means that we are - so to speak - out of the market. In view of the current deterioration in business expectations, there is no reason to change this attitude.
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