The Munich ifo Institute has now added to this. The coronavirus will cause hundreds of billions of euros in production losses for Germany's economy, cause short-time work and unemployment to skyrocket, and put a considerable strain on the national budget. "The costs will probably exceed everything known from economic crises or natural disasters in Germany in recent decades," said Ifo President Clemens Fuest. "Depending on the scenario, the economy will shrink by 7.2 to 20.6 percentage points. This corresponds to costs of 255 to 729 billion euros."

You can find the entire analysis on the homepage of the ifo Institute (https://www.ifo.de/node/53961).

As we suspected in our news this weekend, there is a high risk that the crisis will last longer and have more serious economic consequences than previously imagined.

Conclusion for investors:

Since the sell signal of the capital market seismograph at a level between 10800 and 11000 points in the DAX, the private-wealth stock market indicator only advises a share ratio of 30 percent. In concrete terms, this means that currently only 30 percent of the capital individually earmarked for shares is invested in the stock market. 70 percent is not invested and remains as liquidity in cash.

Of course, valuations on the stock markets have already become very attractive in many areas. But it is highly probable that investors in the stock market (especially in the USA) are underestimating the economic impact.

The Barclays investment house, for example, has just published a current economic forecast in which global economic growth in 2020 is estimated at plus 0.4 percent, growth in the euro zone at minus 2.4 percent and in the USA at minus 0.6 percent.

If Professor Fuest is only approximately right, this is far too optimistic. We are therefore waiting patiently until the leading indicators and/or the capital market seismograph indicate a turn for the better.

Take care of yourself,

Your

Klaus Meitinger

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 is not an invitation to buy or sell securities.