Rarely have we been so eager to see the latest result of the capital market seismograph as today. Would the turmoil of the last few trading days and the concerns surrounding the Omicron variant change the positive view of the stock market barometer?

"To be sure, the likelihood of calm markets has been dampened. In return, the expectation of a positively volatile market rose. Negative turbulence is still not in sight. On balance, the seismograph's positive market expectations remain unchanged", informs Oliver Schlick, Managing Director of Secaro GmbH, who regularly calculates the model and links it to investment recommendations.

What is interesting here is that the emergence of the mutation could reduce the fear of interest rate hikes. "Fed Chairman Powell also recently emphasized the risks to the economy and labor market. Because the Fed may therefore not be in a hurry to raise interest rates for the foreseeable future, central banks should continue to act in a rather supportive manner. This could compensate for the negative effects of the new virus variant in the eyes of market participants," explains Schlick.

Our conclusion: The equity ratio suggested by the private-wealth stock market indicator was lowered in July to a corridor between 45 and 75 percent due to the continuing decline in the economic component (ifo business expectations). Within this corridor, the capital market seismograph determines the exact ratio. As it remains positive, the proposed equity weighting of the private-wealth stock market indicator remains at 75 percent of the capital allocated to equities.

Stay well,

Yours

Klaus Meitinger

Note: Despite careful selection of sources, no liability can be assumed for the accuracy of the content. The information provided in private wealth is for informational purposes and is not an invitation to buy or sell securities.