News from the editorial


"We're out of here."

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ifo index feb2018 Dear Readers,

the private-wealth stock market indicator delivered at the end of February ein Verkaufssignal . As you know, this is not about forecasting  Trendwenden exactly on the stock markets. However, we are trying to find out when the relationship between opportunity and risk changes when investing in equities. The logic: Wenn stocks are valued low and the economic trend improves, the probability is high that the stock market will develop positively in the long term. If, on the other hand, equities are expensive and economic expectations are worsening, it is time to become more cautious.

That's exactly what's happening today.

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"Downward trend in the economy intensifies".

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Dear Readers,

ifo index March18 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.

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"April weather on Wall Street."

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Dear Readers,

Seismograph Feb2018

Since last month, the values of the capital market seismograph have hardly changed. As you know, the team around Professor Dr. Rudi Zagst and Oliver Schlick distinguishes between three phases in the US equity market: "green" (quiet market = buy), "yellow" (turbulent market with positive expectations = invest, but with hedging) and "red" (turbulent market with negative expectations = do not invest).

In the past four weeks, the seismograph's values went up and down in a short sequence - "early" April weather;

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

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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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"The storm has died down."

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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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ifo traffic light continues to show "red".

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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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ifo traffic light continues to show "red".

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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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ifo Indicator of Economic Sentiment continues to decline.

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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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