Stock market indicator remains negative.

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Dear Readers,

ifo index oct18The ifo business climate is pointing downwards again in October. The most important component for us - the expectations in industry for the future - also fell back after a twofold increase. After a brief recovery, the mood in the export sector has also been dampened.

The ifo traffic light has thus switched from "green" to "yellow". At yellow traffic lights, the ifo Institute assumes that there is a high degree of uncertainty about the economic regime.

According to the ifo Institute, a three-fold increase in the expectation component would have been necessary to indicate a turnaround in the economy. This signal failed to materialise after the increase in August and September. We must therefore continue to assume that the economic situation will deteriorate.

ifo graph oct18For the private-wealth stock market indicator, this means: No all-clear. As you know, the indicator gave a sell signal in February 2018 ("We'll be out then"). Since then, the stock market indicator has proposed investing only zero to 30 percent of the capital earmarked for equities on the stock market. In other words, the cash ratio is between 70 and 100 percent. After the capital market seismograph last week also signaled increasing probabilities for a bear market, the model advised to move closer towards a zero rate.

Conclusion:
The risks on the stock markets are high, the economic trend is pointing downwards. In this situation, it is advisable to stay on the sideline;

yours

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 does not constitute an invitation to buy or sell securities.

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