Editorials

  • Klaus Meitinger und Moritz Eckes

The justice debate.

Germany is in the middle of a boom. Corporate profits, wages and incomes are on the rise. Nevertheless, negative headlines dominate. Only wealthy people would benefit from the upswing. That was unfair and had to be changed.

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  • Klaus Meitinger & Moritz Eckes

The story rhymes.

The interest rate policy of the US Federal Reserve has again moved into focus. After all, the well-being and woe of the global economy and capital markets depends on interest rates not being raised significantly. Is that really the case?

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  • Klaus Meitinger und Moritz Eckes

It comes to an oath.

Germany has a choice. And thanks to Big Data, the parties now know exactly what promises they can make to their target customers. It is disappointing that the most important questions in the long term do not play a major role.

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  • Thomas Müller

Issue June 2014: Bubble, Bubble.

Ladies and Gentlemen,
Dear Readers,

The European Central Bank will probably step on the gas in the coming weeks in terms of monetary policy. Because growth in Euroland as a whole is too low, the inflation rate too low and the Euro exchange rate too high, Mario Draghi thinks about a further interest rate cut and/or the purchase of bonds. The analysts at Morgan Stanley have already calculated what a one-trillion-euro purchase program, for example, would bring. Their result: even lower interest rates, 0.4 percentage points more growth, euro depreciation of four percent and ten percent higher share prices. Great! Or is it?

We still remember well the beginning of the euro crisis. Most economists at the time saw the main reason for the problem in the misconstruction of monetary policy. "One size" - a uniform interest rate - did not fit all euro countries ten years ago. At that time, the weak German economy urgently needed low interest rates. For Ireland, Spain, France and Greece, on the other hand, they were far too low and triggered a domestic economic boom. Construction activity picked up, employment, wages, government revenues and benefits increased, consumption flourished. Owners of shares and real estate enjoyed high asset growth, which prompted them to make further credit-financed investments. But at some point it became apparent that the prices paid were too high and that the hoped-for returns could not be achieved. That's it, then.

Today it works exactly the other way around. "One size" in monetary policy does not fit again. This time Germany itself would need higher interest rates. Because this does not fit with the rest of Europe, the next bubble is now being created here. Provided the Ukrainian crisis does not worsen, this can continue for a long time to come. But it will inevitably end like every bubble ends.

A difficult time is now beginning for investors. Doing what? Stick to it? Or watch from the sidelines how prices may rise significantly? The Lerbacher Runde advises to continue dancing, "but a little closer to the exit". We will try to warn you using proven indicators before it becomes too dangerous. Until then, the best idea is to at least resist the temptations of low interest rates on debt. Because in an emergency, debt is fatal. And even a cheap financing very expensive.

Sincerely,

unterschrift-kmKlaus Meitinger
Chief Editor

unterschrift-eckesMoritz Eckes
Publisher

  • Klaus Meitinger

We're out of here.

Our own stock market indicator delivered a sell signal at the end of February. As you know, this is not about forecasting trend reversals on the stock markets exactly. We only try to find out when the relationship between opportunity and risk changes when investing in equities. The logic: If stocks are valued low and the economic trend improves, there is a high probability 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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