Stock markets

Investment opportunities in a low interest rate environment

Low interest rates are a nightmare for savers. The money on their accounts dwindles from year to year because the fees they pay are usually more than the interest they receive. And after deducting inflation the real loss is even greater. So, what can one do to at least preserve value? Bunds with a maturity of ten years are regarded throughout Europe as a benchmark investment among the fixed-income securities. Bund yields are currently slightly negative. Deducting the moderate inflation rate leaves a negative real return of 1.4%. Extrapolated over ten years, this would destroy around 14% of savers’ capital stock. But it is not only the German bond market that has a negative real return. In around half of the world’s thirty largest government bond markets investors are currently losing money in terms of loss of purchasing power. The situation is no better with respect to corporate bonds. Those…

Equity markets with price risks in second half of year – forecasts lowered

Equity investors can feel comfortable with share price performance over the past few years. Corporate earnings have risen worldwide and investors have received a high return on their capital. However, in the immediate future, especially over the next 12 to 18 months, things could get rougher than investors have been used to in recent years. This is mainly because the US economy is likely to lose momentum. In Europe and Germany, economic expansion has in any case not been running at full speed for quite some time. Even though the US Federal Reserve is expected to cut interest rates in 2019 in response to the economic downturn, it is already foreseeable today that our economic forecasts for US growth, the EU and China are no longer tenable due to the growing trade strains. In our new forecast the recovery of DAX corporate earnings that we previously expected is a thing…

Shares bucking the trend, DAX heading for 12,700 points

Our stock market forecasts for the 2019 investment year were too pessimistic, with our 2019 year-end target of 12,000 DAX points having already been reached for the first time at the beginning of April. Since then, our price target for the DAX and the Euro Stoxx 50 has been slightly negative. Investors should be able to absorb our overly pessimistic forecast as they will have earned significantly more than expected in a shorter period of time. Indeed, the increase in the price of the DAX in 2019 until now (+16.4%) has exceeded more than twofold the average return of the index since 1987. However, the price rally is not being driven by sumptuous corporate profits but by the low starting base of share prices at the beginning of the year following the sharp correction in share prices in the fourth quarter of 2018. After all, the first quarter results presented…

Escalation of the customs tit for tat eats into growth even further

The trade dispute between the USA and China threatens to escalate further. Owing to the strong international interconnections and closely interwoven supply chains there is hardly a country that is not in some way or other affected by this conflict. Only a few days ago, the Vice President of the US Chamber of Commerce was quite optimistic about the course of the trade talks between the USA and China. Now, however, the impression is that a new Ice Age is upon us and everything has gone back to square one. In the final analysis, the news in recent weeks was continually shaped by a constant “up and down”, albeit in a far more moderate tone of voice. Given the new, tough tone, we should cast a glance at what consequences the further escalation of the customs tit for tat has for the two countries directly affected and for Euroland, too….

Growth surprise

During this last week, initial data was released on Euroland growth in the first three months. With quarterly growth of 0.4 percent, the figure for the Eurozone came as a bit of a positive surprise. The indications for economic growth in Germany in Q1 are likewise on the favourable side. In other words, the economic performance in Q1 is clearly more upbeat than expected only a few weeks ago, when all was awash in a great wave of growth pessimism. During this period, many economic outlooks were revised downwards, which from today’s viewpoint was no doubt too cautious. We uphold our forecasts and therefore see no need to change them for the time being. In the first few months of the year, the stock markets were not deterred by the growing concerns as regards growth. Prices rose across the board and in fact in the USA some all-time highs were…

Apple and Qualcomm make their peace

The two technology corporations Apple and Qualcomm have reached an agreement on their dispute over patents, which has dragged on for years now – only a few hours after court proceedings on the dispute opened in the USA. The “iPhone” manufacturer had accused Qualcomm of charging overly high licence fees for smartphone patents and therefore instructed its contract manufacturers not to make licence payments to the chip developer. Qualcomm thereupon sued Apple for using the patents without making the associated payments. The agreement now reached applies retroactively as of 1 April 2019 and terminates all ongoing legal proceedings worldwide, both between the two companies and between Apple’s contract manufacturers and Qualcomm. The corporations have now concluded a licence agreement that runs for six years with the option of it being extended for a further two years. During this time Apple will make licence payments to Qualcomm. Moreover, Apple has undertaken…

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