Financial markets have become highly dependent on central bank policies. Grasping the consequences of the interplay between monetary inflation and deflation is crucial for prudent investors.
Due to structural over – indebtedness and the resulting addiction to low/negative real interest rates, we are certain that the traditional way of thinking about financial markets and asset management has lost relevance for investors .
Incrementum Liechtenstein evaluates investments not only from the perspective of the global economy but also in the context of the current state of the global monetary regime. This analysis produces a truly holistic view of the state of financial markets.
In doing so, the Austrian School of Economics provides with the appropriate intellectual foundation, especially in this demanding financial and economic environment.
The most likely scenario that Incrementum believes is playing out is one of a stagflation, i.e. economic stagnation combined with inflation.
The latest chartbook of Incrementum, embedded below, provides many data points which show that a recession is very close. We are highlighting three charts here, but invite readers to check the chartbook to find many more. Some are truly impressive!
From the 11 data points that are revised in the chartbook, 5 are flashing an alert, 4 are close to an alert stage, and 2 are not yet signaling a recession. This is the summary of the 11 recession indicators:
Going forward, there are limited number of tools that central bankers can (ab)use to stimulate additionally. They are summed up in the following overview, each one with its consequences.
How to prepare as an investor for these difficult times, in which policies by central bankers are controlling markets? The answer to that question is to be found on page 50 onwards.