Polis

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• We are close to the peak of inflation. We can expect inflation rates to fall from the beginning of next year.
• However, an inflation rate of 2%, as expected on the capital market, is not likely. We rather expect 3.5%, possibly even more. In the longer term, we will therefore be living with higher inflation overall than before - but it will be nowhere near as high as in the current environment.
• The energy transition, wage trends (reinforced by the demographic factor) and cost increases (e.g. due to rising production costs) will have an inflationary effect.
• The probability of a recession is also high in the eurozone. The positive aspect of this is that a recession has a strong inflation-reducing effect (on average, inflation falls by over 3 percentage points - calculated on the basis of 13 past recessions).

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Development

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• Currencies: The dollar is now so highly valued that it is at a historically unusual level against all major currencies (EUR, YEN, pound). The eurozone is currently at a disadvantage due to the high dollar exchange rate - however, if energy prices continue to fall significantly, Europe can benefit from the low euro exchange rate.
• Real estate prices are also currently falling in many countries: High interest rates are putting a strain on new property buyers. However, the majority of owners of existing properties will not suffer as a result.
• The Chinese real estate market: 65 million apartments are now vacant (approx. 10% vacancy rate). In addition, last year alone, 20 million more apartments were sold than were completed. Many Chinese investors will lose money as a result.
• For the rest of the world, the development on the Chinese real estate market has positive effects: construction activity in China will fall. This in turn has an impact on global commodity prices, because if demand (e.g. for metal and cement) from China falls, demand for energy commodities will also fall.
• Other hopeful signs: electricity and gas prices, as well as other commodity prices such as oil, are currently falling. The container freight cost index has also fallen sharply. This also points to falling inflation rates.

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Investments

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• In the first half of the year, government bonds also made as much of a loss as equities. Given the level of interest rates and inflation, they are generally not a good form of investment. Inflation-linked bonds continue to be the more attractive form of government bond.
• Positive trends for the German real estate market: rental demand is currently rising sharply, vacancy rates are low and new construction activity has declined significantly.
• Gold is not a safe haven against inflation in the short term, but the price of gold is likely to rise next year and generate good returns over the next 10 years.
• Many stock markets are attractive at the moment. The high level of pessimism among many investors speaks for rising share prices.
• European equities are cheaper than US equities, but also offer greater potential for recovery if the energy and war situation shows signs of easing. Expected returns are around 9% on average, and 7% in the USA for the next 10 years.
• However, the US equity market is more strongly represented in crisis-resistant sectors than Germany and Europe. Healthcare stocks, consumer staples and the IT sector are independent of the economy and have comparatively few to no energy and supply chain problems.
• Private equity made more than 10 percentage points fewer losses than equities in times of crisis. Secondary funds in particular show a particularly good risk/reward ratio.  
• REIT prices sometimes fall more sharply than those of shares - and are more suitable for courageous investors. They are less suitable as protection against crises.

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