FOCUS Online : The number of cases is rising again in the world. Also, the risk of a second lock-downs, growing with it?
Ralf Borgsmüller: I don’t think we will see a second major Lockdown. The global economic figures for the second quarter of 2020 have shown the disastrous economic consequences of the first lock downs already. The politicians will not make a second Time.
“price increase on the exchanges is fragile”
FOCUS Online That is to say, the stock market Rally since the end of March 2020 is just more of the same?
Borgsmüller: I would not conclude. The rise in the last few months on the stock exchanges, stands on shaky legs. It is based almost exclusively on the massive assistance of Central banks with newly created money, and the States, with massive new public debt. Over 15 trillion US dollars are spent so since the end of March 2020 until today, into the financial system. There’s an incredible amount of money and new debt in the economy and the financial markets were headed, the DAX, 12.599,54 PTS. -47,44 (-0,38%) Xetra
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add to that If now in the course of 2020, further measures of this kind, can drive the stock prices quite a bit further and at a high level. In order for the exchanges to remove, but more of current and expected developments in the world economy. We are already seeing a strong Overvaluation of many stocks. The stock indices indicate here the investor a perfect world, since they are driven by only a few titles with a high index weighting, mainly due to a few technology stocks in the United States.
FOCUS Online : What is the meaning of this decoupling between the stock market and the real economy?
Borgsmüller: The share prices will not solve long-term on the economic development. The day of reckoning will come when the Economy follow suit in a timely manner. The profit development of the company in addition to the liquidity of the most important determining factor of stock prices. And since the exchanges from our point of view, appreciate massively the lurking risks. The Person
Ralf Borgsmüller of PSM vermögensverwaltung GmbH in grünwald near Munich, The PSM was founded in 1965 and is the oldest Bank is an independent private wealth management in Germany since 2003. (Contact address borgsmueller@psm-vermoegensverwaltung.de).
FOCUS Online What they are?
Borgsmüller: Because of the risk of a massive bankruptcy of companies and private people in the fall, especially when many of the rescue of expiring and will not be renewed. The previous rescue operations of the Central banks and governments have not made the most of the companies stronger. On the contrary, you now have even more debt. In the process, they often do not know whether the business model works sustainably as before.
This is to be expected in bankruptcy will continue to negatively impact the banks more difficult, as you may already have most of the very poor Bank results for the second quarter of 2020 detect. It will, however, be sure not relevant to the Bank insolvent, this will prevent the Fed and the ECB with all the Power. If the bad loans to rise in the next few quarters, banks will need to increase their loan loss provisions and then the new loans are holding back, what is slowing down the economic recovery in addition.
“‘ll see helicopter money to a great extent,”
FOCUS Online : you Expect further assistance of the policy?
Borgsmüller: The current rescue measures are not enough to turn the world economy permanently positive. They are aimed so far mainly only on the company, the new loans will get to stay alive. So the company’s debt to grow in the world more dangerous, they were pre-crisis historical maximum.
The relief measures of the governments of the major consumers, with a few small payments of money completely out of Eight. The consumption has, in most people, a huge proportion of the respective gross economies of the social product. In the US, for example, the proportion is 70 percent. But if the consumer is not attracting sustainable, it is nothing to do with the lasting recovery of the world economy. That bit of VAT, a reduction of three per cent on time, which we have seen in a long time is not enough to all cases, in order to bring the anxious consumers back into the shops. Finally, a lot of people in short-time working and unemployment, and also less affected Others hold back due to the uncertain situation with your consumer.
Also in the other industrial countries, the need for the consumption much more. I expect, therefore, that we will see in the end ,the helicopter-money‘ to a large extent, this means direct, non-repayable cash grants to households to a greater extent.
“setbacks are inevitable”
FOCUS Online : What is the best strategy for the investor?
Borgsmüller: As I have tried to make it clear, there are many uncertainties in front of us. I would advise investors, therefore, now in the case of shares successively in the upward movement of profit-taking and a generally more defensive set up. Equity valuations are historically high, the concentration of investors on a few (technology) is unique and dangerous. Setbacks are to be pre-programmed in the fall of 2020.
FOCUS Online : What is with Gold? You keep that up?
Borgsmüller: in the Short term, I think overbought Gold for strong. The price is maybe a little high, I see then, but the risk of a more significant correction of prices in the range of 1750 U.S. dollars/fine ounce until the autumn. So a slide is a good entry opportunity for investors who want to engage in the long term, and no or little Gold in the assets. Gold in Euro and 1.674,16 EUR -5,79 (-0,34%) OTC refers to the rate of data
Because much of the information also in the future for Gold: the enormous money-printing actions of the Central banks and the rescue packages of the governments at the Pump we are experiencing a massive dilution of the major currencies. Feel and see the people/investors, of course, intuitive. The US government under President Trump takes on election-related at the present time, have no regard for the amount of the debt or of the newly created dollars-amounts of money. Therefore, the US Dollar is forfeited also very strong. Also the European and Asian debt and money supply explode just. That means that the Gold is coming in the future, more and more as a currency replacement for the US Dollar, the Euro, the Swiss franc and the Yen into the game.
The massive debt of States, companies, private individuals and financial institutions, which is added currently, with approximately 300 trillion US dollars, a new historical maximum move stands, will strengthen the Gold. This is because, due to this Debt the interest is not sustained may increase. The Central banks will in the future try to keep the interest rates in all maturity areas in a sustainable manner to zero or in the minus range. Real interest rates were always the great opponent of Gold that pays no interest. This disadvantage disappears.
“The enormous rescue packages, the only right”
FOCUS Online the policy Would have to act in the face of these prospects, better different?
Borgsmüller: no, the policy had, according to the fatal consequences of the lock downs, no other choice. The enormous rescue packages were the Right thing to do. Otherwise, a Depression as in the 1930s, threatened, which could wish none would have us. Also, the Central banks had to massively step on the Gas, to prevent the crash of the world economy.
We at PSM say it for years, and I are here at FOCUS Online, again and again: the generation of Inflation (by Central banks and governments) or bankruptcy (due to the not repayable maximum debt), the future fate of our economic system.
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