U.S. GDP vs German Consumer Confidence / Spicy / The Paris 2024 Olympics

Good Morning Ladies and Gentlemen

„In the end, it’s not the years in your life that count; it’s the life in your years.„

Edward J. Stieglitz (commonly misattributed to Abraham Lincoln)

U.S. GDP versus German Consumer Confidence

This week’s US gross domestic product (GDP) numbers surprised to the upside, increasing by an annualised 2.8% between April and June. Experts surveyed by Reuters had only expected an increase of 2.0%. Those surprisingly strong figures for US economic growth contrast with the consumer sentiment in Germany, which has undergone an “interesting” development in recent months. According to the GfK Consumer Confidence Index, it stood at -21 points in June 2024. For July 2024, GfK forecasts a deterioration of -21.8 points. However, for August, “only” -18.4 points are expected. Germany has the third largest economy behind the USA and China, ahead of Japan.

September Interest Rate Cut

The ECB will cut in September; anything else would surprise me. The Fed, who knows? Maybe they will make a surprise move next week during the upcoming Federal Open Market Committee (FOMC) meeting scheduled for July 30-31, 2024. Else, a September cut is widely expected.

Inflation down the Road

However, in the long term and with an escalation of global trade conflicts, I expect a freshening breeze on the inflation front over the coming years. China is reaching the limits of its previous investment-driven growth strategy, but the government, just like the governments in Europe or the US, is avoiding painful adjustments. This will lead to tougher competition, and if Western countries push for higher tariffs at the same time, this will probably have an inflationary effect.  Perhaps this behaviour brings some industrial jobs back to America or Europe. Still, for most American and European consumers, life will become more expensive, as domestically produced goods in the U.S. or Europe will cost much more than comparable ones on the global market.

Spicy

Ladies and Gentlemen, we finally see some action in the American presidential elections. One old candidate is gone; perhaps the second old candidate will also hand over his baton to his nominated deputy. I think that would be a good thing for America. A breath of fresh air and fresh, younger people for an office that is probably one of the most demanding in the world seems to make sense to me.

The Paris 2024 Olympics

Ladies and Gentlemen, I expect the Paris 2024 Olympics to have a similar effect on the media than the European Football Championship. This means a welcome break from all the negative headlines we are usually inundated with.  Let’s hope for fair and conflict-free games in a spectacular setting.

Ladies and Gentlemen

As always, please share your opinion with me, but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li

Many thanks, indeed!

I wish you an excellent start to the day and the weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
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Mail: smk@incrementum.li