Opinion

German consumer confidence has fallen to its lowest level ever, it became clear last week. Never before have German consumers been so negative about the economy and their financial prospects. And Germany is not alone.

Far from it. In the United States, the United Kingdom and the Netherlands too, consumer confidence recently reached an all-time low. The extremely negative sentiment among consumers is a global phenomenon caused by another global phenomenon: extremely high inflation.

Dire que le premier semestre n’a pas été bon est l’euphémisme de l’année 2022 sur les marchés financiers. Mais qu’apportera le second semestre ? 

Le premier semestre 2022 a été le pire depuis 1970 pour le S&P, le pire depuis la bulle Internet de 2002 pour le Nasdaq et le pire depuis 2008 pour l’Eurostoxx 600.

More economic growth means more population growth, according to Thomas Malthus. The demographer and preacher believed that food production is linear and population growth exponential, and as such are the limits to growth. An overpopulated society leads to famines. Epidemics and wars were insufficient to control the growing population, according to Malthus.

The Atlanta Fed GDPNow real GDP forecast for the second quarter stands at exactly 0 percent. So no growth expected. Something economists certainly do not take into account.

The Atlanta Fed GDPNow forecast is a growth forecast based solely on published macro data during the quarter. This differs from the forecasts of most economists, who usually only give one number that may or may not be revised.

The Federal Reserve is doing something else than what it says it is doing. At last week’s FOMC meeting, Fed chief Jerome Powell said that “the committee is not trying to cause a recession”. Yet it is clear that the Fed is directly linking a recession to lower inflation risks and that the Fed does want to fight inflation.

Luxembourg has witnessed that European integration still has its limits, even when war rages on Europe’s doorstep.

As world markets digested the Federal Reserve’s rate hike and the ECB’s emergency meeting, finance ministers of the 19 eurozone countries met at the EU conference centre on the Kirchberg plateau in Luxembourg and passed on an opportunity to further integrate financial services. Plans to complete Banking Union, first agreed in 2013, are now sent back to the drawing board. 

L’accélération de la chute des cours des actions aux États-Unis s’est traduite par le bond de géant de 75 points de base effectué par le taux directeur américain pour tenter d’endiguer l’inflation galopante. Le fait que la banque centrale va effectivement procéder à ce relèvement inédit a été confirmé dans l’intervalle après la réunion du FOMC du 15 juin.

The global economy is cooling significantly and a large number of countries are at risk of recession. Equity valuations have fallen sharply in recent months, but do not yet reflect a drop in profits. And that is exactly what is in store.

Comme nous l’avions prédit dans notre rapport annuel de décembre, l‹ «inflation» est l’un des thèmes clés de 2022. En mai, l’indice des prix à la consommation a augmenté de près de 9 %, dans la continuité des mois précédents où des hausses similaires avaient été enregistrées.

In the autumn of 1997, both in Europe and the United States, the ten-year interest rate fell towards 5 per cent. This was caused by the Asia crisis, which caused prices to fall worldwide. Falling interest rates and falling share prices were an unusual combination at the time.