Who hasn't been there? In rush-hour traffic, things don't move very fast, you have to stop and start again: the classic stop-and-go situation. This nerve-wracking form of locomotion can certainly be applied to current economic developments.
The last three years have been marked by major changes, triggered by a series of crises. First, the coronavirus put the world into a kind of shock paralysis, bringing social and economic life to a virtual standstill. The consequences have been far-reaching. From empty offices and factory floors to deserted streets. A shutdown that led to significant adjustments across the economy: short-term layoffs, particularly in the US, order cancellations and capacity adjustments. While some industries benefited from the shutdown, the economy as a whole was hit hard. From full throttle to full stop, so to speak.
In turn, the concerted support measures by governments and central banks led to a surge in demand after the reopening of borders, which quickly emptied the stocks of producers and traders. They in turn tried to quickly ramp up production and replenish their stocks. In transport jargon, this would be called a "kickdown" or "cavalier start", and so these restarts led to significant dislocations. A prominent example is container freight rates, which recovered many times over in a very short time. At the same time, some regions, such as China, continued to struggle with Corona-related factory closures.
The result was sharply rising prices and massive delays in supply chains. These disruptions were exacerbated by changes in consumer behaviour caused by the pandemic. The logistical bottlenecks in turn led to massive delays, with some Christmas decorations produced in Asia not reaching customers until Easter. In general, companies tried to fill their warehouses quickly after the opening during periods of high demand. As if this were not enough of a challenge, the next shock came in the form of the war in the Ukraine, which again caused significant disruptions. In particular, the sharp rise in commodity prices, the paradigm shift in central bank policy and the sharp rise in interest rates led to a resurgence of economic concerns, especially in Europe.
At the same time, late arrivals were met with another shift in consumer behaviour, causing major headaches for companies. In the post-pandemic period, many a container of kitchen utensils went unsold and, in some cases, products in out-of-demand categories led to multi-billion dollar write-offs at retailers such as Walmart and Target. As a result, corporate spending restraint is expected to remain high. Expectations of a weakening economy and consumer sentiment are also leading to caution. At the moment, companies are being cautious in their business reports, as inventories are still being adjusted and there is a lack of accurate information on demand patterns. The pitfalls of the current situation are also reflected in the fact that many fashion retailers, for example, are sitting on high inventories and reducing them, while people continue to have to wait a long time for a new car.
If the capital markets' current assessment of an economic slowdown this year is correct and there is no significant correction, contrary to the prevailing opinion, we can expect to see the foot quickly taken off the brake and the accelerator pressed down again, with all the complex consequences for economic and capital market players.
In general, these short-term and sharp fluctuations in economic behaviour are likely to continue. The era of longer-term cycles is likely to be over for the foreseeable future. The cacophony of challenges is likely to lead to only jerky progress, even in the medium term. The motto of the driver in a traffic jam therefore also applies to all capital market participants: Keep calm!
Legal notices
This is a marketing communication.
This marketing communication is for information purposes only and provides the addressee with guidance on our products, concepts and ideas. This does not form the basis for any purchase, sale, hedging, transfer or mortgaging of assets. None of the information contained herein constitutes an offer to buy or sell any financial instrument nor is it based on a consideration of the personal circumstances of the addressee. It is also not the result of an objective or independent analysis. MainFirst makes no express or implied warranty or representation as to the accuracy, completeness, suitability, or marketability of any information provided to the addressee in webinars, podcasts or newsletters. The addressee acknowledges that our products and concepts may be intended for different categories of investors. The criteria are based exclusively on the currently valid sales prospectus. This marketing communication is not intended for a specific group of addressees. Each addressee must therefore inform themselves individually and under their own responsibility about the relevant provisions of the currently valid sales documents, on the basis of which the purchase of shares is exclusively based. Neither the content provided nor our marketing communications constitute binding promises or guarantees of future results. No advisory relationship is established either by reading or listening to the content. All contents are for information purposes only and cannot replace professional and individual investment advice. The addressee has requested the newsletter, has registered for a webinar or podcast, or uses other digital marketing media on their own initiative and at their own risk. The addressee and participant accept that digital marketing formats are technically produced and made available to the participant by an external information provider that has no relationship with MainFirst. Access to and participation in digital marketing formats takes place via internet-based infrastructures. MainFirst accepts no liability for any interruptions, cancellations, disruptions, suspensions, non-fulfilment, or delays related to the provision of the digital marketing formats. The participant acknowledges and accepts that when participating in digital marketing formats, personal data can be viewed, recorded, and transmitted by the information provider. MainFirst is not liable for any breaches of data protection obligations by the information provider. Digital marketing formats may only be accessed and visited in countries in which their distribution and access is permitted by law.
For detailed information on the opportunities and risks associated with our products, please refer to the current sales prospectus. The statutory sales documents (sales prospectus, key information documents (PRIIPs-KIDs), semi-annual and annual reports), which provide detailed information on the purchase of units and the associated risks, form the sole authoritative and binding basis for the purchase of units. The aforementioned sales documents in German (as well as in unofficial translations in other languages) can be found at www.mainfirst.com and are available free of charge from the investment company ETHENEA Independent Investors S.A. and the custodian bank, as well as from the respective national paying or information agents and from the representative in Switzerland. These are:
Austria, Belgium, Germany, Liechtenstein, Luxembourg: DZ PRIVATBANK S.A., 4, rue Thomas Edison, L-1445 Strassen, Luxembourg; France: Société Générale Securities Services, Société anonyme, 29 boulevard Haussmann, 75009 Paris; Italy: Allfunds Bank Milan, Via Bocchetto, 6, 20123 Milano; SGSS S.p.A., Via Benigno Crespi 19A-MAC2, 20159 Milano; Spain: Société Générale Securities Services Sucursal en Espana, Plaza Pablo Ruiz Picasso, 1, 28020 Madrid; Switzerland: Representative: IPConcept (Schweiz) AG, Münsterhof 12, CH-8022 Zürich; Paying Agent: DZ PRIVATBANK (Schweiz) AG, Münsterhof 12, CH-8022 Zürich.
The investment company may terminate existing distribution agreements with third parties or withdraw distribution licences for strategic or statutory reasons, subject to compliance with any deadlines. Investors can obtain information about their rights from the website www.ethenea.com and from the sales prospectus. The information is available in both German and English, as well as in other languages in individual cases. Explicit reference is made to the detailed risk descriptions in the sales prospectus.
This publication is subject to copyright, trademark and intellectual property rights. Any reproduction, distribution, provision for downloading or online accessibility, inclusion in other websites, or publication in whole or in part, in modified or unmodified form, is only permitted with the prior written consent of MainFirst.
Copyright © 2024 MainFirst Group (consisting of companies belonging to MainFirst Holding AG, herein „MainFirst“). All rights reserved.
