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Time Online: Mr Müller-Glissmann, at WichtigstenBörsen worldwide, it has been going on for quite some time only in one direction: upward. Do we have to be afraid of a crash?
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Christian Müller-Glissmann: Indeed, we are approaching Demlängsten high in stock and bond market for more than a century. Einevergleichbare phase existed only in 1920s and in GOLDENEN1950ER years. The global economic environment is extremely strong. We had diesesJahr a better global growth and at same time a barely steigendeInflation. However, such an environment does not last very long in DieserGleichzeitigkeit, a few quarters at most. A starkesWachstum will eventually also bring rising prices because more demand bestehtund n goods and services become more expensive. And if inflation rises sharply, risk of an end to boom also increases.
Time Online: How does this eigenartigenKonstellation?
Christian Müller-Glissmann
Christian Müller-Glissmann is head of global investment strategy for securities portfolios at Goldman Sachs investment bank in London.
Müller-Glissmann: Since 1980s, we have banks lower levels of inflation, even fluctuations in inflation rates are taking off. This, of course, is linked to monetary policy of central banks, which, with ir inflation targets, are much more offensive and wirtschaftlichschwacheing strong phases. The second factor is that despite low unemployment rate in this cycle, we do not have a strongly rising Inflationverzeichnen. Even in Germany or United States, wage costs have not grown appreciably, although total workforce is in demand. For companies This is very positive, y can operate with high profits because costs remain low.
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Time Online: Does that mean that workers would have to ask for more money?
Müller-Glissmann: The fact is that y only do it in GeringemUmfang. One of reasons for this development is also increasing Technologisierungund of international competition, which makes it more difficult for workers to impose wage increases. The raw material crisis of past few years has also contributed to fact that inflation has remained undInflationserwartungen low. We were even very close to einerDeflation, so a continuing expected price level.
The longest stock market boom for almost a century
Duration of selected stock and Anleihenbooms in years
Source: Goldman Sachs
Time Online: Neverless, upturn is already sehrlange. Isn’t that dangerous at some point?
Müller-Glissmann: The length of an upturn in market hatwenig expressiveness over its end. We often say: Bull markets don’t die at a high age. However, re are two probable scenarios from here. Be just keeps on going, with only slightly rising inflation, but even n yield potential for investors is limited because of derhohen valuations. The prices for securities are already sehrgestiegen, both shares and bonds of companies and states Sindteuer. As an investor you have same problem everywhere, even if daswirtschaftliche environment develops relatively stable. This is scenario für2018 we are putting on.
Time Online: And what is or scenario?
Müller-Glissmann: The second scenario would be a großerWachstums or inflation shock, or a combination of both. Since DemZweiten World War, almost all recessions in U.S. had inflation alsentscheidenden drivers. This always means that central banks are streamlining IhreGeldpolitik and, as a result, investors are withdrawing. This often restores imbalances in capital market, which ultimately increases DasRezessionsrisiko. So it would be worrying if we were actually to see einerasante acceleration of inflation and this Beschleunigungsich also reflected in interest rates.
Time Online: Who would make it special?
Müller-Glissmann: Such a scenario would probably be schlechtfür stocks and bonds. There would be few opportunities for investors to escape from. Since bonds are particularly responsive to rising interest rates, it is necessary to align ir portfolio accordingly and reduce sensitivity to interest rates. At such times, Cash is on Wenigstenanfällig account, even with high inflation, it retains value better than AndereAnlageklassen.
