Monetary tightening from central banks and risk of recession?
Every central bank has legitimate reasons for raising interest rates, or at least cites well-reasoned intrinsic motives to justify recent rate hikes. The core of the problem lies in the simultaneous timing of these first-class economic and financial actors.
Moves that are mostly 75% basis points take on a global dimension with multiplier effects.
The different money zones have different times, but this time cannot have too big interest differences. At the risk of seeing the parity of their own currency directly affected. At a time when the weak euro is confronted with expensive commodities, all dollarized, it goes without saying that the euro area is at a disadvantage.
Today, the abnormality that hovered over the cost of money for more than 15 years is being corrected. Looking at the economic environment from a more distant perspective, the recession is no longer a debate. However, it is not yet synchronized as the outlook for the US and China is still positive. The European zone will no longer escape this recession, the consequences of which it has already begun to suffer.
To assess a recession, it is necessary to measure the equation between its duration over time as well as its depth in “hardness”, especially on unemployment and loss of disposable income. From a market perspective, today there is no sense of crack. The risks have already been measured. Markets, especially in a capitalist system, rise with economic cycles of boom or bust.
What impact on the stock market?
More or less all valuation bubbles are currently affected, such as real estate and tech.
At a time when the stock market is still benefiting from luxury stocks, many issues are at odds with the social climate that the middle or “median” class will likely face in the coming months. These values protected by the fantasy of ultra-luxurious leisure consumption will perhaps be called into question in favor of sobriety in the stock market.
Current issues, such as the recent controversies over private jet travel, are more “French-French” and currently do not, rightly or wrongly, reach the projections of these companies.
Traditional broadcasters such as TF1 and M6 are among the hard-hit high-yield sectors that have not attracted investors for years.
On the actual debate about the proposed merger between the two French giants, the competition authority ruled in favor of the consumer. M6 remains a “target”, with TF1 positioned more as a natural buyer.
Both titles are currently suspended. However, TF1, very often the stock market’s unloved, is still there. However, Bouygues made it clear that the situation would not remain as it was. What about a foreign partnership?
Some sectors, the less valued, such as banking, automotive, media, commodities and oil can be an opportunity for investors when their values are “undervalued”.
Thermal vs electric: what future for the luxury car market?
To continue on a highly monitored sector, the automotive industry. Especially with the electrification of vehicles. Will a sports or luxury car be attractive in 5 or 10 years? Today, this question, which is also seen from a cultural heritage point of view, remains unanswered.
In fact, the vintage car is an integral part of a private heritage. It may be wise to consult a wealth management advisor to make the right decisions on these topics.
The majority of luxury car customers appreciate internal combustion engines, which for many are the primary charm of these vehicles. Some more long-term issues such as electrical technologies may be part of recent debates where thermal has had time to prove itself.
The unknown lies in the absence of real knowledge about the costs of an electric vehicle’s life chain (production, use, recycling). Today, there is still no mass consumption of electricity. From a regulatory standpoint, the next decade is almost done. But 20 or 30 years from now we can imagine, rightly or wrongly, a return to thermals.