For the economies of Germany and France, latest indicators conjured up hope for healthy and sustainable times. Their indicators for business climate climbed to record-like highs. A possible sign for investors to boost their trust in the EURO-union?
As long as the reader generally believes in the validity of indicators, Germany is the nation to celebrate a bombastic comeback in 2011.
Citing a report on Financial Times online, Germany “…has been expanding at its fastest since June 2006. Its acceleration has been powered by service sector companies, which were more optimistic about the 12 months ahead than at any time in the past seven years…”
But Germany is not the only EURO-nation to “show off” with its prospects. At the same time, France released optimistic data. In detail, “Paris-based statistics office Insee said its index of manufacturing industry executives rose from 102 in December to 108 in January. This was its highest reading since March 2008.
The Munich-based Ifo institute said its closely-watched business climate index for Germany increased from 109.8 points in December to 110.3 in January. “
One could clearly debate that business confidence indicators (along with other ones) are by no means are definite sign for a , but they merely give hints for investors. Even more, it is not said that every investor could really explain how each of these respective indicators is calculated.
From a strategic point of view, investors shall not rely on one single indicator but rather use a bunch of them for a critical analysis. After having done so, the investor could consider different scenarios of outcomes (i.e. considering real options).
This might give an investor a better step forward towards deciding on whether to rely on such indicators or not – and in order to answer the question of how to react and where to invest.
Last but not least, one has to keep in mind that in the end, an investor is just a human being that often acts and reacts emotionally. And should this human being actually use these indicators, it interprets the outcomes of such an analysis very uniquely.