Looking to new record highs, investors should look beyond interest rates and inflation

At first glance, the development is astonishing: With the global economic environment still relatively weak and fears of recession persisting, the Dax has gained 20 percent since its low at the beginning of October. Anyone who kept their nerve during the previous deep downturn and stayed with it or even bought it, did everything right.

A second glance reveals that there are good reasons for relaxation. As in 2021, companies are again generating record profits this year.

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So far, the feared slump in the global economy has not materialized, nor has there been a recession in companies’ earnings in the second half of the year, which seemed likely in view of major supply chain problems, rising prices and the Russian war of aggression in Ukraine. In addition, there have been at least the first all-clear signals recently when it comes to inflation, which is so important.