Antonia: “Let’s do like this: take me to a place you like… or even better, take me to a place that reminds you of something”.

Sergio: “But you really don’t have a destination?”

Antonia: “My mind is just a mess and I feel a sense of emptiness”.

Sergio: “Well, that makes two of us. I will lead the way”.

Speaker: “The street is in front of us and we are over the edge. Who can really turn the tide now? Maybe you and I, or that bunch of rich old men, but they have a lot of money. They don’t want to start e revolution, they are even ready to shoot into a crowd to leave things as they are. They actually would pay someone to do this ‘job’, because they don’t want to get their hands dirty”.

Sergio: “But you don’t think that one day someone will fight back?”

Speaker: “It will be possible just if someone will remove the TV series”.

 From the movie “L’arte della felicità” by Alessandro Rak.

Six months ago, in every “war room” the predictions of the most important banks were flying off the rack. “It’s on Europe now, Wall Street will take a breath. China is going to overheat”. Those were the predictions for the current year. We are in June: Bitcoin declined by 57%,  Nasdaq is +10%, DAX -5%, oil +22%, dollar +2,5%. And now we also have a storm over the italian government debt (in may the two-years government bonds performance rose from -0,3% to 3%). Talking about emerging countries, we have had the decline of turkish lira, argentine peso and indian rupee, all overburdened by the unusual mix of a stronger dollar and a stronger oil price. Good news for the oil-producing countries, first of all Russia.                                                                                                                     

As always, looking back on the middle of the year, we are dealing with a few right predictions. Other certainties melted down too, like a sand castle. The granitic Germany elected an unstable government comparable to the past italian situation. After just three months, on sunday night the german government has had to deal with the resignation of the minister of the interior Horst Seehofer (first denied by the party leader Alexander Dobrindt and than taken back by Seehofer itself) and with the risk of losing the support of their bavarian “cousins” of CSU.

Minister Horst Seehofer didn’t like the results obtained by Angela Merkel in Europe. He would have liked to have a green light to close the Germany’s doors to migrants and, according to the Dublin agreements, to return them at the first place refugees land. Angela Merkel couldn’t impose it to Italy, the country from where a large number of illegal migrants come to Germany.

Europe is not collapsing because of one of the many budget index planned by the European Union, as well as large debts. Europe is collapsing beacuse of the issues of migrants and refugees. Some countries want to lock down their borders, leaving the problem to the Mediterranean countries.

Just an excuse? It’s to soon to tell, but just six months ago everyone believed that Italy was an unstable country and that Germany was unbreakable. Today the situation is precisely the other way around, and as a result we have a weak euro and strong dollar that doesn’t hurt during a trade war. Europe, unintentionally, is doing the same thing China is doing consciously about the american tariffs: not a straight fight, but a devaluation of the currency.

In the meantime, differences between both sides of the Atlantic are growing. Standard&Poor’s analysts revised the second quarter United States GDP growth prospects upwords, from 3,4% to 3,9%. They expect a growth of 3% in 2018 and of 2,5% in 2019. Now, if that estimate is correct, it would be the biggest annual GDP growth (quarter on quarter according to the american methodology) since the third quarter of 2014. There is a growing consensus about the estimates of the Atlanta Fed of 4,5%.  According to the analysts of the US Federal Reserve, there will be two more increases this year and 3 in 2019. Growth in Europe is stalling at 1,5-2% and someone expects further slowdowns. The ECB is not considering to increase the key rates, the ECB’s policy therefore continues to be accomodative. In the background we have a crude oil price no longer ignorable in terms of inflation and we also have a considerable gap between Wti (american crude oil) and Brent North Sea crude oil), which means that just the USA benefit from the US shale gas. One last point, Wall Street from 2009 . anazon, Facebook, Apple should have collapsed but .

Now, maybe Antonia is doing the right thing taking a cab without a destination, and admitting that her mind is a mess. It seems to be back to the ‘70s, in Europe hippies were chasing one another, and in USA Apple was founded by a hippy called Steve Jobs. Happiness is not a destination, we have just to live one day at a time and the american companies, day by day, are building something new. This is how a portfolio can be happy, day by day, step by step. In fact you don’t have to be fortune-tellers, beacuse six months later all the predictions could be proved wrong.