Yesterday's CPI report fueled even more fire to the ongoing relentless rally in US Equities. Up a respective 46% and 34% from their Liberation Day lows, both the Nasdaq and S&P 500 keep beating expectations.
During the course of 4Q24, European 12M forward earnings estimates started to improve, while they softened slightly in the US after increasing by 13% in 2024, as Chart 2 shows. This was largely driven by expectations of gradually increasing growth in Europe, while growth rates in the US are expected to slow slightly.
The fundamental problem for Indonesia remains weak growth. This continues to be reflected best in the chart of declining nominal GDP growth, as previous discussed here (see GREED & fear - Powell as party pooper, 19 December 2024), whereas real GDP growth has been extraordinarily stable hovering around 5% for the past 11 years, excluding the Covid period (see Exhibit 21). Nominal GDP growth slowed to 6.0% last year, down from 15.4% in 2022 and 15% in 2010.
