Slow food for thought

Insights and research on global events shaping the markets

One theory puts forward the existence of a four-year stock market cycle linked to the term of office of the US President. The second part of the cycle is historically the most favourable for equity markets.

While we believe that equity markets remain in a downtrend, the weight of the evidence leads us to upgrade our one-month tactical view on equities from “unattractive” to “cautious”. Our view on EM Asia equities moves from “cautious” to “positive”. We are also upgrading our stance on credit from “cautious” to “positive” (though favoring Investment Grade).

Most portfolios remain invested in the winners of the 2010-2020 period. leaving them exposed to the risk of missing out on new opportunities.

Equity markets historically outperform in the 6 months following 1 November. What are the reasons for this? Can we expect positive seasonality in the current market environment?

While China’s growth data surprised positively over the weekend, Hong Kong and US-listed Chinese stocks sold off on Monday in reaction to the conclusion of China's 20th Party Congress. What is our take on the latest political and economic news? What are the consequences for China equity markets?

All the market's hopes lie in a change in the Fed's monetary policy. However, a U-turn seems unlikely in the short term.

The first nine months of 2022 will be remembered as one of the most challenging periods ever for asset allocators. For the first time in history, both equity and fixed income are down more than 10% as at the end of September.

With the bond market crash, major central banks are facing significant losses with consequences on their capital. To the point of threatening their efficiency and solvency?

Our main scenario is a rise in downside risks for the global economy, amplified by antagonist policies. This is due to a global growth slowdown that governments aim to mitigate through fiscal support, as well as a simultaneous inflationary environment that central banks are trying to contain. This combination spurs macroeconomic volatility which itself keeps asset price volatility elevated. Consequently, we maintain an “unattractive” stance on equities and a cautious view on both rates and spreads. We are positive on commodities and have a very attractive view on hedge funds. We remain positive on the dollar against all currencies as the greenback remains the only true inflation hedge at this stage.

The financial advisor of the 21st century takes on the appearance of a cyborg, combining robo-advisors with human financial planners.

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