Many companies have taken advantage of the return of inflation to inflate their prices excessively. At the risk of stimulating an inflationary spiral.

While some respite was expected as we entered 2023, the start of the year was far from a relaxing one. After a hawkish start to the quarter, volatility especially in bonds, surged during March, following the collapse of Silicon Valley Bank. That led to fears about broader contagion across the banking system, that were bolstered by the sudden implosion of Credit Suisse and its acquisition by UBS, backed by guarantees from the Swiss government.

The battle between the “bulls” and the “bears” is still raging and the winner has not yet been determined. While the technical background for equity markets has been improving recently, we decided last week to keep our cautious stance on equities. Indeed, our view remains that the aftershock of the Fed's policy tightening is starting to be felt in the financial system and the wider economy. We believe that the macro-economic context is starting to deteriorate and that we have entered yet another period of uncertainty which should lead to an Equity Risk Premium re-rating.

Q1 2023 was turbulent period for the market, a hawkish start of the quarter ended in solid gains for equity markets, while the global banking industry was nearly brought to its knees. Here are 10 stories to remember from Q1 2023.

Why gold and bitcoin can be considered as diversifying assets for multi-assets portfolios?

Last week we decided downgrade equities from positive to cautious. Indeed, our view is that the aftershock of the Fed's policy tightening is starting to be felt in the financial system and the wider economy. We believe that we have entered yet another period of uncertainty which should lead to an Equity Risk Premium re-rating. This week, we are further de-risking portfolios by downgrading credit from attractive to positive.

The private banking industry currently faces a multitude of challenges: changing client needs, the arrival of disruptive business models and new entrants, regulatory pressures, new technologies, a more complex and uncertain macro-economic and financial environment, etc. For incumbents, it is urgent to react and reinvent themselves.

The UBS/Credit Suisse affair has caused the AT1/CoCo bond markets to struggle By tightening their monetary policy sharply and rapidly, central banks have highlighted certain weaknesses in our financial system: insufficient risk coverage, liquidity problems, lack of business diversification, governance issues, and now uncertainties in the treatment of hybrid instruments. After the failure of some US regional banks, the UBS/Credit Suisse affair has shaken the financial world and more particularly the specialists of a specific bond segment which weighs about 250 billion dollars: Additional Tier 1 bonds (AT1) and/or Contingent Convertible bonds (CoCos).

DOWNGRADING EQUITIES TO CAUTIOUS As an old adage says, Monetary policy tightening is like dynamite fishing: when the blast hits, it decimates everything in the vicinity. The small fishes rise to the surface first. But it can take some time for the whale(s) to show up. With the unwind of a major bank (Silicon Valley Bank) last week and another (Signature Bank) over the weekend, it is clear that the aftershock of the Fed's policy tightening is starting to be felt. But should we see these two banks as whales or as just being those small fishes? At this stage, it is very difficult to answer to this question. However, we believe that we have entered a new period of uncertainty which should lead to an Equity Risk Premium re-rating. As such, we are downgrading equities from positive to cautious.

In the age of digital money, a Federal popular initiative wants to anchor cash in the Swiss Constitution.