The global growth cycle hit its lowest point in 2023 and is now picking up. Earnings estimates have been creeping higher. Although central banks are hesitant to lower interest rates at this moment, they are conveying more accommodative signals to the market, which maintains the prevailing "risk-on" sentiment.

US economy rebounds with robust job creation and wage growth. Risk assets soar with the S&P 500 hitting historic highs and Japan's Nikkei 225 at a 34-year peak. Our diversified strategy pays off; adjusting Switzerland and Emerging Markets in equities, upgrading GBP yield curve in fixed income, and tweaking forex positions.

We expect the US & global economy to cool down in the months to come, leading to a Fed pause. This would be a positive for equity and bond markets over time.

Key takeaways: • After a strong first half of the year, the mood has shifted during the Summer as markets are adjusting to the reality of “persisting inflation & sticky rates”, a narrative which is adding pressure on equities and valuations. • While equity and bond market volatility could persist in the short-run, particularly through a historically choppy September/October, we expect more positive market conditions towards the end of the year. Indeed, with the US & global economy cooling down in the months to come, central banks are expected to pause their monetary policy tightening. This would be a positive for equity and bond markets over time. • We remain neutral on equities, rates and credit. Cash and bond yields are a clear competition to equities and our multi-assets portfolios reflect this reality. We are negative on the EUR and CHF against dollar. We upgraded Swiss equities to positive. We are keeping Gold as a diversifier. • We continue to favour 3 main investment themes: 1) Diversify into the lagging segments of the equity market that carry lower valuations; 2) Use volatility at our own advantage by buying on pullbacks; and 3) Use the bear steepening of the curve to extend duration within fixed-income portfolios.

Key takeaways: • After a strong first half of the year, the market’s mood has shifted in August with both US and International equities taking what still looks like a healthy pause. China’s growth issues and the rise of bond yields in the US have been the main triggers for profit taking. • We remain neutral on equities, rates and credit. We are turning negative on EUR and CHF against USD. We are downgrading China & EM Asia equities to neutral and are upgrading US equities to positive. • We continue to favour 3 main investment strategies: 1) Diversify into the lagging segments of the equity market that carry lower valuations; 2) Use volatility to our own advantage by buying on pullbacks; and 3) Use the bear steepening of the curve to extend duration within fixed-income portfolios.

Key takeaways: • Developed economies continue to surprise positively. Inflation is cooling down and a soft landing now looks like a plausible outcome. This has led to a new acronym (courtesy of Goldman): the “Recession In Name Only” (R.I.N.O) • Our current positioning is neutral on equities, rates and credit. We remain negative on the dollar and positive on gold. • After a strong first half of the year, we see opportunities to: 1. Use volatility to our advantage (add to risk assets during market pullbacks); 2. Diversify into the lagging segments of the equity market that carry lower valuations and; 3. Extend duration within fixed-income portfolios

Key takeaways: • While market dynamics remain supportive, the macro & fundamental context are still uncertain and could lead to an Equity Risk Premium re-rating • We keep our cautious stance on equities and rates as well as our positive view on credit • We are downgrading China & EM Asia equities to positive (from attractive). We are upgrading Government bonds to positive (from cautious)

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.

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.

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.