Asset Allocation

In October, we turned more constructive based on our analysis of the market configuration. This month, fundamental support provides further reasons to maintain this stance.

If the smile measures how the portfolio value reacts to changes in the underlying markets, then maybe we should measure the smiles – and this is what our investment team has been doing.

Short-term interest rates have been rising around the world over the past year as central banks attempt to fight inflation.

While inflation continues to surprise to the upside, growth dynamics have turned and continue to decelerate. Growth concerns are mainly affecting Europe, as energy prices remain an important inflation driver, while central banks are stepping up their tightening.

Despite this wealth of information – or perhaps because of too much information? – maybe you are still uncertain.  We can help you organize and develop your views, in a 20-minute video. Our economists and strategists will try to clarify the economic and financial risks.

As 2022 opened, we all thought of Covid, war, oil prices, transient inflation... What do you see on the horizon now? Wheat supply crisis? Quantitative tightening? Sustained inflation?

This year’s European summer heatwave and drought has the potential to worsen the current energy crisis, as river water levels have dropped significantly.

As we reach the halfway point in the year, global growth forecasts continue to be revised downwards and headwinds remain significant…

The multiple shocks experienced so far in 2022 have led to a rare simultaneous decline in equity and bond values. As uncomfortably high inflation leads major central banks to tighten monetary policies, investors are preparing for the landing of the global economy.

The reasons for a prudent allocation have not changed in recent weeks: facing high inflation, central bank rhetoric and policy tools have triggered a tightening in financial conditions while the global economic slowdown is now well underway, as the war in Ukraine and Covid-related lockdowns in China weigh on confidence and activity.

As the COVID-19 pandemic weakened its mighty grip, China enjoyed a strong recovery, helped by developed economies’ consumption switch from services to manufacturing products, many of them coming from China.

Distinctly different investments need a distinctly different approach… How can I ‘’do the math” and compare illiquid investments, such as real estate and private debt, with traditional asset classes such as equities and bonds?

Exiting the pandemic, entering the war and tightening monetary policies around the globe are acting together as a formidable business cycle accelerator.

As recently as the beginning of February, a total invasion still seemed unlikely. Since then, we have chosen to position for a potentially binary outcome, and have increased exposure to gold, the USD, the YEN, and the CHF, as well as to some commodities such as oil, while cutting our exposure to financials, reducing our equity exposure, and adding protection.

The Russian economy is likely to be severely impacted by the sanctions.

The war in Ukraine has added new uncertainties for investors

On the heels of Covid-19 and the oil shock, financial markets experienced a third blow yesterday (12 March) with a major confidence crisis. Speeches from US President Donald Trump and ECB President Christine Lagarde have shaken investor confidence in the ability to lead a timely and bold approach worldwide.

Following weeks of rising tensions between Russia and Ukraine, Russia’s President Vladimir Putin has recognised the independence of two Moscow-backed regions in the Donbas region in eastern Ukraine.

The Federal Reserve (Fed) adopted a hawkish stance during its last Federal Open Market Committee (FOMC) of the year on 15 December.

A spectre is haunting the financial markets – the spectre of inflation.

Messages sent by the Fed regarding its interest rate lift off and balance sheet run off have conditioned performances since the beginning of the year.

Over the last month, the investment environment has been influenced by the consequences of the Omicron variant and by central banks adopting more hawkish rhetoric.

We end the year on a sour after-taste with the discovery of the Omicron variant in South Africa, but as we head into 2022, our outlook is rather positive.

Many investors are wondering about inflation. Will the new year be characterised by the continuing rise in prices? How can inflation be taken into account in a diversified portfolio? Response in images with Nadège Dufossé, Global Head of Multi-Asset.

One year after the discovery of anti-Covid vaccines, financial markets have already left the pandemic behind. The economy has not.