Horizon Handout April 2023

Economics

• The economic slump has failed to materialise. The focus is now on the recovery.
• Stubborn inflation: Even if the peak has been passed, it is still too early to sound the all-clear.
• The further course of action by the central banks now also depends to a large extent on the problems in the financial sector.

Equities

• Profit expectations came down as we expected. In the meantime, hardly any growth is expected globally for 2023.
• Valuations have consequently risen across the board, also because of the equity rally. US stocks remain the most expensive.
• We do not see much upside or downside potential for Q2, with risks clearly pointing downwards.

Bonds

• Government bonds benefit as safe havens due to recession fears and turbulences in the banking sector.
• Financial bonds suffer from banking turmoil. Notable rise in risk premiums. EM local currency bonds favoured.
• After reducing the underweight, we currently feel well positioned. Increasing duration increasingly sensible.

Alternative investments / commodities

• Speculative investors bring oil price down. Fundamental supply-demand dynamics remains solid.
• Gold is a big beneficiary of banking sector worries. Fundamental potential is limited.
  
• Slow recovery in China dampens industrial metals. Supply remains tight and long-term trends intact.

Currencies

• The ECB has remained unimpressed by bank turbulence. The EUR should appreciate against the USD in the medium term.
• The US Federal Reserve is now acting more cautiously in view of the problems in the banking sector.
• Limited upside potential against the CHF, provided there are no negative surprises from the Swiss banks.