Economics
- Germany's economy shrank by 0.3% in 2023. The economy is also suffering from economic policy.
- The US economy is cooling down. However, the landing should be quite soft in the year of the presidential election.
- Inflation has fallen significantly. There is less pressure on central banks to act – but when will key interest rates fall?
Equities
- Trend reversal at the start of the year after last year's strong rally only short-lived. S&P 500 reaches new all-time high.
- Valuation expansion despite rise in yields. Limited potential for strong valuation expansion without a sharp interest rate cut.
- Opportunities in small cap stocks and quality growth stocks, which offer relative catch-up potential if rates no longer rise.
Bonds
- The robust US economy and stubborn inflation on both sides of the Atlantic are dampening expectations of interest rate cuts.
- Spreads in the IG and HY segments have recently fallen again due to high demand and a lack of new issues.
- EM spreads remain stable despite negative inflows, supported by technical factors.
Alternative investments / commodities
- OPEC tries to counter restrained demand in the short term. US production likely to grow slowly this year.
- After all time high, gold burdened by dumped hopes of interest rate cuts. ETF positioning continues to decline.
- Industrial metals continue to move sideways. Structural "green" tailwind temporarily overshadowed by weak industrial activity
Currencies
- The euro benefits when there is less demand for the US dollar. But there is no real euro strength in sight.
- The US dollar is benefiting from its status as a "safe haven" and remains structurally strong.
- The strong Swiss currency seems to be getting scary for the central bank – the franc is weakening slightly.
