Horizon Handout November 2021

Economics

• The economy is slowing down in autumn: supply bottlenecks, high prices, China and COVID-19 are weighing on it.

• We think the discussion about the danger of stagflation is exaggerated. Demand will boost the economy again in 2022.

• High inflation is putting pressure on central banks to act. The BoE and the Fed are likely to act first.

Equities

• US equity indices reach new all-time highs. Chinese stocks remain volatile but seem to stabilise.

• Corporate profits should increase again next year, but growth rates should decline.

• We remain constructive on equities and consider a significant correction unlikely.

Bonds

• Inflation expectations have risen further. 2021 and also 2022 are likely to be a negative year for government bonds.

• Spreads for corporate bonds are at a low level. Return potential mainly available in specific segements.

• We are underweight bonds and focus on credit risk and off-benchmark themes. Duration: short.

Alternative investments / commodities

• Oil price rally continues in October. As long as the market remains undersupplied, the upside risks prevail.

• Gold is currently not in favour with investors despite strongly increased inflation expectations. It continues to move sideways.

• Industrial metals benefit from energy crisis. Supply is tight in the short term. Demand should continue to rise in the long term.

Currencies

• The US dollar continues to be strong. It benefits from the prospect of tighter monetary policy and increased uncertainties.

• Sterling gains somewhat, benefiting from the monetary tightening outlook.

• The Swiss franc is once again very strong. The Swiss National Bank should counteract a further rise.