Change of investor focus from valuation to fundamentals

Economics

• US: The Fed hesitated for far too long, now it is hitting the brakes hard. We forecast a mild US recession in 2023.
• Putin cuts gas supply. Another gas price hike will hit Eurozone hard. Recession from autumn.
• Inflation peak in sight in the US. Euro inflation will continue to rise until late fall. Price pressure decreases sharply in 2023.

Equities

• Equities have suffered one of the weakest first halves in history. Inflation and recession concerns burdened.
• Increasing recession concerns should mean a shift in investor focus from valuation to fundamentals.
• We are moderately underweight in equities. Quality growth with significant potential with less interest rate pressure.

Bonds

• Recession dominates inflation. Yields have fallen noticeably recently, as government bonds were in demand as safe havens.
• Corporate and emerging market bonds are increasingly pricing in recession risks. Yields are increasingly attractive.
• In the current environment, a duration increase via safe bonds is likely to make sense. We are increasing our bond allocation.

Commodities

• Gold is caught between recession worries and real interest rates. It is still an important portfolio component as a hedge.
• Oil has suffered from recession and demand slump concerns. However, supply remains tight for the time being.
• Industrial metals are weighed down by China lockdowns. If the trend reverses, there should be a quick recovery.

Currencies

• The European Central Bank is lagging behind the other central banks. The euro is suffering from the hesitation. •
• At the same time, the US dollar is benefiting from risk aversion. EUR/USD has therefore fallen below 1.03.
• After the interest rate hike, the Swiss franc is bearish. The euro has fallen below parity against the franc.