Quarterly Investment Letter

The world is reaching an inflection point in defeating the pandemic, resulting in a possible regime change in inflation, a steepening of the yield curve, equity sector rotation and possibly a revival of commodity prices. The US is powering ahead and its GDP growth will likely surprise on the upside with the latest fiscal stimulus […]

Investors seem to be living in the best of all worlds. No central bank or government wants to remove economic support too quickly and monetary policy will remain very stimulative. Joe Biden won the US presidency and besides the House, the Democrats have a chance to even get control of the Senate. The economic recovery

Over the next 3-6 months we expect global economic growth to be reasonable, based on the outlook for a viable vaccine, central banks’ ultra-loose monetary policy and governments’ fiscal stimulus measures reaching over USD 13 trillion or 15% of global GDP. To maintain growth momentum in the US, it will be key for Congress to

The Covid-19 pandemic has led to drastic actions around the world. Never before in history has it been so easy for Western governments to increase fiscal expenditures through debt. All of this supported by central banks providing unprecedented stimulus measures and vocal guarantees to keep the whole yield curve depressed. Central banks’ influence has reached

With a global recession now a certainty, government bond yields remain very low and offer no long-term investment perspective, but help diversifying the portfolio as of now. Credit spreads in some market segments have reached extreme levels and led to price dysfunctionalities. In equities “there is blood in the streets” but one cannot call a bottom yet. Places to hide are

Global manufacturing is likely to see a moderate rebound over the next 3-6 months. Hence, a near term recession is highly unlikely. US GDP growth decelerates in 2020. However, consumer spending, driven by low inflation, low interest rates and full employment continues to drive the cycle. Europe grows below trend, but finally some political risks

Global growth is receding but (US) consumer confidence remains strong and as long as corporates’ capital expenditures do not further deteriorate, the likelihood for a near-term recession in the US or China is low. US GDP growth is largely supported by consumer spending. Further rate cuts and politics to warm up for the presidential elections

The US Fed is the dog that wags the tail. US Treasury futures forecast two rate cuts this year, which will prolong the economic cycle and prevent the USD from further strengthening. US GDP growth is slowing but a sudden recession is not on the cards. 10-year US treasuries fell back to 2%, supporting credit.

The US Fed and the European Central Bank kick the can further down the road and keep interest rates lower for longer. US GDP growth continues to slow but a sudden recession is not on the cards. That said, the economic slowdown will lead corporate default rates to slowly move higher. Europe has largely been

Slowing economic growth in the U.S. and Europe is a fact. We admit the risk, that the current sharp market sell-off could front-run the real economy and increase the speed of an economic softening. The US/China trade conflict and the US Fed’s monetary policy are the two dominant macroeconomic factors to be focused on in