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Counterpoint March 2025: Changing leadership

US tariffs, market fundamentals and geopolitics have caused a change in leadership in 2025: European equities are now outperforming their US counterparts due to improving corporate earnings relative to expectations, more attractive valuations and newly announced government spending, including for defence and infrastructure. 

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2025 Alternatives Investment Outlook
11 March 2025

2025 Alternatives Investment Outlook

Thematic investing
As we close the chapter on 2024, it's evident that our investment landscape is constantly changing. What lessons have we learned, and how can we better position ourselves for the opportunities and challenges of 2025?
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Changing leadership – Counterpoint March 2025
10 March 2025

Changing leadership – Counterpoint March 2025

Market Insights
US tariffs, market fundamentals and geopolitics have caused a change in leadership in 2025: European and UK equities are now outperforming their US counterparts due to improving corporate earnings relative to expectations, more attractive valuations and newly announced government spending including for defence and infrastructure.
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German election – a driver for Eurozone growth?
14 February 2025

German election – a driver for Eurozone growth?

Market Insights
The “Bundestagswahl” could result in a more growth-focused government led by a new Chancellor – but as it’s unclear how the next Berlin coalition will look like, hopes for meaningful, expansive adjustments could be disappointed.
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New horizons
03 December 2024

New horizons

Market Insights
As we turn the page on 2024, one thing is clear: the world we invest in continues to evolve. The past year defied expectations, surprising us with economic resilience even as markets braced for turbulence. So, what did we learn, and how can we better prepare for what 2025 might bring?
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Preparing for the unpredictable
14 November 2024

Preparing for the unpredictable

House Views
November is the time of the year when, together with the Investment Committee, I start preparing for our year-ahead market outlook. But, to tell you the truth, we do this continuously: as new research comes in and events unfold, we keep refining our market outlook, day in and day out.
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US elections: a pivotal moment
06 November 2024

US elections: a pivotal moment

Market Insights
While the US presidential election outcome isn’t confirmed yet, Donald Trump is in the lead at the time of writing. With three swing states – Pennsylvania, North Carolina and Georgia – already called for Trump by the US media, he’s also slightly in the lead in the remaining four key states of Michigan, Wisconsin, Nevada and Arizona.
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2024: The Mother of All Election Years
25 October 2024

2024: The Mother of All Election Years

Market Insights
In 2024, a monumental event is unfolding as 4 billion people across 74 countries cast their votes at national, regional, and local levels. Among these, the US Presidential, Senate, and Congress elections on November 5 are poised to be the most market-moving.
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Giving credit where it’s due
15 October 2024

Giving credit where it’s due

Market Insights
The past few weeks have been quite volatile. First, tensions in the Middle East continued to grab the headlines, pushing oil prices higher. Second, US job growth, services activity and inflation came in higher than expected, leading to markets expecting smaller, more gradual US Federal Reserve (Fed) rate cuts.
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Navigating market volatility
09 September 2024

Navigating market volatility

Market Insights
The adage “sell in May and go away”, referring to the historically weaker performance of stocks from May to October compared with the other half of the year, didn’t disappoint this time around, too.
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Why should investors consider adding private markets to their portfolios?
01 August 2024

Why should investors consider adding private markets to their portfolios?

Invest differently
Private markets were once the reserve of sophisticated and institutional investors but have experienced significant growth in recent years. Now, a far broader range of private market investments are available to clients.
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Europe revisited
08 July 2024

Europe revisited

Market Insights
A bit like the unpredictable weather we’ve had over the past few weeks, politics has been a rollercoaster. As expected, the UK election delivered a Labour win. While there might be tax and broader fiscal implications at the individual level, the outcome wasn’t unexpected, which is why it hasn’t moved markets that much.
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French elections – a hung parliament, with a twist
08 July 2024

French elections – a hung parliament, with a twist

Market Insights
The overall outcome of the French legislative elections came as expected: a hung parliament where no party/alliance managed to secure the absolute majority of 289 seats. But it came with a twist.
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UK election: Market insights
05 July 2024

UK election: Market insights

Market Insights
That Labour won a strong absolute majority, and the Conservative Party sank to the lowest result ever isn’t a surprise for markets, given the polls. The next government plans to follow the same fiscal rules as the outgoing one and so, in our view, it will have limited fiscal space. However, there could be modest effects on different groups of consumers and firms.
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A deep-dive on the French elections
26 June 2024

A deep-dive on the French elections

Market Insights
The French head to the polls on June 30 and July 7 to elect their members of Parliament. How does that work? There are 577 seats up for grabs, so a party needs 289 seats to have an outright majority to govern. Anything less, in general, would mean that several parties may try to work together to form a coalition. This has been the case since 2022, with a coalition supporting President Macron given that his party does not have an outright majority.
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Staying the course
18 June 2024

Staying the course

Market Insights
All eyes are on Europe this summer. It’s one of the most visited regions, time and again, by tourists from all around the globe. The European Football Championship also kicked off last week in Germany, the Summer Olympics in Paris starts next month and, for those more politically minded, we just had the European elections and there are key national elections in France and the UK on the horizon (and, Europe aside, the all-important US election in November).
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Why we think our 2024 currency forecasts are on track
05 June 2024

Why we think our 2024 currency forecasts are on track

Market Insights
Looking at how a currency behaves could reveal what direction an economy is trending in. In other words, a currency that appreciates often reflects an economy that’s doing well, and vice versa.
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European green shoots
13 May 2024

European green shoots

Market Insights
Spring is finally here, and it looks like the weather is gradually improving. We got so used to the gloom of Mach and April that it’s perhaps natural to extrapolate the same conditions for May. But the sunshine came unexpectedly. Put differently, in investment jargon, relative to our downbeat expectations, we got a surprise to the upside.
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Stay active! (But don’t overdo it)
08 May 2024

Stay active! (But don’t overdo it)

House Views
The arrival of spring means one can spend extra time exercising outdoors (at least when the weather cooperates). While one doesn’t need to run a marathon to get back in shape, we think active portfolio management is more like a long jog than a short sprint – the key is keeping the right pace.
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The case for small-cap equities
26 April 2024

The case for small-cap equities

Market Insights
First thing first, when we talk about small-cap equities (or small caps), it’s important to understand what “cap” refers to. Cap is short for capitalisation, which in turn is short for market capitalisation.
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In the balance
18 April 2024

In the balance

Market Insights
The first few months of 2024 have come as somewhat of a surprise to investors. For example, US growth has stayed resilient, continuing to defy the odds of recession, so markets have had to reevaluate their expectations for the year. And we are no different. Investing is about finding the right balance between having conviction in your long-term strategy and being conscious of the opportunities in the short term.
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Reshoring – The world is not flat anymore
21 February 2024

Reshoring – The world is not flat anymore

Thematic investing
After three decades of globalisation, could reshoring change the global order?
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The tide is turning
12 February 2024

The tide is turning

Market Insights
In our 2024 Investment Outlook, released in December 2023, I mentioned the importance of building an investment strategy with multiple time horizons in mind. And, over the past two months, things have changed for the medium-term growth outlook. In January, the 2023 US growth figures came in better than expected, showing a resilience in the US economy that the market didn’t anticipate.
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(Invest) some of your time
24 January 2024

(Invest) some of your time

House Views
Speaking about foresight and perceptiveness in markets, John Maynard Keynes, likely one the most well-known economists ever, said that successful investing is anticipating the anticipations of others. Keynes was also an investor.
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How to include liquid alternatives in a traditional portfolio
20 December 2023

How to include liquid alternatives in a traditional portfolio

Invest differently
A traditional portfolio of stocks and bonds has been a popular investment strategy for decades. However, with market conditions changing and volatility increasing, investors are looking for alternative options to add value and, importantly, diversification to their portfolios. This is where liquid alternatives can play a role.
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Investors’ worst enemy (themselves?)
15 November 2023

Investors’ worst enemy (themselves?)

House Views
Striking a balance between wealth protection and growth is both science and art. Finance is a technical field, but it’s also driven by emotions.
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Three reasons why in 2023 big thematic trends have influenced markets
13 October 2023

Three reasons why in 2023 big thematic trends have influenced markets

Thematic investing
2023 has been a year where big thematic trends have influenced markets for three reasons. Firstly, the rise of AI (Artificial Intelligence) boosted themes like Semiconductors and Cloud Computing, driving the big US tech stocks and major indices.
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Quality bonds turn more attractive
24 September 2023

Quality bonds turn more attractive

Market Insights
We expect the major central banks to pause their cycle of interest rate increases as global economic growth slows over the coming months. This makes high-quality bonds even more attractive.
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It’s what you know (and just ain’t so)
06 September 2023

It’s what you know (and just ain’t so)

House Views
There’s nothing better than catching up with market thinking and returning to old classics when on holiday; that’s what we all love to do, after all. Mark Twain couldn’t say it better: making our vocation our vacation is the secret to success.
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Peak rates: a moving target
03 August 2023

Peak rates: a moving target

Market Insights
Peak inflation is now well behind us, especially in the US, but interest rates continue to rise. Central bank messaging of late has been quite clear: the battle against inflation is not won. But, even though the peak in interest rates is a moving target, we believe it’s now in sight, just slightly delayed from our initial expectations.
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Quintet 3-year-thematic: Why zooming out is also important
16 May 2023

Quintet 3-year-thematic: Why zooming out is also important

Thematic investing
Our thematic investing approach involves gaining exposure to companies and themes that benefit from major global trends over the long term.
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Interest rate peak in sight
08 May 2023

Interest rate peak in sight

Market Insights
The US is slowing, China/Asia is rebounding, and Europe is caught up between the two. We expect global growth and inflation to slow gradually, bringing the end of developed market central banks’ rate rises in sight.
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Go west for bonds & east for stocks
27 March 2023

Go west for bonds & east for stocks

Market Insights
The first quarter of 2023 saw a reassessment of global economic conditions by investors and policymakers. Asynchronous cycles are now beginning to emerge as China continues to re-open while the West battles with inflation and market volatility.
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Timing the market vs time in the market
24 February 2023

Timing the market vs time in the market

Market Insights
“When it comes to so-called market timing there are only two sorts of people: those who can’t do it, and those who know they can’t do it”, British investor Terry Smith famously said. Rather than timing the market, a better strategy is time in the market.
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Bonds are back
06 February 2023

Bonds are back

Market Insights
Following one of the worst years in recent memory for fixed income markets, high-quality government bonds are rebounding and now offer decent returns for relatively low levels of risk.
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The USD hedge with an edge
24 October 2022

The USD hedge with an edge

Market Insights
Any self-respecting investment strategist derives a fair amount of titles for research reports from Western films. If it’s scenario analysis, then The Good, the Bad and the Ugly does a good job. If it’s fiscal and political uncertainty we’re talking about, as we’ve seen in the UK recently (leading to Liz Truss’s resignation and the shortest government in the country’s history), perhaps The Wild Bunch. And, of course, A Fistful of Dollars refers to currencies.
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Market thinking, fast and slow
26 September 2022

Market thinking, fast and slow

Market Insights
Markets are full of sayings that somehow have to do with water: “one tide lifts all boats” when liquidity comes in; or, vice versa, “when the tide goes out, you find out who’s swimming naked”. Or they have to do with animals: are you a “bull” or a “bear”? Investors ask hurriedly.
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Success and excess
22 August 2022

Success and excess

Market Insights
The success of monetary and fiscal stimulus in cushioning the pandemic blow is well known. But the resulting demand surge, pressing against constrained supply, has also produced an excess of inflation and rising interest rates – a drag on equities.
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The R word
25 July 2022

The R word

Market Insights
“Why do economists use decimal points in their forecasts? To show that they have a sense of humour” is a joke that resurfaces in the marketplace every time volatility picks up. There’s some truth in this. Things rarely move consistently in one direction. So incrementally tracking how they’re unfolding is useful.
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Micro meets macro
27 June 2022

Micro meets macro

Thematic investing
Our Counterpoint mid-year outlook, published a few days ago, goes from micro to macro and thematic. It talks about how geopolitical and supply shocks in the age of disruption are impacting companies, sectors, inflation and economic policy, our energy supply and technologies, creating risks and opportunities along the way.
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Investing thematically in a market transition
30 May 2022

Investing thematically in a market transition

Thematic investing
As global financial markets work through a period of elevated volatility and increased risks, we prefer investment themes with robust structural growth characteristics but also stronger fundamentals, such as those with resilient earnings and some defensive qualities.
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Peaks and valleys
23 May 2022

Peaks and valleys

Market Insights
“Economists will know tomorrow why the things they predicted yesterday didn’t happen” is a joke that, in this fast-moving market cycle, has a deeper lesson. Rather than sticking to an all-knowing prediction, it’s more fruitful to use a transparent cause-effect framework to recalibrate the base case as events unfold.
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Positive earnings surprises but softer guidance
16 May 2022

Positive earnings surprises but softer guidance

Market Insights
Sales and earnings growth for Q1 2022 in both the US and Europe exceeded expectations, led by strong energy sector results. The percentage of companies beating forecasts is above the long-term trend, but the margin of surprise is lower than recent quarters.
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Reading the signs (and the curves)
25 April 2022

Reading the signs (and the curves)

Market Insights
In the mid-1990s, British Prime Minister John Major reportedly asked Russian President Boris Yeltsin to describe the Russian economy in one word. He replied “good”. Surprised by this assessment, Major asked Yeltsin if he could describe it in two words.
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Looking east: investing in Asia high yield
18 April 2022

Looking east: investing in Asia high yield

Market Insights
Following a poor start to 2022, Asia high yield (HY) bonds have staged a notable recovery since mid-March. We have been holding a tactical overweight position against USD investment grade (IG) bonds. What are the main features of the Asia HY market and our outlook for the asset class?
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The yield curve and recession: truth and myth
11 April 2022

The yield curve and recession: truth and myth

Market Insights
Some segments of the Treasury curve are now inverted. While investors see this as a warning signal, the reality is more nuanced. We explore what it means for the probability of US recession, and for equity and other asset class returns.
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Ukraine War: themes to de-risk economies
04 April 2022

Ukraine War: themes to de-risk economies

Market Insights
We believe the war in Ukraine – which is first and foremost a humanitarian tragedy – will spur some countries and businesses to reduce long-term risks that have emerged from that conflict.
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French elections: geopolitics all around
28 March 2022

French elections: geopolitics all around

Market Insights
On 10 and 24 April, France will elect its new president at a crucial time – a war raging on the fringes of Europe. Emmanuel Macron looks set to be re-elected for a second term. We explore the key implications for the economy and markets.
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The economic consequences of war
21 March 2022

The economic consequences of war

Market Insights
In The Economic Consequences of the Peace, published in 1919, John Maynard Keynes predicted that stiff war reparations would lead Germany to financial instability, with economic and political repercussions across Europe and the whole world.
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Off the lows
07 March 2022

Off the lows

Market Insights
While geopolitical uncertainty could keep them low for longer, bond yields are on the rise as central banks normalise policy. We expect them to move higher but, over the medium term, see lower rates than in past cycles.
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Russian dolls
28 February 2022

Russian dolls

Market Insights
It’s tempting to attribute the ongoing risk-off move to Russia’s invasion of Ukraine. That’s part of the story but, like Russian dolls, there’s a scenario inside a bigger one, which is inside an even bigger scenario, and so on.
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How we’re thinking about Russia/Ukraine and our investment strategy
24 February 2022

How we’re thinking about Russia/Ukraine and our investment strategy

Market Insights
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Solid Q4 results with signs of divergence
14 February 2022

Solid Q4 results with signs of divergence

Market Insights
As the post-pandemic recovery matures, corporate earnings are surprising by less but still exceeding forecasts. We are seeing a divergence in performance within sectors, but must be careful not to extrapolate short-term trends.
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Innovation nation
07 February 2022

Innovation nation

Thematic investing
We see innovation continuing apace and even accelerating, despite high costs currently. We believe top innovators are likely to be long-term winners. We see the current weakness in ‘innovation equities’ as a buying opportunity.
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Rearview mirror
31 January 2022

Rearview mirror

Market Insights
At the beginning of the new year, we look back at the performance of our Quintet Group Strategic Asset Allocations (SAA). In this second edition of our biannual review we explore how our SAAs fared amid buoyant risk markets and macro volatility.
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The name is bond
24 January 2022

The name is bond

Market Insights
Once again, the rise in core bond yields is driving markets across geographies, asset classes, sectors and styles, with a sharp equity rotation away from growth and into value stocks. In the James Bond movie series, 007 eventually overcomes an improbable sequence of obstacles and makes it through.
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Moving past the peak
17 January 2022

Moving past the peak

Market Insights
While economic growth and stimulus should become less positive this year, inflation and the virus impact should become less negative too. We’re tactically overweight US equities and a range of credit exposures.
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Big macro vs little macro
03 January 2022

Big macro vs little macro

Market Insights
Economist and best-selling author JK Galbraith once quipped that there are two kinds of forecasters: those who don’t know and those who don’t know they don’t know. Turns out, it may be worse.
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Thematic investing: fast forward to the future
29 November 2021

Thematic investing: fast forward to the future

Thematic investing
The world is changing rapidly, driven by technological and environmental factors, and these shifts could have profound long-term implications for investors. Our thematic framework can help navigate the evolving investment landscape.
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Cheques and imbalances
22 November 2021

Cheques and imbalances

Market Insights
Paraphrasing an old adage, a forecaster is a portfolio manager who never marks to market. There’s some truth in this. There’s a disincentive in rapidly shifting views back and forth – which is equal to not having a view.
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Solid Q3 results despite the challenges
15 November 2021

Solid Q3 results despite the challenges

Market Insights
In the third quarter of 2021, inflation rose in most countries and the global economy faced ongoing supply chain issues. Despite concerns about how these challenges would impact earnings, the results are better than expected and forecasts have been revised higher across most sectors.
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What a difference a year makes
08 November 2021

What a difference a year makes

Market Insights
In this latest note focusing on our strategic asset allocation (SAA), we explore our updated risk and return expectations for the next 10 years. What has driven the change in our capital market assumptions (CMAs) and how do they affect investment portfolios?
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Are equities too expensive?
01 November 2021

Are equities too expensive?

Market Insights
We’re often asked this question when discussing our current tactical overweight in equities over bonds, and understandably so. Many measures of equity valuations are high compared with history. But that doesn’t mean global stock markets can’t continue to rise.
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Going to the movies
25 October 2021

Going to the movies

Market Insights
Markets are grappling with two new(ish) facts. First, energy prices are surging. Second, central banks are diverging. Have investors seen this movie before?
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The state of European credit markets
11 October 2021

The state of European credit markets

Market Insights
Bond yields are rising following a more hawkish tone from central banks around the world. Monetary policy is becoming less accommodative but we don’t believe it’s the end of the game for credit in Europe.
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Build back better: infrastructure goes global
04 October 2021

Build back better: infrastructure goes global

Market Insights
Spending on infrastructure looks set to rise, mostly in the US but also in Europe. This is a structural trend to rebuild the economy in a sustainable way, with a focus on green and digital investment.
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Asian high yield: well-compensated risks
27 September 2021

Asian high yield: well-compensated risks

Market Insights
Asian high yield (HY) bonds have experienced a period of elevated volatility and rising spreads since June. The correction has accelerated in recent weeks, with the rapid deterioration of property developer Evergrande’s liquidity situation a major catalyst. We revisit the investment case for Asian HY bonds and confirm our conviction in the asset class over our tactical horizon of 6–12 months, despite near-term risks.
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Back to school
20 September 2021

Back to school

Market Insights
September is all about getting back to normal life now that the holidays are over. This sense of normalisation – if one could really call it that in the Covid world – is happening in the wider economy too.
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Germany’s election: life after Merkel
13 September 2021

Germany’s election: life after Merkel

Market Insights
On 26 September, Germany will elect a new Bundestag. The outcome will set the stage for the next coalition, headed by a new chancellor, with Angela Merkel set to step down after 16 years. The next government is likely to have a greener tilt.
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Fed tapering explained
06 September 2021

Fed tapering explained

Market Insights
The upcoming reduction in net asset purchases is likely to put upward pressure on Treasury yields, but only moderately as rate hikes aren’t yet in sight. Credit and equity markets should be able to cope.
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Our strategic asset allocation process in focus
30 August 2021

Our strategic asset allocation process in focus

Market Insights
In this latest note exploring our approach to strategic asset allocation (SAA), we answer some common questions. How do we arrive at our return expectations? How to deal with lower future returns when building globally diversified portfolios? What is the role of geopolitics and sustainability in our investment process?
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Another strong set of earnings results
09 August 2021

Another strong set of earnings results

Market Insights
The second-quarter earnings season has been better than expected. As the global economy recovers from the pandemic, consensus profit forecasts have been too conservative again, and are being revised higher for the rest of this year and into 2022
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Delta Blues
26 July 2021

Delta Blues

Market Insights
The past 18 months have been an exercise in humility for most forecasters. Even now, the typical thinking about the spread of the Delta variant is to highlight (so far) limited effects while quickly flagging that things could turn out worse than expected. The problem with this approach is that it’s unidimensional: it delivers variants of the same scenario, with slightly different assumptions.
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Market crosscurrents
19 July 2021

Market crosscurrents

Market Insights
Another month, another upside surprise in inflation. Yet the drivers appear the same: a handful of categories – such as used cars – are driving the spike, given strong demand pressing against constrained supply.
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The twists and turns of the cycle
19 July 2021

The twists and turns of the cycle

Market Insights
We introduce an indicator that captures economic and financial market dynamics in the US across different phases of the business cycle. This information is useful for making investment decisions.
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Twin Peaks
12 July 2021

Twin Peaks

Market Insights
Watching the Euro 2020 final this weekend reminded us of the expression “there’s no such a thing as a free lunch”. In markets, a few weeks ago the key worry was too high bond yields as rising inflation would lead to central bank tightening. Over time, this would weaken economic and earnings growth, negatively impacting equity prices.
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The power of words
05 July 2021

The power of words

Market Insights
Our Counterpoint 2021 mid-year update suggests that volatility could rise from here: there’s less policy ammunition left if things unexpectedly go wrong, such as new virus variants derailing the recovery; alternatively, stimulus withdrawal could prove difficult, potentially raising financial instability.
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With the benefit of hindsight
05 July 2021

With the benefit of hindsight

Market Insights
The fifth piece in a series exploring our approach to strategic asset allocation (SAA) looks back. In this inaugural edition of our biannual SAA performance review, we recap the first half of the year through the lens of our Quintet Group SAAs. How did they perform and what drove returns?
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Steeper for longer
28 June 2021

Steeper for longer

Market Insights
As the cycle matures, rate hikes approach and the yield curve typically flattens. We’ve seen this market dynamic playing out quite clearly following the latest Fed meeting. The central bank’s ‘dot plot’ – a graphical representation of the committee members’ economic and rate expectations – showed two hikes in 2023 rather than zero as previously, triggering a sharper selloff in shorter-dated Treasuries and, therefore, flattening the curve.
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The inflation head fake
21 June 2021

The inflation head fake

Market Insights
The key strategy for economists to get attention and avoid sounding ‘too consensus’ is to assign high probabilities to events without taking them as base case. Saying that something has a 30-40% probability of happening sounds high enough to make it an important risk to watch but, if it doesn’t happen, chances were always less than even to begin with. A better way is to frame a debate and look at the pros and cons of both sides’ arguments.
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Running on high pressure
14 June 2021

Running on high pressure

Market Insights
As economies reopen, we’re likely to see two overlapping patterns – a ‘bungee jump’ driven by a focal point created by the resumption of activity as mobility picks up, and a more traditional ‘cycle’. The bungee jump is about the short-term displacement of activity as governments closed down entire economies by decree and deployed massive stimulus at the same time.
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Stay tuned!
07 June 2021

Stay tuned!

Market Insights
The business of forecasting is a tricky one. This is because prediction and explanation are different things. Of course, this isn’t unique to the economy and financial markets: alchemists could predict that combining two elements would result in a third one, but couldn’t explain exactly why; geologists have great explanations for earthquakes, but can’t predict when the next one will happen.
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Joining the party
31 May 2021

Joining the party

Market Insights
An old saying about this or that economy trying to fix its structural problems is that it’s the opportunity of the future… and always will be. The opportunity never really materialises in full, or doesn’t last long enough. To strategists, sometimes the euro area feels like this.
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Ringing the inflation bell
17 May 2021

Ringing the inflation bell

Market Insights
A side-effect of prolonged lockdowns is that the entire Netflix catalogue gets nearly exhausted at some point. When that happens, classics come back in vogue – both films and economic topics. If The Postman Always Rings Twice, so does inflation: it makes the news both when it happens and then a year later, when it distorts comparisons that look back 12 months.
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The big long
17 May 2021

The big long

Market Insights
The pandemic has turbocharged a range of pre-existing trends that are changing the way of doing things across many economies. While quantifying the macro impact is highly uncertain, these shifting paradigms are already visible at the sector level.
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Bidenomics
10 May 2021

Bidenomics

Market Insights
Economists’ failure to accurately predict the magnitude of big events like booms and recessions and – perhaps more often than they’d like to admit – the timing of these events with sufficient foresight, inevitably makes them the target of all sorts of jokes: for example, how can you tell that economists have a sense of humour? Because they put decimal points in their forecasts.
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Record surprises… again!
10 May 2021

Record surprises… again!

Market Insights
The first-quarter earnings season highlights once again that consensus expectations for corporate profits have been too conservative as the world recovers from the pandemic. Near-term expectations are being revised higher.
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Taxes, tapering, timing and thresholds
03 May 2021

Taxes, tapering, timing and thresholds

Market Insights
"Nothing is certain but death and taxes" is a rather fatalistic proverb drawing on the inevitability of the life cycle to make a parallel with the inevitability of the fiscal burden. However, just like with Fed tapering, the key thing with any tax policy change is timing and thresholds.
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Turning a corner
26 April 2021

Turning a corner

Market Insights
One of the perennial dilemmas of strategists is figuring out when good news becomes bad news in the eyes of the market, and vice versa. Say the jobs report comes in stronger than expected. This would be good news and the market would go up. More people working means more tax revenues, less spending on unemployment benefits and an increase in demand.
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Flying on two engines
19 April 2021

Flying on two engines

Market Insights
The long-awaited inflation spike has come. Price cuts in the early months of the pandemic are now dropping out of the annual comparison. Surging commodity prices and temporary supply bottlenecks are doing the rest. But we don’t see the pace of wage growth and degree of tightness in the labour market that could result in a more long-lasting inflation spiral.
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Commodity matters
19 April 2021

Commodity matters

Market Insights
How should investors think about the price of gold following the pickup in real yields? What’s the outlook for oil versus metals such as copper now that economies are reopening?
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May two (usually) wrongs make a right?
12 April 2021

May two (usually) wrongs make a right?

Market Insights
Microeconomists are wrong about specific things – economist and comedian Yoram Bauman often says – whereas macroeconomists are wrong in general. Could it be different this time around? A critical look at both the micro and macro drivers of bond yields suggests that a large part of the move higher, at least in the short term, is likely to be behind us.
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Capital at risk
12 April 2021

Capital at risk

Market Insights
In the fourth piece in a series exploring our approach to strategic asset allocation (SAA), we look at what our capital market assumptions tell us about recovering losses when things don’t go as planned and why history is a useful but imperfect guide to the future.
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A crash of rhinos
29 March 2021

A crash of rhinos

Market Insights
The capital sins of forecasting are flip-flopping (rapidly switching from one view to another, back and forth) and salami-slicing (frequently making incremental, insignificant changes). Dealing with uncertainty is a key part of forecasting. There are two types of risks. Black swans, such as Covid-19, are unknown unknowns, high-impact but very rare events that investors often underappreciate.
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The Greenback's bounceback
22 March 2021

The Greenback's bounceback

Market Insights
The caricature of the strategist always painting a year of two halves, one bullish and the other bearish or vice versa, is partly true. What’s behind it is the impulse to stay current with macro developments. Timing turning points isn’t easy, but keeping an eye on how things are changing is healthy. We got strong US growth upgrades and higher interest rates lately. This is why the US dollar has strengthened and may continue to do so for some time.
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The inflation question
22 March 2021

The inflation question

Market Insights
Should investors worry about inflation? Is the upcoming spike temporary, a longlasting trend leading to central banks hiking rates or are bond yields ultimately overreacting?
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The devil is in the timing
15 March 2021

The devil is in the timing

Market Insights
Former US President Harry Truman once pleaded “give me a one-handed economist”, having tired of his advisers proclaiming “on the one hand, this” but “on the other hand, that”. The investor debate on whether rising bond yields and, potentially, higher inflation (however transitory) are signs of recovery and reflation or, rather, a market setback as central banks may tighten policy, feels a bit like this.
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Optimal portfolios in a low yield world
08 March 2021

Optimal portfolios in a low yield world

Market Insights
The third piece in a series exploring our approach to strategic asset allocation takes a closer look at our expected evolution for eurozone government bond yields and the role they play in optimising the risk and return balance in well- diversified portfolios.
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Liquid markets
08 March 2021

Liquid markets

Market Insights
Martial artist and movie star Bruce Lee famously summarised his philosophy as “be water”. He meant that adaptability is a key skill (“be formless, shapeless, like water”) and that the same thing can have different effects depending on how sudden, fast the movement is (“water can flow or it can crash”). The rise in bond yields is just like this.
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Emerging issues
01 March 2021

Emerging issues

Market Insights
Our scorecards for emerging markets highlight where fundamentals are resilient and where they’re not. These measures are especially important if bond yields overshoot their forecasts.
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It takes two to tango
01 March 2021

It takes two to tango

Market Insights
Back in the 1990s, investors worried about a potential spike in bond yields if Bill Clinton pushed through with his plan of economic stimulus. James Carville, his adviser, joked that, rather than as the next US president or a baseball player, he wanted to be reincarnated as the bond market, because “you can intimidate everybody”.
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