Market Comment

Market Comment

The Market Comment is published monthly and sheds light on current topics from the investor's point of view.

Market Comment

Focus on US equities

We would like to elaborate on our focus on US equities and explain why we remain overweight in this segment compared to global equities. Even if it loses some momentum over the next few months, the US economy continues to exhibit above-average growth. US corporate earnings have once again exceeded the market's high expectations for the second quarter, with more than 80% of companies surprising on the upside. Valuation methods do not suggest US equities are overly expensive, particularly not in relation to US bonds. The American stock market can therefore cope with higher interest rates – as long as these are accompanied by solid economic growth, as this would have the effect of boosting corporate earnings. Our US equities module offers promising performance and a diversified way of gaining exposure to the world’s leading equity market, which also boasts the strongest earnings growth of any region.

Market Comment

Commodities and inflation in upward trend

In late phases of the global economic cycle, production capacity is generally heavily utilized, which is why more resources are required – such as labour, but also commodities. Historically, this has often led to higher rates of inflation due to higher commodity prices. Higher import prices against a backdrop of the escalating trade conflict and US sanctions against Iran could have the effect of exacerbating increases in commodity price inflation. Investors can counter rising inflation and commodity prices with a commodities focus module.

Market Comment

No Italian Summer?

Italy finally has a new government. But the new coalition's policy plans put it on a path to confrontation with the EU, as Italy feels it has been left in the lurch. The realization of these electoral promises could trigger a massive increase in Italy's budget deficit, as well as turbulence in the eurozone. European equities now come with higher risks attached.

Market Comment

What the US–China trade dispute is all about

The trade dispute between the US and China should not be underestimated. However, a bit like the approach adopted by Ronald Reagan against Japan in the 1980s, the negotiation tactics adopted by President Trump could lead to a compromise that brings relief to the markets. The positions adopted by both sides, US and China, are understandable. Ultimately, what is at stake here is nothing less than global dominance in the area of geopolitically crucial technologies.

Market Comment

Geopolitics: Bonds and gold can help in temporary equity turbulences

The financial markets are under the spell of new geopolitical tensions. These have been triggered by a more hard-line policy on the part of the US re- acting to practices of Russia and China that it is no longer prepared to tolerate. In the medium term, equity markets are driven more by earnings and economic growth than by political events. In temporary phases of geopolitical uncertainty, bonds have historically performed well, while commodities such as gold have typically acted as a safe haven. Thus, bond and commodity modules are key components to hold as part of a complete portfolio.

Market Comment

Five Factors for Emerging Markets

Like all equity investments, emerging market equities come with risks attached – such as higher short-term volatility – but five factors are currently boosting the longer-term appeal of this segment of the equity market. These are as follows: cheaper valuations than the world equity index, historically undervalued currencies, higher weighting of important technology stocks, strong economic growth and rising commodity prices. They are particularly interesting as long as the US dollar remains on a downward trajectory.

Market Comment

Turbulent times – keep calm

The first few weeks of the New Year began strongly for the markets – too strongly, as it turned out. After global equity markets performed unusually well from a historical perspective in January, recording a rise of around 5%, a major consolidation (i.e. correction) has now taken place. However, this latter development should be viewed against a backdrop of long-term market strength in which no real market consolidation took place at all.

Market Comment

Optimism yes, euphoria no

Will there be a year-end rally in in equity markets in 2017?  But the importance of what actually happens in the remaining weeks of the year should not be over-exaggerated. Above all, investors should keep a wider perspective. And that picture gives us reasons to be confident.

Market Comment

Commodity prices at the crossroads

What are the medium-term perspectives for commodities? We give an overview of the developments of the past decades and the long-term influence factors which offer a positive outlook for commodities.

Market Comment

The outlook for Europe

How does the situation in Europe look? Before the background of Brexit and a number of tensions within the EU, its macro-economic situation has improved strongly. We give an overview.

Market Comment

Words, not deeds

Equity markets have moved up significantly since the election of Donald Trump. Can this be ascribed to his accomplishments? As the title of our latest Investment Comment implies, we beg to differ. During the month of September, deeds will be in demand and we therefore see the risk of market turbulences in case squabbling continues between the White House and Congress.

Market Comment

Robotics and Industry 4.0

Will the world be conquered by robots? Technological innovation affects many aspects of our lives. Robots used to be designed as slave labourers in the past, today they are destined for much greater assignments. The fourth industrial revolution has just begun, the "mega trend" is called "Industry 4.0", also called "the internet of things and services". Artificial Intelligence (AI) connects the virtual world with the physical one. What kind of potential do we attribute to this theme and how one can invest in it – these questions are addressed in our Investment Comment.

Market Comment

Animal Spirits

Business and consumer confidence have reached levels unseen in the last 10 years. Is this due to specific legislative proposals by the Trump administration or rather the manifestation of revived animal sprits on behalf of economic agents? We give an overview.

Market Comment

The latest on the emerging markets

After emerging market-related investments have again embarked on a positive trend, the question remains how the situation presents itself currently. We give an overview of the different investment categories and identify where we can see further gains.

Market Comment

La Peine

Will the election of Marine Le Pen for French president trigger investors’ sorrows? How big are her chances to win? Or may there be bigger risks for the European project elsewhere?

Market Comment

Glass half full

The movements on financial markets since early November have displayed a significant degree of optimism on behalf of investors. We state why we remain optimistic for equities in spite of considerable uncertainty in connection with the 45th US president, even if there could be a correction coming in the short term.

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