Our latest insights on the markets.
November – Markets love the color red
By now, it is old news that Trump won the race and will have quasi-unchallenged powers. Indeed, besides the presidency, which he won with a greater margin than back in 2016, Republicans took over the Senate and the House in a so called “red sweep”, showing once again the limits of polls when it comes to predicting outcomes of very polarized elections.
October – Might as well skip to November
By now, we are all tired about the non-stop coverage and exposure to the US election. Admittedly, it is an important event as it will give a sense of direction to certain sectors depending on who wins the White House. And with the US representing over 72% of the developed World Index (and over 65% even if emerging markets are included), this will ripple around the world.
September – A central bank story
The headline was set and the main theme of this monthly letter was pretty much all written and ready for print. And then China acted, and not with superficial measures like last year. This time China took the economic problems (deflation, below target growth, real estate slump, to name the main ones) it is facing very seriously (see below for more).
August – “It is time”
More fear than harm in August, as we witnessed one of the most dramatic sell off in stocks in years, with the S&P 500 losing over 7% over 2 trading days. All major indices took a hit due to a combination of factors. It all started with weak job and manufacturing data, and fear that the Fed may have delayed cutting rates for too long and the resulting increased probability of a recession. Meanwhile, the bank of Japan took everyone by surprise by increasing interest rates, leading to the unwinding of yen carry trade (borrow yen at a low interest rate, buy USD, invest the USD in bonds or stocks), thereby taking the volatility index (VIX) to a 4-year high.
July – Magnificent isn’t what it used to be
The month of July showed what some (including Stork in previous insights letters) warned would happen, but investors were too greedy to heed. The so called magnificent 7 (Microsoft, Amazon, Meta, Apple, Alphabet, Nvidia, Tesla) suffered following earnings releases by Tesla and Alphabet, losing a grand $ 2.6T in market cap in the past 20 days. Meanwhile, the S&P 493 had a decent month. But with the weight of the 7 mega caps in the index, a negative performance was unavoidable. Is this the beginning of a sector rotation? It is hard to say, but in our summary recommendation and graph of the month, we make the case that it could be.