Vontobel Multi Asset Boutique
Fundamental strategies to protect and grow investors’ assets in their chosen markets.
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Investors’ Outlook: Is the wait for Godot over soon?
Not many of us like to be kept waiting. Our Multi Asset Boutique experts get a tad theatrical with their references this month, reminding us of Samuel Beckett’s lesson in Waiting for Godot: waiting is often accompanied by confusion, uncertainty and a certain amount of pain. The good news is they are optimistic a second act is about to begin:
- There’s a saying that good things take time. Investors who’ve held their breath might just be starting to exhale, as it seems a pause in rate hikes is in sight and the elusive recession might be arriving soon. Also spurring renewed market confidence are inflation’s continued retreat and China’s stronger-than-expected economic recovery.
- The odds may have increased for one of the most anticipated and talked-about recessions in history. Yet investors are ready and have been for a long time. We expect this recession to be both short and shallow.
- It’s time to step away from the sidelines. We’re mixing up our game plan by allocating some cash to upgrade emerging-market equities to overweight, as looser monetary policy, China’s growth motor, and a weaker US dollar are set to benefit those assets.
- Looking for attractive returns with a short wait time? Experts from TwentyFour Asset Management present their views on the opportunities in short-dated investment-grade credit.
Financial markets have put on a show featuring both resilience and a return to stability. March’s volatility left investors on tenterhooks. Investors were left holding out hope for meaning and direction – a painful wait that, as Samuel Beckett’s Waiting for Godot crystallized in our collective cultural consciousness, is often accompanied by confusion and uncertainty.
But could the wait soon be over? We are not holding our breath anymore amid growing signals that central banks’ rate hikes are nearing an end. The continued retreat of inflation and the bolstering effect of China’s stronger-than-expected recovery helped drive renewed confidence among investors.
While the odds of the most anticipated and talked-about recession in history have probably increased, investors have been at the ready for a long time now. When the recession finally arrives, it won’t be a surprise visit, and we expect its stay to be short and shallow.
This month in our Investors’ Outlook, we dissect why inflation in the eurozone looks set to decline, discuss oil’s prospects following a surprise production cut, and analyze the upcoming path for the US dollar. In discussing our asset allocation, we explain why historically high company profit margins prompted us to reduce some of the cash we had set aside and allocate it to emerging markets – a region that is showing superior economic growth trends. May’s focus topic is short-dated investment-grade credit, with our colleagues at TwentyFour Asset Management providing their take on opportunities in this particular area of bonds.
As we forge ahead in the second quarter of the year, we know investors have been waiting for their Godot, be it in the form of a rate-hike pause by the US Federal Reserve or an outright pivot, in the form of a recession, or improving market opportunities.
We’re ready for Godot to come. We have kept our appointment.