Anchor Insights April 2022

• The month of April was marked by a drop in US rates to 2.8%, and a depreciation of the dollar to 1.07 EUR/US (-1.5%).
  
• The US stock market was flat, reversing in the second fortnight the bad start to the month.
• The rise in the price of oil in the month of May (+13%) generated inflationary pressures.

• Market drawdowns so far this year generate incentives to invest in equities. We believe that while there are opportunities, the market is not yet pricing in a recession but rather a slowdown, so caution should prevail.
  
• We will have to keep an eye on the earnings season, since increases in input prices threaten to generate downward revisions for the second quarter.
• We are begging to see attractive the US Dollar Corporate Investment Grade bonds, with returns of 4.5%. The dollar has a positive scenario, with more attractive rates.

We favor US stocks, we are neutral on European and Asian stocks.

Presentations of results are beginning to be consistent with a slowdown in the economy. In this context we favor defensive companies in the short term:

• Health: countercyclical sector, historically more defensive and with good fundamentals.

• Agribusiness: rising prices of raw materials and bottlenecks due to the war in Ukraine have been favoring this sector.

• Consumer Staples: it does a better job during periods of economic slowdown rather than cyclical stocks.

Long term opportunities:

• Technology: it is cheap after the price drops since the beginning of the year.

• Renewables: due to rising energy prices and less dependence on Russia.

We still see little room for invest in.

• During the month of May, corporate spreads in dollars have increased slightly. We believe it is a good time to start to build in a position, as corporate yields are around 4.5%.

• We underweight euro corporate bonds as credit spreads are still very tight.

• High Yield in both euros and dollars could be affected by a weakening of economic fundamentals. We believe that it still does not pay for risk.

• We continue to underweight inflation-linked bonds.

• The dollar is in the range of 1.04-1.08 due to a more predictable monetary policy than the euro and the war in Ukraine. Although much is already discounted in prices, we believe that even parity may have a way.

• Oil price hikes of 13% to $124. We see it as risky to invest in Energy at these levels, but we discount that high prices remain at these levels in the short term due to the war in Ukraine.

• Inflation and supply problems favor the agribusiness sector. We see medium-term growth for these Soft Commodities.