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.