Anchor Insights April 2023
Anchor Insights
The vision of our Investment Committee to tactically adjust the appropriate investment strategy to the financial markets in any environment.
Anchor Insights April 2023
Market Wrap
- Gains on the stock markets, helped by earnings and interest rates.
- The Euro continues to rise against the USD.
- Fixed income continues to price pause in rate hikes.
- Raw materials correct prices.
Insights
- Inflation continues to moderate, pending the decisions of the central banks.
- China seeks to increase the weight of its currency in international trade.
- The publication of Q1 results continues to exceed forecasts for the cycle.
Variable Income
Average valuations in the US and Europe, with economic contraction and earnings already implicit in prices. Possibility of improving the multiple depending on the evolution of monetary policy and expected earnings growth for 2024 above the long-term trend.
Prioritize sectors that support a recession or stagflation environment:
- Health: stable income and margins supported by public spending.
- Agri-food: the climate crisis and the war in Ukraine put pressure on food prices.
- Defensive consumption: with the capacity to transfer price increases to the consumer.
- Financial: you benefit from an environment of rising interest rates.
Long-term opportunities:
- Technology: Although there may still be volatility, attractive multiples and higher growth than other sectors.
- Cyclical consumption: It usually bottoms out before the start of recovery.
- Renewables: the need to decarbonize drives huge investment plans in renewable energies.
Fixed Income
The latest inflation data supports a pause in rate hikes. The inflection in monetary policy discounted by the market is not the scenario of the central banks, although the current IRR levels are once again attractive.
- Credit spreads at medium levels, both in European and American bonds.
- IRR stabilization in government bonds, both European and American.
- High Yield in both euros and dollars may be affected by the increase in default rates. The BB sections are interesting.
- Selectively, emerging countries with limited external indebtedness.
Alternatives and Currencies
- The euro and the dollar remain in the 1.10-1.05 range. Increased tendency to weakness in the USD by phase of the monetary cycle.
- Real estate bubble risks in some countries (Nordic, Canada, US, Germany, UK), especially in commercial real estate.
- Recession risks put downward pressure on metals and energy. Volatility in raw materials.
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