Anchor Insights November 2022

• Rises in the stock market and stability in fixed income.
  
• Stabilization in the EUR/USD range.
• Generally better-than-expected earnings release, but with less visibility into the future and pressure on earnings growth.

• The return of “buybacks” may help sustain a year-end rally on the stock market.
  
• The outcome of the US parliamentary elections, where Republicans are expected to regain control of Congress and possibly the Senate, may be positive for equities. Watch out for riots.
• Restrictive monetary policy, waiting to see the result of the previous tightening over growth and employment. Probable pause or slowdown until 2023.

Geographic neutrality. Valuation opportunity in Europe, at recession prices.

The most defensive sectors can benefit from a late macro cycle, even recessive:

• 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 ability to transfer price increases to the consumer.

Long term opportunities:

• Technology: Although there may still be volatility, attractive multiples.
  
• Biotechnology: advances in the treatment of diseases will encourage M&A in this sector.
• Renewables: the need to decarbonize drives huge investment plans in renewable energies.

Short-term, attractiveness due to base and spread increase.

• Credit spreads at high levels, both in European and American bonds. We see it as attractive because the returns are around 5%.
  
• Risk of yield increase in government bonds, both European and American. country risk premiums on the rise in Europe.
• 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, as inflation expectations are lower than the current rate.

• The dollar continues to be a safe haven asset in the face of geopolitical uncertainty. Range 0.95-1.00 in the short term, in which to reduce dollar exposure.
  
• Private equity bubble risks: lots of money to invest with still high valuations.
• Recession risks put downward pressure on metals and energy. Volatility in agri-food raw materials.