CIO View June 2023

Stock market highs collide with dark economic clouds: how does Tareno position itself as an indepen­dent asset manager in client portfo­lios?
A high angle shot of the mossy stones in the mountain under the cloudy sunset sky

Stock market highs collide with dark economic clouds: how does Tareno position itself as an indepen­dent asset manager in client portfo­lios?

The bad economic news just keeps coming: Negative year-over-year growth in money supply, the sharpest rise in interest rates in decades, tighter lending standards for businesses, but also various other indica­tors such as business climate indica­tors or the inverted yield curve on both sides of the Atlantic are lowering dark clouds over the economy. Even the antici­pated boom for the global economy, follo­wing China’s reope­ning is fizzling out much faster than origi­nally hoped for. It seems to have served the domestic market rather than the global economy.

What are equity markets making of this?

The Dax is trading at an all-time high and the US indices have posted double-digit gains since the begin­ning of the year – all thanks to 7 stocks. This leaves everyone and their dog puzzled.

Do you have any questions?

We are happy to assist you and our author Gregor Taraszow, Head Portfolio Manage­ment and CIO is always available for questions and explana­tions.

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How do these obser­va­tions fit together and where is the market headed from here?

The positio­ning of profes­sional investors is certainly one reason for the bull market: Reces­sion forecasts for Europe and the U.S. have long been a topic in invest­ment bank outlooks and daily newspa­pers.  The eurozone has already followed Germany into an official technical reces­sion. Switz­er­land, on the other hand, seems – as is often the case – to be the last Gallic village to escape an economic downturn. For all other count­ries, the situa­tion looks much worse. The data are available to all market parti­ci­pants and are quite clear. Accor­dingly, many market parti­ci­pants are cautious. Even the more optimi­stic analysts do not expect a US reces­sion in 2023, but in 2024. The reason for the later start is the huge amount of money that Ameri­cans saved during the Corona pandemic and are still drawing on: Based on govern­ment aid payments and business closures, it is estimated that American house­holds saved up to $2.4 trillion during the pandemic, of which $1.3 trillion remains. That could keep the consumer-driven U.S. economy out of reces­sion this year, analysts say.

While it may seem boring to follow the finan­cial market consensus, we at Tareno also believe that it is time to become more defen­sive: Within the asset alloca­tion, this can be done by parti­ally hedging equities (volati­li­ties are low again and hedging is there­fore cheap) or by under­weighting equities.
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So how do you invest your money in these times?

While it may seem boring to follow the finan­cial market consensus, we at Tareno also believe that it is time to become more defen­sive: Within the asset alloca­tion, this can be done by parti­ally hedging equities (volati­li­ties are low again and hedging is there­fore cheap) or by under­weighting equities. Within equities, we prefer defen­sive stocks that hold their value. On the other hand, some stocks in the artifi­cial intel­li­gence sector remind us of the dotcom bubble with price-to-sales ratios above 35 – we avoid these stocks not only despite, but also because of the hype. On the other hand, compared to recent years, there are alter­na­tives to stocks again: TARA (there are reasonable alter­na­tives) has long since replaced TINA (there is no alter­na­tive). Thus, it is once again possible to earn more than 5.25% in USD with high quality bonds and low interest rate risk! There is one mistake investors should not make: Panic selling of the portfolio or a complete change of strategy is not recom­mended. Through constant portfolio analyses, the right adjust­ments in asset alloca­tion, we successfully steer your assets even through poten­ti­ally stormy seas.

Learn more about our exper­tise.

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Disclaimer

The state­ments and data in this publi­ca­tion were compiled by Tareno AG to the best of its knowledge, in part from external (publicly acces­sible) sources that Tareno AG considers reliable, solely for infor­ma­tion purposes. This publi­ca­tion is not the result of a finan­cial analysis. Tareno AG and its employees are not liable for incor­rect or incom­plete infor­ma­tion or for losses or lost profits resul­ting from the use of infor­ma­tion and the conside­ra­tion of opinions expressed. The state­ments and infor­ma­tion do not consti­tute a solici­ta­tion or invita­tion, offer or recom­men­da­tion to buy or sell any invest­ment instru­ments or to engage in any other transac­tions.

Nor do they consti­tute a specific invest­ment proposal or other advice on legal, tax or other issues. A positive return on an invest­ment in the past is no guarantee of a positive return in the future. The state­ments, infor­ma­tion and opinions expressed here are only current at the time of writing and may change at any time.

Dupli­ca­tion or repro­duc­tion of this publi­ca­tion, even in part, is not permitted without the written consent of Tareno AG. The „Direc­tives on the Indepen­dence of Finan­cial Research“ of the Swiss Bankers Associa­tion do not apply.
Pictures: IStock, Pixabay, Unsplash
Original: Marijke Vosmeer