Wild West Ride
There are some parallels between the markets we’ve just lived through and the Wild West Ride. February’s equity markets extended the advances that started in November 2023, even though macro signals are deteriorating, with plateauing inflation, long rates on the rise again, and drastic adjustments to rate cuts expectations (from six to three cuts) in a matter of weeks. In this environment, maintaining a neutral but differentiated portfolio approach seems wise. Asia remains promising, with the rerating of Japan not complete and with China finally showing some signs of stabilization. In the United States, if some similarities can be drawn with the IT bubble, the strong results and outsized profitability of US tech champions also underline significant differences with today. With more stretched valuation and sentiment indicators, a short-term market pause would be healthy. Finally, as rate cut expectations have adjusted, fixed income looks a more attractive asset class compared with a few months ago. We are detailing these ideas in this newsletter.
