9/8/22 2:34 PM - Lesezeit

Bulls against bears

Robert Karas

Chief Investment Officer, Partner

On the stock market, the weight of the bulls and bears dominates events; in the long term, it is corporate profits that count. Often, individual pieces of good or bad news tip the scales and decide whether the bulls - the symbol for rising prices - or the bears gain the upper hand. 

Until mid-June, the bears stormed ahead; by mid-August, they were thwarted again by the bulls. Was this countermovement a bear market rally? In other words, a short-term countermovement that will soon be wiped out by another wave to the downside? Or are we already at the beginning of a new bull market?

Facts versus emotions

Unfortunately, these questions can only be answered correctly in retrospect. Currently, we have to make decisions for an uncertain future. Hard data is what counts first and foremost, not gut feeling. 

We focus on how broad the upward movement actually is. After all, the highs in March and May were driven by only a few sectors and stocks and were correspondingly short-lived. The latest upswing differs in its breadth. For example, over 90% of the largest 500 U.S. stocks rose above their average price over the last 50 days. 

Of course, this is only one piece of the puzzle among many indicators. Good returns are possible in the stock market in any month, but historically September is always the worst. The presidential cycle and the Mid Term Elections in the U.S. also cast a shadow over the markets in the coming weeks. After that, however, this cycle had a positive effect. 
 
In summary, our outlook for the equity markets has brightened somewhat. September could bring an interesting buying point. However, as the saying goes: We will cross that bridge when we get there. 

Bonds in the wake of inflation

On the major bond markets on both sides of the Atlantic, investors focused on inflationary aspects. The yield on 10-year U.S. government bonds surged above the 3% mark for the first time in around a month. The upward pressure on yields was equally noticeable on the euro government bond market. Italy's government bonds are suffering more than average, and the new election is causing unrest.

We are maintaining our average duration of 4 years for euro and 4.5 years for USD mandates. Within our bond strategy, we are 13% invested in Italian government bonds. Enough to have a noticeable return opportunity, but not so much that Italy dominates the portfolio.

Disclaimer: This is a marketing communication. Investments in financial instruments are exposed to market risks. Past performance or forecasts are not reliable indicators of future results. Tax treatment depends on each client's personal circumstances and may change in the future. Bank Gutmann AG hereby explicitly points out that this document is intended solely for personal use and for information only. Publishing, copying or transfer shall not be permitted without the consent of Bank Gutmann AG. The contents of this document have not been designed to meet the specific requirements of individual investors (desired return, tax situation, risk tolerance, etc.) but are of a general nature and reflect the current knowledge of the persons responsible for compiling the materials at the copy deadline. This document does not constitute an offer to buy or sell or a solicitation of an offer to buy or sell securities. The required data for disclosure in accordance with Section 25 Media Act is available on the following website: https://www.gutmann.at/en/imprint

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