Monthly comment October 2022

Index

• Markets
• Economy
• Geopolitics
• Conclusions
• Allocation
• Market data
• Event calendar

Markets

Financial markets had already discounted the central banks' measures and so there was no particular movement on short-term rates while we witnessed a descent in medium to long-term rates as traders begin to predict a recessionary scenario as early as 2023 in both the United States and Europe. On the equity front the month of October has seen a recovery in prices and closes with a very good positive sign, the quarterly reports released so far have been mostly positive and have often exceeded analysts' expectations, only in the technology sphere we have seen disappointing results on some big caps such as Amazon and Meta but these disappointing figures have been offset by Apple's good data so that even the Nasdaq was able to close the month in positive territory. 

Economy

On the economic front, the month of October was quite eventful because of the inflation data released that were significantly higher than analysts' expectations, in fact, in the United States we had the annual inflation level at 8.2% while in Europe the inflation level was as high as 10.7%, the highest level in forty years. The issue of inflation has now become the focal point of the policies of central banks, which have now for months adopted very restrictive monetary policies with very aggressive interest rate increases designed to combat this inflation. With this in mind, the European Central Bank raised benchmark rates during the month by 0.75 percent to 2 percent and the Federal Reserve also raised rates by 0.75 percent to 3.75 percent at its last meeting. Our impression is that after these months of frenzied hikes, the central banks may ease the pace of hikes for a moment so that we can see the impact of these measures on the real economy in the coming months.

Geopolitics

The month of October from the geopolitical point of view marked a pause in the growing dynamic of international tensions that had manifested themselves throughout the summer period; the situation between Ukraine and Russia is still very tense but very small glimmers of openness were seen that could lead to a dialogue between the two sides while on the Asian front the tensions between China and Taiwan fortunately had no further developments. In Europe we had the inauguration of the new government in Italy and the resignation of British Prime Minister Liz Truss who, in just 42 days, was forced out of office after announcing tax reform policies that caused a major financial earthquake with the collapse of British bond market prices. The country's leadership passed into the hands of Rishi Sunak who previously served as treasury secretary.

Conclusions

Expectations for the last months of the year are tentatively positive even though in the coming weeks we will have very important deadlines such as, for example, the midterm elections in the United States and a G20 summit in Indonesia where for the first time Biden and Putin could meet and thus open a negotiating table on the conflict between Russia and Ukraine. As said statistically the last months of the year are positive months for financial markets, so we expect a recovery phase in both equity and bond markets and as a result we have increased and are increasing our investment allocation. Having said that in our opinion, first of all, the choice of sectors where to invest and then the selection of stocks with the greatest growth potential remains fundamental; our analysis and research work focuses on these two points.

Allocation

Liquidity

Bonds

Equity

Precious metals & Commodities

Geo-tactical allocation

Switzerland

Western Europe ex Switzerland

North America

Latin America

Asia Pacific

Top sector

1. Energy
2. Health Care
3. Consumer Discr.

Market data

Event calendar

Legend