The chief investment officer of the Swiss asset manager Prime Partners recently appeared to give advice to stock investors, especially on the development of stocks over the past two years. For him, investors should be cautious in chasing the recent surge in stocks and bonds given the current economic uncertainty.
Francois Savary said it is very difficult to have clarity on what is happening in the economy because of the current investment cycle. He said in an interview, "One of the main factors supporting the recent surge is that the bond market that was strong in July, has started to fade to some extent."
Also, second quarter earnings are solid for now and this is likely to prompt analysts to revise their third quarter earnings forecasts. So his party considers that two elements that can support a further surge in the equity market are not clear.
Therefore, he is of the view that investors should be cautious in chasing the surge in the equity market since mid-July. The S&P 500 is up nearly 13% from July lows, closing at 4,140 on Monday, but remains down since the start of the year. Regarding bonds, Savary said, "we all know it's very difficult to make money on the bond side." He personally did not choose to pursue bond increases.
Investors in global markets are paying attention to inflationary pressures, recession risks and central bank tightening cycles, with even major companies such as Berkshire Hathaway and SoftBank posting investment losses in the quarter that ended in June.
For now, Savary is of the view that the market still expects the possibility of a recession. On that basis, the analysts continue to pay attention to what is happening in the market.
U.S. gross domestic product fell for the first two quarters of the year, meeting the general definition of a recession, though the NBER defines it differently and the White House insists the U.S. not currently experiencing a recession.
Investors will look to U.S. inflation data. on Wednesday for further clues on the state of the world's largest economy.
