Market Commentary May 2023
The debt discussion led to an agreement much faster than expected not only by us, but also by the world's largest central banks. That is why - not surprisingly - there was a stock market boom in the run-up to the decision.
Because and even though this has an inflationary effect, the world's five largest central banks decided to temporarily shelve the restrictive monetary policy in order to increase the supply of liquidity to the markets. The threat to the economy and the capital markets seemed too great.
The chart below illustrates this very well.
The question now is whether the central banks will continue to keep the money floodgates open now that the Black Swan has been averted. We believe that they will not. On the contrary, inflation (USA: 4.9%, euro area: 7.0%) is still at an elevated level, so we can expect monetary policy to remain restrictive.
For the U.S., the financial players are still not quite sure whether the maximum rate of 5.25% has already been reached or whether there will be one final rate hike in the fall. For the upcoming Fed meeting, a pause is expected in any case.
In the euro zone, by contrast, two further interest rate hikes totaling 0.5% are expected by the end of October.
Especially in times of increased inflation, investments in tangible assets are still the measure of all things.
In the course of the annual rebalancing of the CIIM European Stock Portfolio Fund, we made changes in the relatively undervalued shares. In contrast, nothing has changed in the selection of the "Deep Value" stocks.
Please do not hesitate to contact us if you have any queries regarding the fund.
Your CIIM Team