Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
Is it time to review your investment portfolio?
Søren Otto Simonsen
Senior Investment Editor
Summary: Inflation is surging and as an investor it is important to prepare your portfolio. And it is even more important this time, as it may not be as straight forward as the books would lead you to believe.
You need to be aware of inflation as an investor. But it does not need to be a scary thing. In fact, inflation is an important factor in the way the world’s economies are built – and without it, we would be in a much worse situation. Apart from that, inflation can also provide investment opportunities. So, if you, like we do, believe that inflation is here to stay and will keep pushing prices upwards, it could be potentially be relevant for you to review your portfolio and make sure it is positioned towards it.
Time to diversify your portfolio?
There is one important paradox that is important to deal with, when looking at the current development within inflation and your portfolio. Usually, inflation would favour equity markets, but right now it is more important to look at how the central banks will get inflation under control, rather than looking at the wild running inflation itself.
“We have long believed that the current inflation is more structural than temporary, which is contrary to especially the American Fed. This also means that we believe there is a much larger need for tightening the financial conditions than legislators believe. Such tightening will hurt companies across the globe and thus we expect the equity markets to suffer,” says Economist, Christopher Dembik.
On top of that, the green transformation makes it harder for the central banks to tighten fiscal policy, as the former takes priority. “Since late 2020, the Saxo Strategy Team has held the view that the real economy is far too small for the financial and economic agendas of governments, central banks and the green transformation. This prompted our call for higher inflation throughout 2021, which crystallised with the inflation spike in the second half of 2021, capped by a 7 percent US December CPI print,” Chief Investment Officer, Steen Jakobsen said in our Q1 2022 Quarterly Outlook.
This means, according to Dembik that we should expect the opposite of a positive run for equities: a risk sell-off and the re-introduction of other asset classes’ strength in a portfolio. “With the expectation of fiscal tightening - even though less than we think is necessary – and potentially the first real move back towards historical averages for equities, the concept of a diversified portfolio – not within equities – but across asset classes, could be a key step towards getting the best risk-adjusted return for all investors,” he says.
If you want more inspiration from Jakobsen about this topic, go check out his SaxoSession about inflation, where you can also get inspiration to create a portfolio, which is sturdy today as well as tomorrow, from his 100-year portfolio.
If you want to read our Head of Equity Strategy, Peter Garnry's, more detalied view on the equity side of inflation, take a look at this article.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer