Markets do not look back, yet investors do. After a breakdown of bourses in March, the bellwether indices are up by 30%–40%, at least. This calls for a breather, especially as a quite demanding earnings season is due in July 2020. Our Head of Research, Christian Gattiker explains his weekly analysis on what's next in the markets.
- Signs of a market consolidation are materialising. Yet liquidity points to intact prospects after that. We suggest investors get some good nights’ sleep in the meantime.
- For anyone willing to take action, the infrastructure theme comes in handy. It is election-campaign driven, of course, but underpins a sound structural trend.
The challenge will remain to stem against the overall tide of bearish sentiment from investors who have missed opportunities earlier in the year. After that, the medium-term prospects are fully intact. Liquidity measures – the driving force of risk assets beyond the short term – are flashing deep green. Our strategists point to the gauges in the US. These monetary aggregates signal double-digit upside for the months to come, and the US numbers tend to set the tone globally.
Sure, this is just the same old “it’s the economy, stupid” type of election-campaign salvo. Yet it points to a well-supported structural trend. The US infrastructure score was recently downgraded to D+ versus a C during the times of Reagan. But other nations have been massively ramping up their efforts. So presidential elections or not, infrastructure spending deserves a position in your portfolio. Maybe not necessarily brick-and-mortar investment in US steel and cement producers, but 5G and other technology-related investment franchises are wellworth a look.
Presidential elections or not, infrastructure spending deserves a position in your portfolio.
In the meantime, those who are fully invested can happily remain so. In fact, this is the time to catch up on some good nights’ sleep. As our technical analysts highlight, staying invested while markets were closed was the most profitable strategy in past decades. By contrast, day trading was a recipe for disaster for the average market participant. For anyone looking for active investment ideas (to hold onto for longer than a day or two), the good news is that the recent announcement on US infrastructure spending will come in handy.
What is going on in the markets? Julius Baer’s experts share their views.