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Stocks, bonds, gold, silver, copper and crypto: why are they rising and how long will it last? Fugnoli (Kairos) responds

In the last episode of the podcast on the 4th floor, Kairos strategist Alessandro Fugnoli reflects on the similarities between 2021 and 2024 to answer a question: how long will the market run last?

Stocks, bonds, gold, silver, copper and crypto: why are they rising and how long will it last? Fugnoli (Kairos) responds

Do you remember what happened in 2021? The pandemic and the economic recovery, vaccines and the rush of raw materials, the historic highs reached by the stock markets and the bitcoin rally. In the latest episode of his podcast  “On the 4th floor”, the strategist of Kairos Partners Sgr, Alessandro Fugnoli, reflects on the analogies between what happened three years ago and what is happening today, in 2024. In fact, if in 2023 the optimism was placed on vaccines, today it has moved to'artificial intelligence (quarterly Nvidia docet). Today as then, the bags have reached historic highs, the raw material are recovering, while the bitcoin in six months it went from 30 thousand to 70 thousand (at the time there were 65 thousand and even the meme actions of the playground, forgotten by everyone in the past two years, have returned to shine.

The biggest analogy? The attitude of central banks towards inflation

“These similarities are not coincidental. They are the result of growing economies, profits inflated by inflation and expansionary fiscal policies. But the decisive analogy is that between attitude towards inflation, then and now, by central banks, in particular the Federal Reserve American”, explains Fugnoli. 

Moving from theory to practice, both in 2021 and 2024, the Fed "tolerates inflation in the name of growth", despite the large difference existing in rates, then at 0 and today at 5,50%. "Despite governor Powell from a few months you try to reiterate in every speech that your monetary policy is restrictive, the market doesn't believe him too much", admits the strategist, who underlines the ongoing contradiction: “The market in fact sees on the one hand an economy that is doing well, profits that are growing and inflation that is no longer falling and on the other it sees a Fed that ensures that under no circumstances will it raise rates again and is looking for any excuse to lower them as soon as possible." For now there is no evidence to indicate an imminent end to these conditions. Because of this we remain invested in the stock market. 

Bonds and commodities

Moving on to bonds, Fugnoli states that “the direction is that of an increasingly less inverted yield curve. In practice, those who cannot carry out arbitrage operations between short and long bonds are better off remaining invested in relatively short bonds".

  And what about raw materials? According to Fugnoli, gold and silver will continue to be supported by strong Chinese purchases. “We must accumulate weakness, also because gold, after forty years, is slowly regaining its function as a reserve currency and unit of account in international exchanges,” he advises.

Il copper, for its part, "it is the most important industrial metal and will have a central role in the energy transition", says the economist who highlights how the price is currently inflated by technical and speculative factors, but looking at the medium term "its prospects they are however very interesting, with a structural imbalance between stable supply and growing demand”.

What about cryptocurrencies?

The latest news, however, which arrived after the release of Fugnoli's podcast, concerns the SEC gives green light to ETF on Ether in the United States. Regardless, the bitcoin it benefits from the still ample liquidity, from the doubts of a part of the market on the credibility of the central banks' anti-inflationary policies and from the recent introduction of ETFs which make their holding easier and safer. However, let us remember that Bitcoin still has speculative characteristics and that, unlike gold, it is not subject to purchases by central banks", underlines Fugnoli.

So what to do? "The the general picture is still positive and the modest slowdown in some areas of the American economy is offset by an acceleration in European growth. For the markets, the characteristic of the coming months will be the expansion of the share price rise to sectors and geographical areas that have been neglected until now. Even within the American stock exchange we will look for the diversification and part of the interest concentrated so far on high technology will be distributed across the rest of the market”, concludes the strategist. 

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