2018 is in the final stages and barring surges that are not foreseeable at the moment, it risks reserving a meager, if not bitter, balance sheet for Italian savers. Managers, for the first time, are called to bring out and communicate management costs based on the Mifid2 directive. Based on Wednesday evening's Bloomberg data, in fact, we are faced with a red balance sheet in France, Switzerland, the United Kingdom, Europe, Germany, Spain, Italy (-10,97%) and China (Shagai Composite) with growing losses from first to last in the list. The only exceptions among the major Stock Exchanges are the USA and Japan.
There may still be some rebound but the moment of braking is coming, he explains – in this comment which we reproduce in full – Lorenzo Di Mattia, manager of the HI Sibilla Macro fund, Hedge Invest Sgr. Hedge Invest, an independent asset management company specializing in alternative investment products (hedges, Ucits, real estate and private debt), with offices in Milan and London, was among the first alternative asset management companies authorized in Italy.
In September, we saw a tactical rally in emerging markets and Europe, and a repricing of the German Bund. We believe that from a tactical standpoint the market can continue to have marginal upside, with short-lived rallies in currently depressed areas such as emerging and European equity markets. We also expect new highs to be reached on the American market. However, the moment when “the music stops” is approaching and it is becoming increasingly dangerous to try to catch these small bounces.
In the United States, interest rates have continued to rise: the two-year rate is now above 2,8%, and therefore represents a solid alternative risk-free compared to all other risky assets. That rate is about 1,5% higher than a year earlier and 2,3% higher than two years earlier, a significant change that incentivizes a change in asset allocation. The Fed has not yet finished the hike and its policy quantitative tighteningIndeed, we expect these measures to continue for at least a year, or even longer, unless something goes terribly wrong with the US economy.
A significant slowdown is underway in China, which persists today and which largely did not result from the trade war. It is not yet clear whether there will be a stimulus-led recovery, given that growth has peaked in nearly all developed markets.
In Europe, the ECB is attempting to stop its support for the periphery (the quantitative easing) at the worst possible moment, just as the populists and the unstable Italian government aim to continue to increase the level of debt, which in Italy is already equal to 2000 billion euros and has a ratio to GDP of around 130%. In our opinion, the gap between the budget numbers suggested by the European Commission, 0,8% of GDP, and those announced by the Italian government is too wide to reach a stable agreement that the market may like.
A worrying fact is that a correction on the semiconductor industry and the technology sector in the United States is continuing, albeit in a moderate way, which is leading to a repricing of securities growth. When even the strongest area starts to weaken, that's rarely a good sign. The time to take a position on the short side is likely to come soon.
Finally, we have a neutral outlook on government bonds, especially on the US XNUMX-year bond, given that even if short-term rates are rising, growth is reaching its peak. Instead, we are moderately positive on the dollar and on precious metals, at least until the FED is close to the end of the recovery process.
