August was very much a tale of two stories across financial markets in August: the first two weeks were a simple continuation of the risk-on wave that started at the end of June and then, from mid-month onwards, a powerful and ever since relentless reversal eventually vindicated our recent mantra that this was yet another dead cat bounce in a cruel bear trend, all the more so that, quite crucially, the ebb tide started this time way before Jerome #powell killed off any surviving dovish/bullish hopes at the #jacksonhole Summit. All in all, end of the Summer parenthesis for risk assets altogether...
Importantly, this by no means rules out the possibility that we may have touched some kind of #inflation #peak, at least in the U.S. but the problem is the "may", precisely. Because, as long as that is not a certainty, which, by definition, will take months (at the very least) to unfold, all bounces on risk assets should and WILL be perceived as opportunities to lighten exposure in what, from a more macro perspective, remains a quintessential #stagflationary environment.
From an investment perspective, we must have been quite lucky AGAIN on Fixed Income because after switching from Underweight / Short to Neutral on June 14, the very day global rates peaked (e.g. #US 10Y #rate note at 3.498% ), we switched back to Underweight/Short the very day (August 2) they bottomed (e.g. US10Y note at 2.516%, please check our #podcaststrategy). Meanwhile and quite logically, our long-held positions on risk (more or less Overweight/Long anything commodity-related and Underweight/Short on virtually all risk assets (to various degrees of course) have been candidly (but equally logically in a wicked kind of way) making up for "lost gains" during the now-defunct Summer Break for risk assets...
Having said, as we highlighted regularly over the last few weeks, pockets of weakness and/or #volatility across the #commoditymarket have tended to become more widespread recently ( e.g. silver, - 24%YTD ), which may become a key game-changer at some point but, then again that is still only a "may" in as much as scores of commodities remain essentially up-tempo: think about #orangejuice, up a cool and tangy 36% YTD and still actively exploring 5-year highs.
In the end, this is what markets would really need at this juncture: Vitamins! So, will central banks provide them any time soon? Well, they may. But...
#AiRLAB #Investmentsheatmap #markets#review #august2022 #returns #performers #thinktank #finetank #staytuned
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