The Big Picture: Time for a Break
Societe Generale Corporate and Investment Banking - SGCIB
Helping you build the future
Everyone requires some respite, even a bull market. In their latest quarterly report, our strategists highlighted that a lot of positive news was already priced in after the markets 7% gain in 1Q24. During 2Q, the market overall has been nearly flat, while defensive sectors have outperformed. This behaviour suggests a market that is in need of some rest. Furthermore, political uncertainties amplify the likelihood of a more rangy rather than trendy market in the second half of the year. It's time for a well-deserved break!
🖋️Charles de Boissezon, Roland Kaloyan, Kevin Redureau
Multi-Asset Portfolio: Broadening in Equities, Narrowing Elsewhere
In a scenario where global growth looks set to remain relatively robust (and might even accelerate in Europe and China, while the US stops overheating), oil prices show a (severe?) downward bias, and most central banks offer an asymmetric profile (to cut or not to cut?), our strategists aim for a balanced allocation (neither risk-averse nor dynamic), acknowledging that cross-asset positioning is still far from risk-on and exuberant. There’s a lot happening on the (geo)political agenda, forcing them to separate the noise from the real game changers, the latter being mostly pro-growth, although some could be inflationary.
Commodities Outlook: Attained but not Sustained?
That commodities futures trade on margin can mean that sentiment can at times dominate fundamentals in driving price action. However, this is the only time-tested way of incentivising the projection of an unknown future into today’s price formation. Our analysts look at crude, gold and copper’s most recent price moves through this prism of “sentimental” versus “fundamental”.
🖋️ Ben Hoff, Florent Pelé, Paul Faucillon
Thematic: A Nuclear Energy Revival
In July 2022, our strategists published a key report on the nuclear industry. The industry has moved back into the spotlight, as nuclear is a low-carbon source of energy that could help countries meet the energy security imperative. Most scenarios assume that nuclear will account for a growing proportion of the electricity mix (IPCC, IEA, NGFS). At last year’s United Nations COP 28 climate conference, 22 countries made a collective commitment to triple their nuclear energy capacity by 2050 (from 2020 levels), underscoring nuclear’s vital role in achieving global net-zero greenhouse gas emissions.
🖋️ Charles de Boissezon, Roland Kaloyan, Kevin Redureau, Frank Benzimra, Manish Kabra
The Fed (and the dollar) may be ignoring weaker US data but bond investors are not
US inflation numbers and hard economic data are printing weaker than expected, a fact that bond investors are increasingly taking on board. But the dollar remains stubbornly robust, despite a 25bp drop in US 10-year yields and yield differentials turning against it. Instead, investors are transfixed by the sliding yen as it approaches Y160/$. And it is not just the Japanese authorities who are getting anxious at the yen’s weakness (pledging to intervene “24 hours a day if necessary”); it is also a big headache for China as the yen’s struggles are making China’s deflationary quagmire much more sticky and difficult to escape.
Abraham Lincoln once said, “By failing to prepare, you are preparing to fail”. So why do well-known risk management models fail to predict major events? Is it possible to know when and where the next crisis will come from? And how can we be better prepared? In this episode of 2050 Investors, host Kokou Agbo-Bloua explores the theory of Black Swans, created by Nassim Nicholas Taleb, and its relevance to sustainability, climate change, and financial markets.