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Tactical Asset Allocation

Correction or blow-off?

Thursday, 27 June 2024, written by Maarten Spek

Historically, the first two weeks of July were very good weeks for equity prices. If stocks adhere to this calendar effect, a stock market blow-off phase could be in the offing. However, slowing growth, high valuations and very weak market breadth point to a high risk of a correction..

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Previous reports

Unreliable recession indicators

Monday, 03 June 2024

As long as there is excess liquidity, higher short-term interest rates have a relatively minor negative effect on the economy. Therefore, asset prices and an inverse yield curve become an unreliable recession indicator. For the time being, monetary conditions remain supportive for riskier asset prices. However, we do not expect much upside potential anymore due to more downward pressure on economic growth.

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Monetary headwinds

Thursday, 25 April 2024

An economic recovery in Europe and more stimulus in China increases speculation of a no-landing of the economy. As inflation also picks up, investors expect far fewer rate cuts and long-term interest rates are rising. In this report, we discuss how markets may react to these monetary headwinds and what this means for tactical asset allocation.

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Effects of tight monetary policies delayed rather than over

Wednesday, 27 March 2024

As Warren Buffett once said: “Only when the tide goes out do you learn who’s been swimming naked”. Despite the very rapid pace of monetary tightening in recent years, the monetary tide hasn’t gone out with the major stock indices at all-time highs. There are several explanations for this, which we will discuss in this report. However, there are also a number of developments that point to an upcoming low tide and that will expose more of the delayed negative effects of monetary tightening on asset prices.

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A word from the author

"In this report I answer the question How would ECR invest? We express our views by indicating exactly how much we want to underweight or overweight each asset class relative to the Strategic Asset Allocation. The approach is fundamental and chart-technical combined with valuation metrics. It is a bridge between our mid-term macro views and your tactical asset allocation decisions. I'm always pleased to hear readers tell me it's been an  invaluable resource for their investment committee meetings as it provides a comprehensive insight and guidance in team their discussions. This is exactly what we want to achieve with this report"




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