Quarterly Investment Review – Q4 2022

In 2022 inflation returned with a force not seen for forty years. This was especially true in western economies where a confluence of forces, mostly Covid related, drove up prices. During 2020 and 2021 western governments provided huge monetary stimulus and organised generous relief packages to alleviate the Covid pandemic. The surge of spending in a world where many production facilities were running at low capacity, due to supply constraints caused by Covid, led to soaring price increases. This situation was exacerbated by the Russian invasion of Ukraine which led to tighter markets in oil, gas and wheat. Moreover, Covid changed the labour market, leading to labour shortages. A combination of health-related concerns and over generous welfare led in the US to the lowest worker participation rate for forty years. With nearly two jobs available for every unemployed worker wage pressure has been strong. This sharp and persistent inflation led to a belated reaction from the Federal Reserve to tighten liquidity, and both the bond market and stock market suffered sharp setbacks. In 2022 the US 10-year bond fell 14.7%, the German 10-year bond fell 18.6%, while the longer dated Austrian 2086 bond fell over 50%. In equity markets the S&P 500 index declined 19.4%, the MSCI Europe Index fell 14.9% in US dollars, and the MSCI World Index declined 17.5%. The US dollar was the strongest major currency rising by 6.2% against the euro and 12.5% against the yen. Very few asset classes managed a positive return for the year, and the largest falls were in the popular areas such as US technology stocks, the Nasdaq was down 33%. The outcome of this turmoil was an estimated $35 trillion wiped off financial wealth.

The strength of inflation caught policy makers by surprise. After a long period of keeping interest rates at close to zero, the Federal Reserve raised rates from 0.5% in April to 4.5% in December. While this is a level much lower than the rates that prevailed in the 1970’s and 1980’s the size of the debt now is far greater, so the impact is much more forceful. A 5% US interest rate today generates the same burden as a 15% rate in the 1980’s. It also marks a reversal in policy.

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Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

Informe de inversión trimestral – 4T 2022

En 2022, la inflación volvió con una fuerza que no se veía desde hacía 40 años. Así sucedió especialmente en las economías occidentales, donde una confluencia de factores, en su mayoría relacionados con la covid-19, impulsó los precios al alza. Durante 2020 y 2021, los gobiernos occidentales aplicaron enormes estímulos monetarios y acordaron generosos programas de ayuda para mitigar la pandemia de covid-19. El aumento del gasto en un mundo en el que muchos centros de producción funcionaban a baja capacidad, debido a las restricciones de suministro provocadas por la covid-19, disparó de forma vertiginosa los precios. Esta situación se vio agravada por la invasión de Ucrania por parte de Rusia, que provocó restricciones en los mercados del petróleo, el gas y el trigo. Además, la covid-19 propició cambios en el mercado laboral, provocando escasez de mano de obra. Las preocupaciones relacionadas con la salud, junto con una asistencia social demasiado generosa, llevaron a EE. UU. a registrar la tasa de participación de los trabajadores más baja de los últimos 40 años. Con casi dos empleos disponibles por cada desempleado, las presiones salariales han sido fuerte. Esta marcada y persistente inflación provocó una reacción tardía de la Reserva Federal para restringir la liquidez, y tanto el mercado de renta fija como el de renta variable sufrieron fuertes reveses. En 2022, el bono estadounidense a 10 años cayó un 14,7%, su equivalente alemán se dejó un 18,6%, mientras que el austriaco a 2086, a más largo plazo, cayó más de un 50%. En los mercados de renta variable, el índice S&P 500 descendió un 19,4%, el índice MSCI Europe cayó un 14,9% (expresado en dólares estadounidenses) y el índice MSCI World se dejó un 17,5%. El dólar estadounidense fue la divisa más fuerte, al subir un 6,2% frente al euro y un 12,5% frente al yen. Muy pocas clases de activos lograron una rentabilidad positivo en el año, dándose las mayores caídas en los sectores más populares, como los valores tecnológicos estadounidenses: el Nasdaq sufrió una caída de un 33%. El resultado de esta inestabilidad fue una pérdida de patrimonio financiero estimada en 35 billones de dólares.

La fortaleza de la inflación pilló por sorpresa a las autoridades políticas. Tras un largo periodo en que los tipos de interés se mantuvieron próximos a cero, la Reserva Federal los subió del 0,5% en abril al 4,5% en diciembre.

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Los resultados pasados no implican resultados futuros. Las opiniones, estrategias e instrumentos financieros que se describen en el presente documento pueden no ser convenientes para todos los inversores. Las opiniones expresadas son sólo las del momento en la(s) fecha(s) que aparece(n) en este material. Las referencias a índices de mercado o compuestos, índices de referencia u otras medidas de resultados relativos de los mercados durante un período específico sólo se proveen a título informativo. NS Partners no garantiza ni es responsable de la exactitud o la integridad de las informaciones (datos financieros de mercado, precios de bolsa, resultados de investigación u otros instrumentos financieros) que se mencionan en este documento. El presente documento no constituye una oferta ni solicitud a ninguna persona ni jurisdicción donde tal oferta o solicitud no esté autorizada ni a ninguna persona a quien sería ilegal hacer dicha oferta o solicitud. Toda referencia en este documento a instrumentos específicos o a emisores sólo tiene una finalidad ilustrativa y no debe ser interpretada como una recomendación para la compra o venta de dicho instrumento. Las referencias en este documento a fondos de inversión se aplican a fondos que no han sido registrados por la Finma y que por lo tanto no pueden ser distribuidos en o desde suiza excepto a ciertas categorías de inversores. Algunas de las empresas del grupo NS Partners o sus clientes pueden tener posiciones en los instrumentos financieros de alguno de los emisores mencionados en este documento, o ser asesor de uno de ellos. Hay información adicional disponible a solicitud. © Grupo NS Partners

Quarterly Investment Review – Q3 2022

Some sombre clouds have darkened the global economic outlook. The energy crisis is making headline news daily, and creating considerable political trouble. China’s economy continues to suffer due to their zero Covid policy and the weakening of its real estate market. Inflation is running at levels in the West not seen for decades. Then at the end of the quarter a radical and poorly communicated budget statement in the UK led to an alarming collapse in sterling and UK gilts. So, it is not surprising that the markets have been under pressure. Equities had seen the worst first half to the year since 1962. By the end of the third quarter the World Index was down 26%, and the Nasdaq was down 32%. Technology having been far and away the best performing sector in the last decade, meant that a lot of money was crowded there, so it has suffered even more than the general index. The bond market has performed even worse, with some analysis showing 2022 being the worse year for bonds since 1788 and 1865. It is an environment that begs a lot of questions that are not easy to answer. How will the war in Ukraine progress? Can European solidarity with Ukraine survive a cold winter? How in control of its real estate sector is China, remembering that Chinese real estate is now the largest financial asset in the world? What happens if Central Banks run out of room to raise rates due to their national debt situation, but inflation remains high? Put another way how would Central Banks respond to an inflationary depression? That could be caused by continued high prices of food and energy, and disrupted supply chains.

Many of these uncertainties come down to inflation and the cost of living. Some price rises are due to the lingering after effects of Covid with shortages in critical components, such as semi-conductors, exacerbated by China’s lockdown. Russia’s invasion of Ukraine represents a completely different scale of disruption. Europe’s reliance on Russian gas, for example, represents a colossal strategic mistake. How can European economies thrive when they undergo a five to ten-fold increase in electricity prices?

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Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

Quarterly Investment Review – Q3 2022

Some sombre clouds have darkened the global economic outlook. The energy crisis is making headline news daily, and creating considerable political trouble. China’s economy continues to suffer due to their zero Covid policy and the weakening of its real estate market. Inflation is running at levels in the West not seen for decades. Then at the end of the quarter a radical and poorly communicated budget statement in the UK led to an alarming collapse in sterling and UK gilts. So, it is not surprising that the markets have been under pressure. Equities had seen the worst first half to the year since 1962. By the end of the third quarter the World Index was down 26%, and the Nasdaq was down 32%. Technology having been far and away the best performing sector in the last decade, meant that a lot of money was crowded there, so it has suffered even more than the general index. The bond market has performed even worse, with some analysis showing 2022 being the worse year for bonds since 1788 and 1865. It is an environment that begs a lot of questions that are not easy to answer. How will the war in Ukraine progress? Can European solidarity with Ukraine survive a cold winter? How in control of its real estate sector is China, remembering that Chinese real estate is now the largest financial asset in the world? What happens if Central Banks run out of room to raise rates due to their national debt situation, but inflation remains high? Put another way how would Central Banks respond to an inflationary depression? That could be caused by continued high prices of food and energy, and disrupted supply chains.

Many of these uncertainties come down to inflation and the cost of living. Some price rises are due to the lingering after effects of Covid with shortages in critical components, such as semi-conductors, exacerbated by China’s lockdown. Russia’s invasion of Ukraine represents a completely different scale of disruption. Europe’s reliance on Russian gas, for example, represents a colossal strategic mistake. How can European economies thrive when they undergo a five to ten-fold increase in electricity prices?

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Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

Informe de inversión trimestral – 3T 2022

Las perspectivas económicas mundiales se han visto ensombrecidas por algunos nubarrones. La crisis energética acapara los titulares cada día y genera importantes problemas políticos. La economía china sigue viéndose afectada por su política de «cero covid» y el deterioro de su mercado inmobiliario. La inflación se sitúa en niveles inéditos en Occidente desde hace décadas. Además, al final del trimestre, una declaración presupuestaria radical y mal comunicada en el Reino Unido provocó un desplome preocupante de la libra esterlina y los gilts británicos. Así las cosas, no es de extrañar que los mercados se hayan visto sometidos a presiones. Las acciones han registrado su peor primer semestre del año desde 1962. Al final del tercer trimestre, el índice mundial había caído un 26% y el Nasdaq un 32%. La tecnología, que ha sido con mucha diferencia el sector que mejor se ha comportado en la última década, ha concentrado mucho capital, por lo que ha sufrido incluso más que el índice general. El mercado de renta fija se ha comportado aún peor y, según algunos análisis, 2022 está siendo el peor año para los bonos desde 1788 y 1865. Es un entorno que plantea muchos interrogantes de difícil respuesta. ¿Cómo evolucionará la guerra en Ucrania? ¿Podrá la solidaridad europea con Ucrania sobrevivir a un invierno frío? ¿Hasta qué punto controla China su sector inmobiliario, si recordamos que el sector inmobiliario chino es ahora el mayor activo financiero del mundo? ¿Qué sucede si los bancos centrales se quedan sin margen para subir los tipos debido a la situación de su deuda nacional, pero la inflación se mantiene alta? Dicho de otra manera, ¿cómo responderían los bancos centrales a una depresión inflacionista? Esta podría producirse por la persistencia de precios elevados de los alimentos y la energía, así como por la alteración de las cadenas de suministro.

Muchas de estas incertidumbres se reducen a la inflación y al coste de la vida. Algunas subidas de precios se deben a las persistentes secuelas de la covid-19, pues la escasez de componentes críticos, como los semiconductores, se ha visto agravada por el confinamiento de China. La invasión de Ucrania por parte de Rusia constituye un grado de perturbación totalmente diferente. La dependencia de Europa del gas ruso, por ejemplo, supone un error estratégico descomunal. ¿Cómo pueden prosperar las economías europeas cuando sus precios de la electricidad se multiplican por cinco o por diez?

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Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

Informe de inversión trimestral – 2T 2022

Al inicio de 2022 se generó optimismo al levantarse los confinamientos impuestos por la Covid y cuando los mercados financieros comenzaron a anticipar la liberación de la demanda reprimida una vez que la economía mundial salió de la pandemia. Desde entonces una maldición bíblica liderada por guerras, hambrunas, pestilencia y muerte ha ahogado este sentimiento, con el consiguiente varapalo de los activos financieros. Ha sido especialmente atípico ver cómo los mercados de renta fija y renta variable registran caídas al unísono. Durante los últimos cuarenta años cada vez que las Bolsas se tambaleaban, el mercado de renta fija ofrecía un refugio seguro, pero a partir de máximos récord. Ahora, con la llegada de una inflación mucho más alta de lo esperado, los bonos se han desplomado. La renta variable ha entrado en un terreno bajista, pero el mal comportamiento de los índices ha ocultado el daño real que se ha sufrido. Muchas acciones han perdido más del 60% de su valor, un declive del que son responsables tres sucesos inesperados. Primero, la inflación, que supuestamente iba a ser transitoria, ha resultado más persistente, lo que ha provocado un brusco aumento de los rendimientos de los bonos, dando lugar a una de las subidas más rápidas de los tipos hipotecarios de la historia. Segundo, China no ha concluido su dura política contra el ómicrom, lo que ha llevado a imponer confinamientos totales en Shanghái durante varios meses y otros tantos parciales en Pekín. Durante casi todo este año alrededor de un cuarto de la economía de China se ha visto afectada, lo que ha agravado los problemas de abastecimiento que se habían desatado en los últimos dos años. Tercero, la invasión a gran escala de Ucrania por parte de Rusia propició que escasearan numerosos productos básicos de consumo, casi de un día para otro. Casi lo único bueno que puede decirse sobre la situación de Ucrania es que de momento se han evitado los peores escenarios; no obstante, la enorme crisis de abastecimiento que supuso perder al mayor productor de energía, metales industriales y materias primas agrícolas del mundo justo en un momento en que el mundo lidiaba con la desglobalización y el fin del despilfarro macroeconómico, se combinaron para generar considerables presiones inflacionistas. Como consecuencia de esto, todas las grandes economías se enfrentan a la desagradable opción de aceptar niveles de inflación mucho más altos o imponer políticas monetarias y fiscales mucho más estrictas respecto a las que prevalecieron en el periodo posterior a 2008, lo que en la mayoría de los casos significa entrar en recesión. La incertidumbre que genera esta situación ha puesto nerviosos a los mercados, y es improbable que recuperen el tono hasta que se aclare qué decisiones van a tomar los responsables políticos.

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Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

Quarterly Investment Review – Q2 2022

At the start of 2022 optimism was building as the lockdowns imposed by Covid were being lifted, and financial markets started to anticipate the release of pent-up demand from the global economy emerging out of the pandemic. Since then a biblical combination of war, famine, pestilence and death have drowned this sentiment, and financial assets have been pummelled. It has been particularly unusual to see the bond and equity markets fall in tandem. For the last forty years whenever the equity market tumbled the bond market provided a safe haven, but starting from record highs, and the arrival of much more inflation than was anticipated, bonds have collapsed. Equities have entered bear market territory, but even the poor performance of the indices has disguised the real damage which has been suffered. Many stocks have fallen more than 60%. Underlying this decline were three unexpected outcomes. First inflation, which was expected to be transitory, has proven to be more persistent, leading to a sharp rise in bond yields and one of the fastest rises in mortgage rates in history. Second China has not ended its harsh policy on omicrom leading to multi-month lockdowns in Shanghai and partial ones in Beijing. For most of this year about a quarter of China’s economy has been impacted, compounding the supply chain problems that have built up over the past two years. Third the full-scale invasion of Ukraine by Russia created shortages, almost overnight, of numerous commodities. About the only good thing that can be said about the Ukraine situation is that the worst-case scenarios have been avoided so far, but the huge supply shock of losing the world’s biggest producer of energy, industrial metals and agricultural commodities at just the moment that the world was grappling with deglobalisation, and exiting macroeconomic profligacy, combined to create considerable inflationary pressures. This leaves every major economy facing an unpalatable choice of either accepting much higher levels of inflation, or imposing much tighter monetary and fiscal policies than have prevailed in the post 2008 period, which in most cases means recession. The uncertainty of this situation has unsettled markets, and they are unlikely to regain their poise until there is more clarity on what choice policy makers will make.

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Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

Quarterly Investment Review – Q1 2022

“We need to increase oil and gas output immediately.”
Elon Musk, 5 March 2022

Just as the world economy was emerging from the Covid crisis it was overtaken by another crisis when Russia invaded Ukraine. Apart from the human trauma there are multiple economic impacts from this act. The main one is that it has made an energy crisis even more acute, but a string of other commodities’ supply have been affected. Russia is a commodity superpower producing 11% of the world’s oil, 17% of its natural gas, 40% of palladium, 15% of platinum and rhodium, 15% of aluminium, significant volumes of battery grade nickel, and 65% of neon (a rare gas used for semiconductor production). Russia and Ukraine account for 28% of global wheat trade. Belarus has 40% of the world’s potash, and Russia supplies 66% of ammonium nitrate (used for fertilizer). Many of these markets were already tight, and the loss of such a large provider will create huge upheaval as the world tries to reorganise its supplies. The inflationary pressures are clear, and they add to a situation which was already experiencing the highest inflation for forty years. On top of these pressures will be increased defence spending, which will further constrain government budgets and add to inflation. Wars are always inflationary. Before the invasion several areas of financial markets were struggling as Central Banks indicated that interest rates would rise through the rest of the year. Bonds had fallen as inflation rose, and profitless technology companies in the US fell precipitously. Most dramatic was the profit warning on 3rd February by Meta (formerly Facebook) which resulted in it losing $250bn of value that day. It is a measure of how concentrated the market is that its loss represented the combined total value of all but the top twenty companies in the S&P500. Yet this feature of the market also offers opportunity. The obsession with technology in the last decade means that large swathes of the market have been ignored, leaving plenty of decent companies on sensible valuations. Nonetheless the strong inflationary environment, with a super imposed geopolitical and commodity shock, has left all markets in an uncertain state. Longer term the most damaging consequence may be to the US dollar’s reserve currency status. The unilateral freezing of Russian reserves will make countries with large surpluses think twice about parking their reserves in the US bond market. The US has benefited from trillions of deposits from countries such as China, India, Saudi Arabia, UAE, and Kuwait. These reserves have allowed the US to run huge deficits at low cost, but if the inviolability of these reserves is questioned they may leave. That will put upward pressure on US interest rates, and downward pressure on the dollar.

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Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

Revue trimestrielle des investissements – Q4 2021

En 2021, tandis que le monde se débattait avec la covid et ses multiples variants, les marchés financiers ont à nouveau enregistré d’excellentes performances grâce au maintien des programmes de relance colossaux mis en place par les banques centrales. La réponse des autorités face à la covid ces deux dernières années a donné lieu aux politiques de stimulation monétaire et budgétaire les plus importantes depuis 1945. Aux États-Unis, par exemple, le total des dispositifs de relance budgétaire adoptés et envisagés s’élève à 35% du PIB, soit un montant comparable au coût de la Seconde Guerre mondiale. Les taux d’intérêt réels s’établissent à -4%. Ici encore, il s’agit du niveau le plus bas depuis 1945. L’économie n’a jamais connu de récession lorsque les taux réels étaient négatifs. Toutefois, la question qui se pose désormais est de savoir si ces mesures de relance massives sont en train d’alimenter une inflation structurelle. L’inflation a atteint 6,8% aux États-Unis, son plus haut en 40 ans, et n’a cessé d’augmenter tout au long de l’année, ce qui remet en cause la thèse de la banque centrale selon laquelle l’inflation ne serait que transitoire. En 2022, la réponse à cette question sera cruciale. En effet, les marchés gorgés de liquidités montrent des signes d’excès importants, de sorte qu’une diminution rapide des mesures de relance les rendrait vulnérables. Par exemple, en novembre, le constructeur automobile Tesla était valorisé à 1 200 milliards de dollars, soit plus que les neuf autres plus grands constructeurs automobiles réunis, son fondateur, Elon Musk pesant, quant à lui, plus lourd qu’Exxon. Cette valorisation représentait également le double de celle de Berkshire Hathaway, la société de Warren Buffett, dont les bénéfices au cours des neuf premiers mois de l’année se sont élevés à 50 milliards de dollars, contre 36 milliards de dollars seulement pour Tesla. Un resserrement des liquidités pourrait avoir un impact dramatique sur des entreprises telles que Tesla, qui ont amplement profité de la souplesse des conditions ces dernières années. Or, l’évolution de ces conditions dépend en grande partie du futur de la pandémie et de l’inflation.

À mesure que les campagnes de vaccination progressent dans le monde, les espoirs de levée définitive des blocages économiques augmentent. La production des vaccins constitue une prouesse scientifique remarquable et très rentable pour certains (le vaccin Pfizer-BioNTech est aujourd’hui le produit pharmaceutique le plus vendu de l’histoire). Certes, des revers ont été enregistrés avec l’apparition du variant delta, et maintenant du variant omicron, mais, armée par les vaccins, la population devrait pouvoir vivre avec la covid et la phase pandémique de la crise est appelée à disparaître. Ce seuil approche plus rapidement dans les pays occidentaux que dans les pays émergents, mais dans ces derniers les progrès s’accélèrent également. De nouveaux variants sont toujours possibles et de nouveaux revers ne peuvent être exclus, mais compte tenu des informations actuellement disponibles, il y a de bonnes chances que la covid soit maîtrisée dans le courant de l’année 2022. Quoi qu’il en soit, 2021 aura mis en évidence que là où la reprise n’a pas été entravée, elle a été soutenue. Ainsi, en cas de levée complète des restrictions grâce aux vaccins, on peut donc s’attendre à une libération de la demande insatisfaite qui attiserait davantage le débat sur l’inflation.

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Quarterly Investment Review – Q4 2021

In 2021 while the world wrestled with the Covid virus, and its evolving variants, the financial markets enjoyed another strong performance thanks to the enormous stimulus that Central Banks continued to provide. Authorities’ response to Covid in the last two years has produced the most stimulative monetary and fiscal policies since 1945. In the US, for example the total agreed and intended fiscal stimulus amounts to 35% of GDP, a sum comparable to the cost of the Second World War. Real interest rates are minus 4%, again the lowest since 1945; the economy has never gone into recession when real rates are negative. However, the debate has now turned to whether this gigantic stimulus is starting to stoke structural inflation. Inflation has reached 6.8% in the US, a 40-year high, and has been climbing all year, so Central Banks message that it is only transitory, is coming under scrutiny. The outcome is critical for 2022, because with markets awash with cash, if the stimulus is withdrawn quickly they look vulnerable as they show signs of significant excess. For example, in November the car company Tesla reached a valuation of $1.2 trillion. This was more than the next nine largest car companies combined, and left its founder, Elon Musk, worth more than Exxon. It was also double the value of Warren Buffett’s Berkshire Hathaway which had profits in the first nine months of the year of $50 billion, compared to Tesla with only $36 billion in sales. A tightening of liquidity could dramatically impact companies such as Tesla which have benefited so much from the easy conditions of the last few years. Whether these conditions do change depends largely on the course of the virus and inflation.

As vaccines are rolled out globally, hope is rising that economic lockdowns will end. The scientific achievement in producing the vaccines is extraordinary, and highly profitable for some – the Pfizer-BioNTech vaccine is now the best-selling pharmaceutical product in history. Setbacks were occurred with the appearance of the Delta variant, and now Omnicrom. However, as vaccines armour plate the population, allowing us to live with Covid, the pandemic stage of the crisis will pass. This point is being reached faster in the West than in Emerging Markets but in these too progress is accelerating. New variants are always possible and further reversals cannot be ruled out, but on current information there appears to be a decent chance that Covid comes under control during the course of 2022. What 2021 made clear is that when permitted the recovery has been strong. If the vaccines succeed in a full reopening, then it will release considerable pent up demand, which will further inflame the inflation debate.

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