Significant recovery on the stock markets. Rebound thanks to strong start to the US reporting season. The topic of stagflation is increasingly making the rounds. Find out more about the current direction of our investment policy in the latest issue of Aquila Fokus with Nicolas Peter, Head of Investments at Aquila.

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Focus Points:
0:00 Intro
0:16 The recovery of the stock markets
1:41 The latest decisions of the Aquila Investment Committee.

The Bundestag election result is likely to be neutral for the markets. The Fed’s move to policy normal-ization indicates higher interest rates are coming. This will hit Tech stocks. A bigger spread between short and long rates means the maturity transform-ation business of banks will become more profitable.

We are sticking to our forecast for global economic growth of around 5.0% for this year. However, the growth rate has already passed its peak. For 2022, we expect growth of 4.0%.
China is also facing weakening economic growth. Moreover, there are problems in the real estate sector.
The Biden Administration is having difficulty finding Congressional majorities for its ambitious $3,500 billion spending package.
The Fed wants to start reducing (“tapering”) its bond-buying programs in November.
Federal Open Market Committee (FOMC) member interest rate forecasts (the “dot plots“) are consistent with one rate hike next year followed by three rate hikes in each of the following two years.
The September FOMC monetary policy meeting and the indication that the Fed will begin tapering bond purchases later this year had only a marginal impact on the US dollar yield curve.
The quiet sideways trend in the US dollar continues.

The independent asset managers in Switzerland are facing reality, both with a political turnaround in Germany and with a stock market that, in the face of expected interest rate hikes, will no longer be so exhilarating, as the latest AVI index shows.

Economic growth figures down, but remain solid. FED holds out the prospect of tapering. Evergrande story creates uncertainty in equity markets. Learn more about our current investment policy and asset allocation in the latest edition of our Aquila Focus with Nicolas Peter, Head of Investments Aquila.

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Focus Points:
0:00 Intro
0:15 The slowdown in economic growth
0:46 Tapering
1:17 China

#Tapering #Evergrande 1TP5Insecurity

Peking’s policies of debt containment have left skid marks on Chinese economy, and they are hurting China’s property market.

The Senate’s passing of a $1 trillion infrastructure package with the support of 19 Republican senators, including Senate Minority Leader Mitch McConnell, shows the Biden Administration still has momentum behind its government spending objectives.

Strong quarterly figures from US companies. Encouraging reporting season supports equity markets and also the US labor market is recovering. Learn more about the expected economic outlook and our investment policy in the latest edition of our Aquila Focus with Nicolas Peter, Head of Investments Aquila.

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Focus Points:
0:00 Intro
0:19 Encouraging US reporting season supports stock markets
1:33 What could cause volatility again in the short term

#Earnings growth #USlabor market #JacksonHole

Not only in China, but also in the US and even the EU, governments are concerned about the ubiquitous power of Big Tech. The influence of their platforms on elections, the security of vast amounts of consumer data and the exploitation of workers are increasingly putting these companies under the spotlight of authorities. In the US, congressional hearings have been held and antitrust lawsuits filed, so far without far-reaching consequences. In China, on the other hand, the government is tightening the reins and the political system allows for quicker action.

The state and its politicians have a strong interest in not losing the lucrative monopoly on money creation. Spontaneously created cryptocurrencies threaten the central banks’ monopoly on money creation. Thus, Bitcoin & co. can be seen as “enemies of the state, and of the central banks”.

After months of lockdown and limited business opportunities, independent asset managers in Switzerland are experiencing an enormous upswing. New client money is flowing in, and the stock market is doing the rest, as the latest AVI index shows.

We expect the global economy to grow around 5.0% in 2021.
Ultra-expansionary monetary policy had little or no inflationary effect during the periods of lockdown because of the collapse in the velocity of money circulation that was induced by those lockdowns.
Now, with the reopening of the economy, consumers can again spend on services like travel and hotels. This will tend to increase the velocity of money circulation, increasing the risks of inflation.
The Fed has adjusted its expectations for inflation and started to discuss “tapering”. The Federal Open Market Committee now projects the first rate hike in the next interest rate cycle as early as 2023 (instead of 2024 previously).
Stock markets are experiencing abrupt shifts in sentiment but remain resilient.
The September FOMC monetary policy meeting and the indication that the Fed will begin tapering bond purchases later this year had only a marginal impact on the US dollar yield curve.
Precious metals prices have corrected sharply as real yields have picked up. More details on our assessments in the new Aquila Viewpoint.