Return Of The Jedi
23 August 2022
For those of you who don't have the reference, the title of this post echoes the third part of the first Star Wars trilogy - produced by Lucasfilm and released in 1983.It is in this episode that Darth Vader - the figure of evil - makes a salvific return to reason and ends up killing his master mind, one of the most evil characters in the opus, just before the latter could commit the irreparable by murdering Luke Skywalker (Vader's son). An anthology comeback for moviegoers (watch it here).).This sounds quite far from the markets, you may ask? Well, to make a simple analogy, it would seem that recent weeks have seen a form of "Return of the Jedi" for bullish investors.Indeed, the latter have managed to pull the indices out of their bear market situation (decline of more than 20%) by making the S&P 500, for example, recover more than 17% in 2 months (from June 16 to August 16). Enough to give George Lucas ideas for a grandiose comeback."Rebound", "Rally", "Relaxation" .... are all media terms that investors who were suffering in the first half of the year are jubilant about. However, there is a catch: no one is able to provide a tangible justification for the upward movement that has animated the markets in recent weeks. A colossus with feet of clay? Surely...Between Friday's session and Monday's at the time I was writing this post (it was 6.02pm to be precise), the S&P had lost nearly 3%, the Swiss franc (one of the pillars of safe-haven strategies) was at an all-time high of 1.05 against the euro, and the same was true for the euro against the dollar, which fell below parity. At the same time, interest rates were rising (notably with the US 10-year rising back above 3%). Risk aversion could well be back.What if Darth Vader does not come to his senses in 2022?
Market and portfolio focus
As you can see, the markets, after having risen sharply, are starting to recover. In this context, the Monocle fund is maintaining a cautious positioning with a net equity exposure of 5% (30% gross and 25% hedging). There were no significant transactions in the past week.
Have a great week,Max
Disclaimer
This presentation is a promotional document. The content of this document is communicated by and is the property of Monocle Asset Management. Monocle Asset Management is a portfolio management company approved by the Autorité des Marchés Financiers under number GP-20000040 and registered with the ORIAS as an insurance broker under number 10058146. No information contained in this document should be construed as having any contractual value. This document is produced for information purposes only. The prospects mentioned are subject to change and do not constitute a commitment or a guarantee. Access to the products and services presented here may be subject to restrictions for certain persons or countries. Tax treatment depends on individual circumstances. The fund mentioned in this document (Monocle Fund SICAV) is authorized for marketing in France and possibly in other countries where the law permits. Before making any investment, it is advisable to check whether the investor is legally entitled to subscribe to the fund. The risks, costs and recommended investment period of the funds presented are described in the KIDD (key investor information documents) and the prospectus, available free of charge from Monocle Asset Management and on the website. The KIDD must be given to the subscribers before the subscription. Past performances are not a reliable indicator of future performances. Monocle Asset Management cannot be held responsible for any decision taken or not taken on the basis of information contained in this document, nor for the use that could be made by a third party. The investor may lose all or part of the amount of capital invested, as the funds are not capital guaranteed.
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