If you have never seen the film Groundhog Day (1993), in which Bill Murray plays a weatherman who has been assigned to cover "Groundhog Day" in a small Pennsylvania town and who finds himself stuck in a time loop forcing him to relive that day endlessly, I recommend it.

It's a comedy, of course, but as the film progresses, you realise how perverse the phenomenon is.

At the moment, the markets are in a similar situation, but their "groundhog day" is in fact "inflation release day". Indeed, every time a figure is released, it's the same thing: prices either go up more than expected or go down less than expected. Two recent examples: US inflation for August published on 13 September came out at +8.3% year-on-year against +8.1% expected and German producer price figures came out yesterday at +45.8% against +37.2% expected (check out the difference).

So, even if the central banks on both sides of the Atlantic (the FED and the ECB not to mention them) have begun very recent efforts to calm things down, we don't seem to be out of the woods yet.

And the markets are starting to react a bit violently to the idea that we are stuck in this loop (inflation - recession):
On results released last Thursday that were more or less in line with expectations, Adobe (136 billion in capitalization) fell -17%.
Fedex (41 billion in capitalisation and which is highlighting the fact that global economic conditions are deteriorating) lost nearly 22% when its accounts were published the next day (with a profit warning).

At the same time, interest rates continue to rise: Italy is now borrowing at more than 4% at 10 years (we have to go back to 2014 to find this level) and the United States at the same rate at 2 years (and here in 2007).

The FED will give its interest rate hike decision tonight and Q3 results will start in a little less than three weeks: the end of 2022 looks like being a sport.

PS: Monocle Fund B share will be available on SwissLife contracts (Strategic and PER) in early October!

Market and portfolio focus

Behaviour:
Over the past week, the markets have continued their downward movement with -2.3% for the Nasdaq and -4.5% for the CAC 40. At the same time, the fund fell -1%, mainly impacted by its positions in BASF, Unilever (on which we are protected by dividends), and Pfizer (which, despite Mr Biden's statements, should continue to post very good results given Covid's momentum).

Lines:
We have increased our bearish position in the US markets from the S&P 500 to the Nasdaq 100 - valuations in US tech remain very high and this index has more downside potential in our view. At the same time, we increased our positions in META (6% of the fund), GTT (2%), and TF1 (1.5%).