February report – Global Strategy Fund

Posted on Posted in Uncategorised

Please find attached our Global Strategy Fund – February report :

From where will the growth come?

The introduction of negative rates is a final act of desperation…

It only compounds the risks of financial instability and sets the stage for the next crisis.

Nowadays, markets are still completely de-correlated from fundamentals. That is unfortunately not new. This situation is persisting since Central banks are printing money and creating bubbles in various areas. Central Banks have been buying time, time for the politicians to do some necessary structural reforms. But the politicians – only interested in reelection – wasted all that precious time. Today, Central Banks have no potential anymore. They are out of ammunition.

I read articles from various economists about what Mr. Draghi could tell or legally do in the coming March ECB-meeting. QE and negative rates haven’t helped in December (nor did it work in Japan). So Mr. Draghi will have to imagine something new. The possible tools are however limited and very complicated (I admit that I had to read them twice J).

I wonder if the investors’ community will understand them as per Mr. Draghi’s imagination. And in any case, I wonder if they will work this time.

Maybe some High-Frequency-Trading-Computers will act as if they understand and send some orders in the market that will give us huge volatility but without clear direction.

In fact, we don’t see any reason why (especially European) stocks should rise in the short term. Don’t forget that – besides our other problems – we will have the Brexit-party in June. It could be risky to be full invested in Europe before knowing what the Brits will do.

Today (*) there is only one thing that seems to be able to drive the markets higher, which is a soaring oil price, if the oil producers could come to an agreement to cut production. But that seems not very likely if we listen to the Saudi Oil minister. On the other hand, the oil glut will not disappear within 6 to 8 months. We are convinced that the oil price might be much higher at year-end, but it’s not clear at all where it will go in the short term.

Global Strategy Fund – Febreaury Report

The following two tabs change content below.
Investment Committee

Investment Committee

NOVACAP Asset Management

Leave a Reply

Your email address will not be published. Required fields are marked *