The dollar strength This year, expectations of a rise in interest rates in the US for September (or November with more probability) of next year were consolidating this year, unlike other regions such as Europe, where this scenario looks much more distant.
On the other hand, the above investors focused on core countries rather than emerging ones, which are still pending in the markets. I advise looking at opportunities but staying focused on the core countries. The international context for emerging markets stopped blowing like a tailwind, at least as it did until the middle of the year, with the exception of some products such as Petroleum and some industrial metals with a strong recovery.
Oil puts pressure on inflation to new highs of many years, but the Soy It erased all the rise and is negative in the accumulated of 2021 due to oversupply from the US and a stronger dollar, and market interest rates rise, something inevitable in light of the high year-on-year inflation figures: + 5.4% retail and 8.6% wholesale in the US. as many years ago was not seen and an oil price above the $ 80 a barrel of WTI that is giving a buzz and feedback on price levels.
The energy crisis It was originated by the shutdown of many coal-fired plants, in addition to several bottlenecks in the supply of natural gas that are added to the expanded OPEO cartel with Russia, which promises to continue fueling fuel prices, on the one hand and on the other from the Atlantic (in Germany such wholesale prices were not observed since 1974 and retail prices since 1993).
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To all of the above, we must speak of a deflation of the Chinese real estate bubble and a slowdown in economic activity in the second world economy with a direct impact on commodities (with the exception of hydrocarbons). With stock market valuations elevated by whatever valuation multiple taken, the markets are awaiting the Fed’s Tapering announcement and the expectation that the Federal Reserve’s benchmark rates will rise in the fourth quarter of the year that is coming (43.9% probability for September). The pandemic left a strong increase in fiscal deficits and sovereign debts, but they found financing by far at rates of the lowest in history and almost infinite money for the issuance of central banks to face the exit from the pandemic.
But there are plenty of reasons to think that although the best was left behind, there are no reasons for the markets to collapse, in part because of the large excess supply of money that will continue to exist in the markets, the return to the growth path of all countries , good seasons of corporate results in the main developed countries and a decisive factor: interest rates are still very negative in real terms (discounting inflation) and the money goes in search of aggressive investment alternatives to obtain returns that at least protect them from the loss of purchasing power due to inflation.
You have to be selective because sovereign dollar bonds Long-term loans from emerging countries or companies are marked by a high quota of duration risk, that is to say, by sensitivity to the reference interest rate in the markets, which aims to close the year once again reaching its recent maximum. The risk of default, even in non-investment grade high-yield bonds, has been declining sharply to unsuspected values a year ago.
By sectors we like them technology, banks and real estate, in addition to discretionary consumption.
So far the stock markets have managed to get around the complications from China, inflation in the US and Europe, and the economic slowdown along with a better earnings season. In addition to the high relative valuations by multiples. But the risk measured by the VIX fell to the 16% area and is dissipating.
Investors are weighing the suspicion that the Federal Reserve could begin cutting its bond-buying program in mid-November. But no news yet from the tapering. An auspicious debut of the S&P 500 earnings season is added, especially from the sectors of Financial, Discretionary Consumption, Technology and Basic Consumption, which have already begun to report, were positively surprised compared to what was expected.
In addition, there were positive signs in US policy to approve pending assistance plans, although the debt ceiling is still an issue not yet sealed.
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