Julius Baer CIO Monthly – a view from the top on key market trends

Yves Bonzon, Chief Investment Officer (CIO) and Head Investment Management at Julius Baer on euro strength and other recent market developments

Yves Bonzon, Chief Investment Officer (CIO) and Head Investment Management at Julius Baer on euro strength and other recent market developments

In Yves Bonzon, Chief Investment Officer, in dialogue with Amanda Kayne, expresses concern over the Federal Reserve's plan to potentially reduce the balance sheet. With credit growth weakening in the private sector year-on-year, Yves wonders if a move is really so urgent. Yves goes on to remind investors that oil is an asset class of last century and is today more a trading space than an investment one. And while biotech and the general healthcare sector will always have to deal with on/off pressure when it comes to pricing, it remiains an attractive part of the portolio.

Yves Bonzon, Chief Investment Officer, in dialogue with Amanda Kayne, explains why he believes investors have confidence in the resilience of banking systems and shares his views on cryptocurrencies.

Yves Bonzon, Chief Investment Officer, in dialogue with Amanda Kayne, explains why he believes that investors have confidence in the resilience of banking systems and why Cryptocurrencies should not be a core holding of any portfolio. While he understands that investors may not like the dollar, Yves suggests buying the real asset of gold or the S&P500 instead.

Chief Investment Officer, Yves Bonzon, tells Amanda Kayne that the Julius Baer strategy of treating political events as external shocks led to precautionary repositioning just before the first round of the French election, which subsequently could be reversed again. Back to fundamentals, an expanding global economy as well as cautious and accommodative central bank policies result in an economic situation being neither too hot nor too cold, which should support riskier assets. Furthermore, Yves emphasizes that statistical analysis reveals that there is no correlation between low volatility and imminent corrections on the financial markets.

French presidential elections 2017

Chief Investment Officer, Yves Bonzon, tells Amanda Kayne why he believes that the European Central Bank has an opportunity between the French and German elections to reverse engineer negative interest rates - a policy mistake, he believes, from the onset. Expectations over a hike in deposit rates had already been building in markets until recently when the ECB made it clear it would not do so for now. A move of this kind was a missed opportunity in Yves' opinion since it would have sent a signal of confidence in the system and positively impacted the euro and European assets.

In dialogue with Amanda Kayne, Julius Baer's Chief Investment Office, Yves Bonzon, warns investors not to become too obsessed with the outcome of the European elections since the greater source of uncertainty comes from the European Central Bank. Once the French elections are behind us there could be a good case for the European Central Bank to start normalizing interest rates back to positive. Rate hikes in the EU are not already priced in so a move of this kind would benefit banks, the euro and cyclical value stocks.

Chief Investment Officer, Yves Bonzon, tells Amanda Kayne that while the direction of the global economy is seemingly clear, investors should be wary of politics. The Julius Baer strategy is to treat political events as external shocks which means keeping some cash in reserve to be able to take advantage of any potential surprise thereafter. In the meantime, Yves explains why it is healthy to keep some exposure to hedge funds, namely systematic and long/short trend following strategies, with a clear focus on managers that do not run too large funds and have the ability to navigate markets without liquidity issues.