Time for the Beach

Monday, August 19th, 2024   Categories: Corporate Bonds, Defensives, Emerging Markets, Global Equities, High Yield, Momentum vs mean reversion, Small Caps, Technology, United Kingdom, US Treasuries

What have we learned from 2024 so far

Lesson one, fixed income is not offering many clear signals. There is no sustained relative momentum anywhere along the US Treasury curve. Investment Grade and EM Bonds are not adding to returns or diversifying risk. High Yield continues to do both, which is lesson two. Three, we still like the Technology-related sectors in US equities, but not as much as previously and we are much more selective within them. Four, Japanese equities are uninvestible until we know who the new Prime Minster is and maybe not even then. Five, we are already defensive in our Eurozone equity models and becoming more so in our bond model, all of which is consistent with a rising threat of recession. Six, the UK is our preferred equity region, with its recommended weight approaching a 20-year high. There is a chance it may escape from 25 years of underperformance.