Cross Asset Investment Strategy - February 2022

Fast and furious market gyrations

January has seen strong gyrations in markets, with nominal and real yields rising sharply, driving a strong shift from growth to value in equities. The reassessment of the inflation premium in the wake of demanding valuations has driven a strong repricing of risk premia...

Real interest rates in the US and Europe have reached negative levels that are unprecedented in recent history. We have to go back to the 1970s to find similar levels, and only a handful of past examples since WWII can be used as reference points...

2022 will be the “year of reckoning” for DM economies when they will test the effectiveness of the policies deployed since the peak of the pandemic phase and face the challenge of retuning to normality: fiscal and monetary policies will tighten up at a time when the growth/inflation mix is becoming more challenging and there is much less room for manoeuvre in terms of policy...

The concept of strategic sovereignty goes far beyond the issues of security and defence. It also assumes relative self-sufficiency, and the ability to impose one’ standards and to create global leaders in tomorrow’s ecosystems...

Because of unorthodox economic policies, Turkey will face a tough year ahead, with inflation peaking at a 20-year high… but we do see some lights at the end of the tunnel...

We are marginally adjusting the narrative to take into account the recent economic news flow and the impact of the Omicron variant, but are keeping the probabilities of the scenarios unchanged...

Macroeconomic Picture by area and Macro and Market forecast.