If 15 months ago and in the middle of the pandemic, we had been told that the main American indices could double those quotes, or that Europeans like the dax or the CAC would be very close to achieving similar marks, I’m afraid very few of us would have believed it. But after that time and closed the first half of 2021, the market again proves that it is sovereign, that the long term is the way in which we should all manage to invest, and that only those who apply a rigorous strategy are able to generate sustainable profitability over time.
Looking ahead to the rest of the year, it seems that neither the inflationary fears, nor the new fears raised by the “Delta” variant of the coronavirus, these markets that remain oblivious to this latest narrative as evidenced by their global indices really matter. If we take the MSCI World Index, the S&P500 or the EuroStoxx600 itself, all remain in the area of historical highs and have obtained positive monthly returns in 5 of the 6 months that we have of 2021.
Similarly, this is happening in a very low volatility environment. If we look at the case of the S&P500, for example, the biggest daily variation has been this year of approximately 2.5% (both up and down), data not seen since 2017 in terms of the little dispersion. And despite the fact that goldman sachs analysts warned the other day of some bearish sentiment, measured by the difference in volatility between options (Skew) of a part of the investors, the truth is that that same entity assigned a 5% probability of moving to an environment of greater general instability (depending on the macro data and market indicators). That is, despite the fact that they exist fears of a sharp bearish move that can be given at any time, it is not contemplated today, a temporary extension of it.
the Forecasts for all of 2021 Wall Street they have been adjusting upwards in recent months. The current range (through May) is between 4100 and 4600 points for the S&P500 with an EPS of 200USD. It is taken as a consensus reference a data of the GDP in the USA on the 8.6% nominal where, for every 1% of improvement of the same, the impact on the income of the companies of that index would be close to 3%.
If we open the view to another asset class, Gold has suffered its worst month (June) in terms of profitability, in four years. The so-called “active refuge” does not seem to assume its role well when the risk comes from the side of the rise in real rates and, despite the changes that Basel III will bring with respect to the gold metal, the liquidity crisis announced by many does not seem to impact prices yet.
Bitcoin (BTC) and ether (ETH) show a performance in the last quarter that has been among the worst since 2018
And for those who want to take positions in the new paradigm that the cryptoeconomics you’re already creating, bitcoin (BTC) and ether (ETH) which are the main references at the level of infrastructure, despite ending a positive semester with increases of 20% and 200% respectively, show a performance in the last quarter that has been of the worst since 2018 with adjustments from maximums of around 50% for both cryptoassets. However, value and price do not always go hand in hand and if we look at the former, this has nothing to do with the existing one a few years ago in the ecosystem, achieving very important growth in terms of utility and adoption. At these levels, one might think of re-entering as long as one understands the risks and the value proposition that cryptoassets incorporate.
Thus, it seems complicated to understand what really matters to an average investor, and how the data that we know will be interpreted. On the U.S. side, the key may be employment and the impact that the evolution of employment may have on the EDF decisions. To this day and attending to the Odds marked por futures, until a year from now we have no apparent real dangers of rate hikes. All this without forgetting that “tappering” is only a matter of when. On the volatility side, despite these specific fears, the overall reading indicates some stability at the current low levels. In any case, and looking ahead to the second part of the year, until there is greater clarity on the evolution of the post-pandemic global economy, investors remain long in “reflation”, cyclicals and value. And in view of what happened in the exercises, going against has not gone well.