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Monthly report, January 2025

Updated: Jan 14


In the latest edition of our monthly report:


Editorial


Overweight or underweight US equities?

  • For 15 years, the answer is to overweight the US;

  • In 2024, US equities’ outperformance is at the top; and

  • Could this trend continue into 2025?


What consequences can we expect for the markets?

American exceptionalism is still the order of the day at the start of 2025, but by the end of the year, a return to favour in international markets seems likely. The extreme positioning in favour of US equities confirms our decision to remain diversified.

- by Kim Muller, CIO (Switzerland)


Assessment of the economic situation

The US economy remains on course, while China's “soft” recovery is confirmed. Europe remains weighed down by its old demons as it awaits elections in Germany next month.

  • US economic activity remains at a good level;

  • Gold closes out its best year since 2010; and

  • What can we expect from the German federal elections?

 

What about the SNB's monetary policy?

The Swiss National Bank (slightly) surprised the markets once again by announcing a 0.5% cut in its key interest rate. In so doing, it has temporarily “insulated itself” from a potential major rate cut by the ECB, and is taking advantage of the situation to try to revive a domestic economy that is in the throes of a growth slump. But unless the franc replaces the yen as the currency of choice for “carry” operations, it should remain fairly close to its current (high) levels.



Financial markets during the month

The year ended with a bang for US equities, cryptos and gold. For other assets, the year was more mixed, particularly for medium and long-dated USD bonds.

  • US households have never held so much in equities;

  • The yield on the 10-year Treasury note rises by 1%; and

  • A year to forget for commodities.

 

Our convictions


Comments on investment decisions

The exceptionalism of the US equity market is being pushed to the limit. Clear signs of exuberance confirm our decision to remain diversified. USD 10-year bond yields are rising sharply on the long side, but show no signs of stabilizing. Gold continues to consolidate.

  • Equities;

  • Bonds;

  • Precious metals, listed real estate (REIT); and

  • Currencies.

 

Performance summary

  • Equity performances; and

  • Performance of bonds, currencies and commodities



 

Disclaimer

This document has been prepared using sources believed to be reliable but should not be assumed to be accurate or complete. The statements and opinions it incorporates were formed after careful consideration and may be subject to change without notice. The author and distributors of this document expressly disclaim any and all liability for inaccuracies it may contain and shall not be held liable for any damage that may result from any use of the information presented herein. Past performance is not indicative of future results. Values of an investment may fall as well as rise. This document is intended for information purposes only and should not be construed as a recommendation, an offer or the solicitation of an offer to buy or sell any investment products or services. The use of any information contained in this document shall be at the sole discretion and risk of the user. Prior to making any investment or financial decisions, an investor should seek individualised advice from his/her financial, legal and tax advisors that consider all of the particular facts and circumstances of an investor's own situation.


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