From an investment point of view, the question is how to position appropriately for a weaker US Dollar and higher inflation environment. We believe there are a number of strategies that could be employed, one of which is implementing exposure to real or tangible assets like precious metals, specifically gold (and silver).

With South Africa, Mexico and India’s 2024 elections now finalised, the world awaits the much anticipated outcome of the US election to be held in November this year.

The Fed started raising rates on 17 March 2022 in an attempt to curtail rapidly increasing inflation. Is it possible that the Fed has raised rates too much and too fast?

Post this significant increase in prevailing interest rates and the subsequent horrific return generated by bonds, the question being asked is whether bonds have corrected sufficiently from being an investment that offers “return-less” risk to one that offers sufficient potential reward for the risk involved?

The US Dollar may well be impacted by the de-dollarization forces, however, there might also be fundamental economic factors to consider.

From an investment point of view, it’s next to impossible to predict what the impact of new technologies might be on individual companies or industries. It is safe to say, however, that in the long-run technological advancement benefits the broad economy.

Although defence companies have performed very well during 2022, outperforming the S&P 500 Index by a wide margin, their valuation metrics still appear attractive, especially considering the potential for healthy long-term revenue and profit growth.

After years of Quantitative Easing and near zero interest rates globally, rising interest rates will lead to some form of normalisation in the behaviour of capital markets.

The era of free money seems to be over and there may be some adjustment needed with regards to expectations for global economic activity and investment returns.

We have been writing about inflation since late 2020 and believe it’s safe to say that inflation has become a significant problem facing global financial markets. While inflation is still very much making daily headlines in the financial press globally, the focus is shifting increasingly to the impact on monetary policy, economic activity and financial markets. 

The first half of 2022 was by no means a walk in the park. The global economy, and capital markets in turn, had to face a barrage of shocks. Our central investment theme, “The Return of Inflation”, which we have written about at length since late 2020, has taken centre stage. Read our latest newsletter by Benjamin van Wyk, CFA, below.