Economic growth figures down, but remain solid. FED holds out the prospect of tapering. Evergrande story creates uncertainty in equity markets. Learn more about our current investment policy and asset allocation in the latest edition of our Aquila Focus with Nicolas Peter, Head of Investments Aquila.

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Focus Points:
0:00 Intro
0:15 The slowdown in economic growth
0:46 Tapering
1:17 China

#Tapering #Evergrande 1TP5Insecurity

Peking’s policies of debt containment have left skid marks on Chinese economy, and they are hurting China’s property market.

The Senate’s passing of a $1 trillion infrastructure package with the support of 19 Republican senators, including Senate Minority Leader Mitch McConnell, shows the Biden Administration still has momentum behind its government spending objectives.

Strong quarterly figures from US companies. Encouraging reporting season supports equity markets and also the US labor market is recovering. Learn more about the expected economic outlook and our investment policy in the latest edition of our Aquila Focus with Nicolas Peter, Head of Investments Aquila.

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Focus Points:
0:00 Intro
0:19 Encouraging US reporting season supports stock markets
1:33 What could cause volatility again in the short term

#Earnings growth #USlabor market #JacksonHole

Not only in China, but also in the US and even the EU, governments are concerned about the ubiquitous power of Big Tech. The influence of their platforms on elections, the security of vast amounts of consumer data and the exploitation of workers are increasingly putting these companies under the spotlight of authorities. In the US, congressional hearings have been held and antitrust lawsuits filed, so far without far-reaching consequences. In China, on the other hand, the government is tightening the reins and the political system allows for quicker action.

The state and its politicians have a strong interest in not losing the lucrative monopoly on money creation. Spontaneously created cryptocurrencies threaten the central banks’ monopoly on money creation. Thus, Bitcoin & co. can be seen as “enemies of the state, and of the central banks”.

After months of lockdown and limited business opportunities, independent asset managers in Switzerland are experiencing an enormous upswing. New client money is flowing in, and the stock market is doing the rest, as the latest AVI index shows.

We expect the global economy to grow around 5.0% in 2021.
Ultra-expansionary monetary policy had little or no inflationary effect during the periods of lockdown because of the collapse in the velocity of money circulation that was induced by those lockdowns.
Now, with the reopening of the economy, consumers can again spend on services like travel and hotels. This will tend to increase the velocity of money circulation, increasing the risks of inflation.
The Fed has adjusted its expectations for inflation and started to discuss “tapering”. The Federal Open Market Committee now projects the first rate hike in the next interest rate cycle as early as 2023 (instead of 2024 previously).
Stock markets are experiencing abrupt shifts in sentiment but remain resilient.
The September FOMC monetary policy meeting and the indication that the Fed will begin tapering bond purchases later this year had only a marginal impact on the US dollar yield curve.
Precious metals prices have corrected sharply as real yields have picked up. More details on our assessments in the new Aquila Viewpoint.

The FED revises its inflation forecast.
The first interest rate hikes could now take place as early as 2023.
Learn more about the expected economic outlook and our current investment policy in the latest edition of our Aquila Focus with Nicolas Peter, Head of Investments Aquila.

Follow us also on LinkedIn: https://ch.linkedin.com/company/aquila-ag

Focus Points:
0:00 Intro
0:18 The latest Federal Reserve decisions
1:04 The latest decisions of the Aquila Strategic Investment Committee.

1TP5Inflation 1TP5Increase in interest rates #eam 1TP5Economic growth

New virus variants will continue to prevent a complete opening of the global economy. Europe’s vaccination gap to the US has narrowed considerably. Inflation risks are high. A scaling back of highly stimulative monetary policies is not yet in sight. The recovery of the US labor market is slower than “the consensus” expected. Although more than 7 million jobs have been lost since the start of the pandemic, US wage inflation looks set to rise. The coming rise in consumer price inflation will be less transitory than central banks would have us believe.

Vaccination campaigns are being implemented at speed in most Western nations and lockdown measures are being scaled back. There is a risk that the jump in US inflation will not be just temporary. But the US labor market is still too weak for an inflation explosion. The latest US economic figures were disappointing. Central banks, like most other investors, are investing pro-cyclically and have increased their quotas for “investments” in risky instruments. Many central banks intend to hold less US dollars and more “other currencies” in their reserves.

Thanks to the continued positive macro environment and the recovery of corporate earnings, some stock indices reached new highs. Cryptocurrencies were significantly more volatile - after the Bitcoin price reached a new all-time high, it corrected by over 25%.

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Focus Points:
0:00 Intro
0:18 Is "sell in May and go away" the right investment strategy?
1:32 Bitcoin price shows its volatile side

1TP5Financial Markets #SellInMayAndGoAway #cryptocurrencies #bitcoin #aquilaFocus