Review & Outlook
January 2021
We are still firmly in the grip of the pandemic and a return to the carefree lifestyle we enjoyed before the crisis continues to be a distant prospect as we move into the new year. Even though several vaccines have now been rolled out, their efficacy has yet to be conclusively proven – especially given the continuous mutation of the virus – and it will take a while for their side-effects to be fully investigated once testing has been done over a much longer period. These uncertainties will mean that many people are likely to hold off from immediate vaccination, and in any case the vaccines will only be made available to the broader population much later in the year.
As a result, many sectors of the economy will probably take much longer to recover than predicted by many so-called “experts”.
The new US president will now definitely take up office on 20 January 2021. In addition, the Senate election in the past week has shifted the parliamentary majority in favour of the Democrats. However, the chaotic scenes of the storming of the Capitol clearly highlight the deep political divisions in America. We can only hope that the new administration succeeds in bringing the people together again.
The US unemployment rate rose again in December for the first time since last May, which is likely to further weaken the rate of economic growth. Many small and medium enterprises are also in serious trouble and insolvencies will probably increase over the coming months. The new president will therefore be forced to launch another massive economic support programme that should benefit most sections of the population.
Over the course of last year central banks worldwide have pumped massive amounts of liquidity into the economy. They are using every means available to hold interest rates at historically low levels, as no one can afford to pay higher interest. However, this is sending government borrowing through the roof and further undermining the credit ratings of countries and their respective currencies.
The biggest beneficiaries of central bank interventions are equity markets, which have soared to new heights, partly because of the lack of investment alternatives. Several companies have benefited from the pandemic and their prospects are exceptionally bright in the longer term as well. But many other companies have now reached a valuation level that already factors in full economic recovery. If the general situation significantly worsens again, however, we cannot therefore rule out a market correction.
Our portfolios are broadly diversified, with an increasing focus on forward-looking sectors such as climate change and green technologies, which should receive plenty of support from the new US president. Our investments in precious metals, combined with our option strategies, also cushion the risk of unexpected market volatility.
All Reviews & Outlooks
Review & outlook 24-Q1
Review & outlookApril 24Dear Investor Geopolitical conditions around the globe have continued to deteriorate since our report in January. The situation in the Gaza conflict seems more hopeless than ever, as the US has not yet been prepared to make further military...
Review & outlook 23-Q4
Review & outlookJanuary 24Dear Investor The geopolitical situation around the globe has continued to deteriorate dramatically in recent weeks. Europe is showing ever stronger signs of fatigue when it comes to supporting Ukraine. On the other hand, Russia appears...
Review & outlook 23-Q3
Review & outlookOctober 2023Central banks around the globe continued to raise interest rates in the third quarter of this year. Especially in the US, news from the economic front still indicates an astonishingly subdued response to record-high interest rate...
Review & outlook 23-Q2
Review & outlookJuly 2023The US Federal Reserve has raised benchmark interest rates by 5% since spring 2022 and the market is now expecting US interest rates to rise by a further half a percent over the course of the year. Although inflation rates have been on a...
Review & outlook 23-Q1
Review & outlook April 2023The financial markets have long been warning on the risks posed by the massive interest rate hikes by central banks. But for us too, last month’s collapse of Credit Suisse was a previously unimaginable scenario. The takeover by UBS that...
Review & Outlook 22-Q4
Review & OutlookJanuary 2023An extremely eventful year is now at an end and will go down in the history books. At the beginning of the year, sentiment across the economy was still optimistic due to the waning pandemic, but the optimistic mood was then abruptly...
Review & Outlook 22-Q3
Review- & OutlookOctober 2022The problems plaguing our world are currently so manifold that it would be impossible to list them all within the confines of this letter. Although Ukraine has made some advances in recent weeks thanks to the military aid provided by...
Review & Outlook 22-Q2
Review & OutlookJune 2022The economic situation continued to deteriorate in the second quarter, most notably as the prospect of an imminent end to the war in Ukraine receded. This is impacting on the prices of many commodities such as energy and foods, pushing global...
Review & Outlook 22-Q1
Review & OutlookMarch 2022Schon während der Pandemie der letzten zwei Jahre zeichnete sich ein baldiges Ende der Globalisierung ab. Der Einmarsch Russlands ins Nachbarland hat nun aber definitiv die Weltordnung beendet, an die wir uns seit dem Ende des Kalten...
Review & Outlook 21-Q4
Review & outlookDecember 2021As we now put an extremely turbulent year behind us, it seems harder than ever to reliably forecast what the New Year will bring. Even two years on, we are still completely in the grip of the pandemic and there is no end in sight. The...