indexes in this article
• Inflationary pressure is forcing central banks to raise interest rates
• Fund manager Peter E. Huber relies on countercyclical investments
• Europe could slide into recession
Rising inflation is currently a major concern of market participants. According to fund manager Peter E. Huber, this problem is domestic. Central banks are responsible for printing endless money, which now affects spending due to the excessive debt policy of the states. The war in Ukraine would only exacerbate the problem and would now serve as a “cheap excuse for blatant political errors”.
At least the international central banks have recognized the danger and are now reinforcing theirs monetary policy. The Fed has already raised its benchmark interest rate twice this year and has also announced further rate hikes for the next few months. The ECB is a bit slower, but has at least announced it will end its net purchases of multi-billion dollar assets on July 1st. Plus, he has one for his next session in July rate increase reported by 25 basis points.
As a rule, interest rate hikes have hit growing stocks particularly hard because they are usually more heavily indebted. So it’s no wonder that tech stocks, which have been heavily hyped in recent years, have had to suffer a setback this year. For example, the NASDAQ Composite has lost more than 27% in value since the beginning of the year (as of June 10, 2022).
But according to Huber, a (temporary?) Recovery is already emerging for tech stocks. That’s why investors who still own tech stocks should stop selling now, advises Taunus Trust’s fund manager. On the other hand, in his opinion, it is still early days for massive purchases of shares.
“We are still seeing an unprecedented build-up of crises and challenges: climate crisis, war in Ukraine, COVID pandemic in China, disrupted supply chains, tighter central banks, high inflation rates, etc. But these factors are well known. and should therefore be at least partially taken into account in the current. In any case, numerous sentiment indicators point this out, which indicate enormous pessimism on the part of investors “, quotes” Institutional Money “Peter E. Huber.
The expert explains that there has not yet been a major sell-off on the stock market as follows: “Most investors are still holding their positions, although they are so negative. A real sell-out with high turnover it has not yet taken place, presumably because there is a lack of alternatives to stocks and bonds, even precious metals and cryptocurrencies have had to give up feathers. ”
Risk of recession in Europe
Although Huber believes it is possible that inflation rates may now decline due to base effects, Europe in particular is still far from lasting calm. In fact, he wouldn’t be surprised if Europe went into recession.
But the phases of recession are always good opportunities to buy shares at low cost, the expert is able to draw something positive from such a scenario. But things aren’t that far off yet, says Peter E. Huber.
Financeen.net editorial staff
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