Global Situations
The year 2022 was the ‘annus horribilis’ for stock exchanges: the S&P500 fell 19.44 percent, the worst year since 2008, the Nasdaq hit 10,939.76 realizing a loss of 32.97 percent, and Piazza Affari dropped 12 percent. Bonds were also not far behind, filing the worst year in almost a century. The New Year started positively for markets, with the equity sector registering strong gains during January: the S&P500 gained +6.18%, the NASDAQ 100 +10.62%, and Europe +9.75%. In terms of sectors, the best were Consumer Discretionary (+15%), Communications Services (+14.50%), and Technology (+9.30%), while the worst were Healthcare (-1.90%) and Utilities (-2.0%).
The key factors were definitely the optimistic sentiment given by the deceleration of inflation, according to which the Fed is basing its “soft
landing” scenario as opposed to a deep recession that has agonized. Other factors lending support have been a weaker dollar, the reopening of the Chinese economy in conjunction with the end of the Zero-Covid policy, easing supply chain restrictions, and falling energy prices, especially in Europe, have provided ample breathing space for companies. To tame inflation, the FED is expected to raise the federal funds rate by 25 basis points, as estimated by the market at 98%, at its 1st February meeting, reaching a rate of 4.50%-4.75% at the moment; the estimate is for a “terminal rate” of 4.75’%-5.00%. We are amid earnings season, with one-third of the S&P500 companies already reporting results. For the fourth quarter, earnings are down about 5 percent compared to an expected decline of 3.2 percent. The labor market remains tight: new jobs surprise on the upside (+223,000
new vs. +205,000 consensus); hourly wages fell, coming in below consensus (+0.3% vs. a downwardly revised +0.4% M/M and +4.6% vs. another downwardly revised +4.8% Y/Y). The unemployment rate also fell to 3.5% (consensus was +3.7%) from 3.6% in November (revised downward from 3.7%), while the labor force participation rate increased to 62.3% from 62.1% M/M. December’s consumer price index (CPI) declined, per economists’ expectations (+6.50%). Retail sales decreased in December, falling for the
second consecutive month, showing that the U.S. consumer spent less than expected.
Operations
We will continue to seek performance by diversifying sectors, tools, and time horizons, using our artificial intelligence AI algorithms for a careful screening of the markets.
Currently, we have constituted a few thematic lines, based on stocks Aerospace & Defense, Hotels Restaurants & Leisure, Semiconductors, Genomic Revolution & Biotechnology, Metals & Mining.