Max Severijns

After a formidable start for the capital markets in 2023, followed by the “SVB correction”, a consensus on the sense and nonsense of the 60/40 formula still remains to be found. Investment Officer takes stock again.

Has the sudden collapse of Silicon Valley Bank ignited fears of a new financial crisis? Or is its demise incidental, offering investors an excuse to take profits on attractive gains that bank sector stocks booked in recent months?

As European financial markets closed on Friday, worried investment professionals were hard to find. The sentiment and rising interest rates however are clearly recognised as risk factors. 

The crusade against “woke capitalism” is entering a new phase in the United States now that Republican politicians turn against ESG policies in asset management. Jan van Eck, chief executive of the global ETF boutique carrying his name, this interference is fully justified, regardless of where one stands on ESG and sustainability investments.

For those looking to make an impact investment without the pain of market corrections, the solution can be simple: Buy the best-in-class, short the villains, and keep the portfolio neutral. 

Earlier this month, the European Securities and Markets Authority, Esma, warned of further corrections in the stock market. Esma chair Verena Ross said the resilience of the financial system was being tested by “fragile liquidity”. The warning proved justified.

He is the New York Stock Exchange’s most photographed trader, also known as the “Einstein of Wall Street” on Instagram. Speaking to Investment Officer, veteran floor trader Peter Tuchman talks about the game changer in his profession: the new generation of investors.

Economists at PGIM Fixed Income have suggested converting Ukraine’s dire debt obligations into new debt. These so-called “freedom bonds” could be backed by frozen Russian assets, according to the bond house. Such a proposal would receive great interest in Luxembourg, home to about one third of Russian assets frozen in the EU.

The euro saw a 20-year low against the US dollar in 2022. With the ECB catching up with the Federal Reserve, investors are counting on a comeback for the European currency. Currency specialists, however, are divided.

German judges handed down an important verdict this week: EU treaties are no obstacle to shared debt in the union. The ruling comes shortly after the European Commission called for new joint injections into the economy. “As an investor I would carefully reconsider my bond portfolio,” one critic warns.

On Tuesday, the German constitutional court in Karlsruhe ruled that “exceptional” EU loans to overcome problems caused by the Covid-19 pandemic do not violate European treaties.

Chinese stocks are in a sell-off following Xi Jinping’s power grab. “Tighter state control of the Chinese economy warrants a higher risk premium.”

As real estate markets worldwide move in tandem by showing clear signs of a downturn, two major international financial bodies this week have reiterated their concerns over the housing market’s potential impact on financial stability. Both the European Central Bank and the International Monetary Fund have raised a red flag. Investment Officer looks for answers to some key questions a moment that mortgage rates are at their highest since 2006.