Tomorrow is the beginning of August, a typical month for holidays. However, investments do not take any rest and markets become more fragile in this month, as there is a decrease in the market volume of operations. While VIX index shows a historical low point in the market volatility, there are some reason to be warned: the crisis in Ucraine and the commercial fight between Europe and Russia, the crisis in Palestine, the end of the QE in US and the chance of an interest rate rise in the middle term or the continuous rumors about a possible turndown in the markets with current peaks.
Experts from different entities agree that the economic recovery is a real fact and the trend will keep on, but investors have to be watchful about the possible developments. Wells Fargo advises an investment strategy taking into account that low volatility does not mean absence of risk. It recommends a diversified portfolio underweighting fixed income and overweighting equities. Fixed income yields are now not interesting, but a tighter monetary policy in the US will push them up.
BlackRock maintains its view as in the beginning of the year. In US, it expects more volatility linked to the Federal Reserve policy evolution. In Europe, the trend is also linked to the ECB, but with other gear: the fight against deflation. Cyclicals, energy and large cap values are some bets. In Asia, the fund manager is bullish with Japan and cautious with China, as it considers that the growth is not sustainable.
The Swiss Julius Baer predicts for the next half a continuation of many of the trends. The general relaxing monetary policy in almost all central banks, a controlled inflation and a moderate economic growth are the basis of the scenario. The bank focuses in two points: European peripheral debt is not interesting anymore, because the risk premiums are low and reached the convergence point; and the company balance sheets in the non-financial sector, as they expanded significantly in the last years and that is a strong argument to invest again in equities instead of corporate debt.
Generally speaking, there are risks as mentioned above, but the outlook is positive mainly for equities in the second half of the year.