March General Markets Comments
“Prisencolinensinainciusol” – Adriano Celentano, 1972.
In his 1972 legendary « Prisencolinensinainciusol » hit, the mighty Adriano Celentano sings an entire song in an unknown language he invented on that purpose, which is intended to sound like English, while those listening believe it’s an English song and can repeat the lyrics, with the impression of singing in English. An extract of said lyrics goes: “In de col men seivuan, Prisencolinensinainciusol ol rait”, just to give an example.
With all these things happening in the economy, markets and on the geopolitical front, Central Banks pretends they speak like Central Banks, but are they? And we pretend we clearly get their message and understand their language, but are we? We could be in a « Prisencolinensinainciusol » situation, as all the moving parts we, and Central Banks, have to deal with, prevents their message from being clear, and allow us to extract what we want out of it: before this crazy March 2023, it seemed that the only way was up for interest rates in the US and in Europe, at least until real and durable progress was made on the inflation front. Past the SVB and Crédit Suisse debacles, it sounds less clear, although we still hear a lot about rising interest rates and inflation, but with a pinch of salt due to the possible aftermaths of last month’s turmoil.
The resistance of financial markets in general has been surprising: the MSCI World rose 2.83%, the S&P 500 3.51% and the MSCI Emerging Markets 2.73%. Europe fell 0.48%, but this has to be put in the context of a strong euro and the fact that Financials are an important part of European indices. The most striking fact last month was the steep decline in long term bonds (-45 bps for the US 10 year, -36 bps for the 10 year Bund), which highly impacted equity styles: the MSCI World Value lost 1.06% while the MSCI World Growth jumped 6.8% (not to mention the Nasdaq 100, up 9.46% in March and 20.49% year to date). Credit did well (+0.59% for the Itraxx Crossover), and Gold unsurprisingly soared 7.79%, aided by a weak dollar (-2.25% for the DXY) and falling yields.
Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group