Markets rallied strongly last week, very much on the back of the latest inflation print from the US (more details below). The cooler than expected inflation has also combined with warmer than expected weather in Europe. In the midst of COP27 this weather is not a welcome long-term development, but it removes a powerful bargaining chip from President Putin’s bag of tricks. In the US, the Democrats performed better than expected and have retained control of the Senate whilst look to have lost the House by a lower than expected margin. Politics aside, there is a strong investment argument for a split Congress and the stalemate (read status quo) that it creates.
Much has been written over the weekend about the collapse of the FTX cryptocurrency exchange. This is certainly a big story, which will garner a huge amount of media attention. Comparisons such as ‘crypto Lehman or Enron’ could well be justified. However, at times like this it’s important to remain anchored in what and how people within Zurich funds are investing: Diversified Multi-Asset funds, with a consistent process and a robust governance framework. Stories such as FTX are interesting, but we must all be vigilant to the risk that it leads clients to refrain from investing for the long-term – to the detriment of both themselves and their dependents. Inflation and interest rates might not make for exciting reading but are much more pertinent than crypto travails.
As always, if you wish to discuss anything in this newsletter in further detail, please do get in touch.