November 2021
back to all monthly reportsExecutive Summary
- There are more companies with supply backlogs, hiring difficulties, and rising input prices that are eating into profits – this trend appeared in the latest reporting season.
- 75% of U.S. companies beat earnings estimates in the 3Q but forecasts for the 4Q were only flat, breaking a run of more than a year of rising expectations.
- US real yields are at the lowest level in 70 years. On a spot basis, real yields are c.-4.6%.
- US inflation has already spent six months above the 5% level, with US CPI at 6.2% YoY in October. At the start of 2021, the forecast was 2.0%.
- Has the turnaround in investment sentiment towards China started?
- Quality - the best strategy in the current business cycle and most of the macro scenarios.
- The Technology of the Future Fund had a +5.11% return in October. This was in line with other major equity indexes, slightly underperforming the benchmark MSCI World Index (USD), which had a return of +5.59%. In the new reality of extreme valuations, we prefer to manage the downside risks and stick to our strategy of low beta portfolio of “undiscovered values” and deep value stocks which are out of favor (Chinese tech). As we expect volatility to rise in 2022, we avoid mainstream overpriced stocks which drive the main equity indexes in today’s environment (FANG, US Large Cap Tech, etc.).