Newsletter dated April 28, 2016

Newsletter dated April 28, 2016

Most stock markets have pared losses from their drop earlier this year. Year-to-date the S&P 500 just reached positive territory, MSCI Emerging Markets index is even better. Europan markets are still slightly lower than at the beginning of the year and Japan is even in the double-digit area negative.


The winners are commodities by far. Crude oil has bottomed out and is +22%, Gold is +18%, other energy and metals are similar. For a nice summary see Bloomberg commodity index as our chart of the day!


Where to we go from here? Current earnings season is mixed. On average broad markets lack growth. Both sales and earnings report signal a total decline for European and the US companies. Valuations are rather high compared to their own history. S&P 500 is trading at 19x reported earnings and EuroStoxx 50 at 22x. Analysts still factor in considerable growth for current and next year which could be a base for disappointments.


However the key driver keeps central bank policy. Mario Draghi is still expanding monetary base in Euro area. Bank of Japan does it the sometimes faster, this week slower than expected. On the other hand US Fed is still hesitant on its opposite path. While some ‘experts’ expect the second US rate hike for June of this year market prices reflect a probability of 14% only for Fed meeting in June. However by December of this year there is a probability of 63% for higher US rates.


The upcoming Brexit vote might cause some extra turbulences – see also our special on this


Thus Erwin Lasshofer and his INNOVATIS team expect limited upside and more volatility ahead. We prefer income oriented structured notes to benefit from volatile sideways markets. Don’t hesitate to contact us for investment solutions that meet your needs.
































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