Weekly Newsletter #9/2015

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Please, kindly note that we have updated our data sheet. We see much more dramatic market development in interest rates, crude oil and maybe sooner or later in gold than in equity sector rotation.

We see interest rates all over the world falling to zero. And this is a big game changer. We do not talk about real or net returns (after inflation, after taxes) anymore. We are looking for any yield at all.

Is this just a temporary phenomenon? When we did not agree with speculations about 2015 Fed rate hikes in the third quarter of last year we did not even see the drop in crude oil and the strong US dollar yet. So, no we don’t see a change without strong global economic growth.

And even worse: negative yields. For the short term up to 6-9 years in CHF or top rated EUR government bonds yields already are negative. See our chart of the day! What will the Swiss pension fund manager do now when managing liquidity? Will he buy the “risk-free” loss? He might be in violation of rules and laws if he does not!

And what about the investor who is responsible for himself only? He can buy bonds that are too expensive just for the hope to get even more expensive. This is the classic price bubble scenario. He can buy equities. Are they expensive after the recent gains? No yields for the risk-free asset drives most valuations for risky asset classes to infinity. We will take a closer look in our next newsletters at valuations of common asset classes.

What do we offer if you are insecure about future market moves and you are looking for yield? You should consider a structured product that gives you a reasonable yield at a very limited and well controlled risk – see our offer below.