Monthly Market Monitor
November 2023
Content Macro Radar
Satellite View
Taking the pulse of economic activity
Geopolitical heat map
6
8
In a Nutshell
4
Asset Allocation
Theme in Focus
Better than the Benchmark
Is now the time for… hedge funds?
Notes from the Investment Committee
10
13
Drawdown: All about Private Banking Not investing has its own costs
20
18
The Back Page
Agenda
Asset classes
25
24
Kaiser Partner Privatbank AG | Monthly Market Monitor - November 2023
3
In a Nutshell
Our view on the markets
Receding inflation is a positive development, but it doesn’t necessarily make the job of central bankers any easier.
US momentum machine Robust growth in the USA, stagnation in Europe – that’s the lingering picture leaving an imprint also on year-end 2023. A US recession remains more a medium-term risk, whereas the continued possibility of a government shutdown threatens to dampen sentiment in the near term. Receding inflation is a positive development, but it doesn’t necessarily make the job of central bankers any easier. Behind the scenes they may be asking themselves when and under what scenario they should revert to cutting policy rates. A new, old geopolitical hotspot Political stock markets are short-lived, but does this apply also in the midst of the reignited conflict in the Middle East between Israel and Hamas? Investors have to think in scenarios and mustn’t underestimate the potential for an escalation in hostilities. But even in view of this new, old geopolitical hotspot, it will likely pay to stick to a longterm investment strategy, though an investor can indeed readjust and hedge his or her portfolio against an adverse scenario depending on one’s risk profile and risk appetite. Good chances of a year-end rally Equity markets continued to move lower in October. However, the orderly downward momentum indicates that this is nothing more than a typical autumn correction. There are still good chances of a year-end rally. And now
Chart of The Month It’s November | Time for the next erroneous forecast? US interest rates and US bond ETF 10%
180
8%
160
6%
140
4%
120
2%
100
0
80
2003
2007 2011 2015 2019 10-year US Treasury Yield US Home Mortgage 30 Year Fixed National Average iShares 20+ Year Treasury Bond ETF (right)
Sources: Bloomberg, Kaiser Partner Privatbank 4
Monthly Market Monitor - November 2023 | Kaiser Partner Privatbank AG
2023
that the 10-year US Treasury yield recently crossed the 5% mark, the chances are improving also for bondholders for both a conciliatory closure to the current year and a good 2024. Is now the time for… hedge funds? Hedge funds evoke a certain fascination. In the past, however, they have regularly fallen short of investors’ expectations. To this day, this asset class remains a black box to many people. The rise in the general interest-rate level has recently improved the return prospects for many hedge fund strategies, at least on paper. But in order to make sure that the added value of hedge funds actually finds its way into an investment portfolio, a purchase decision must not only be well thought out, but also implemented well. Not investing has its own costs Nothing is without risk, including when it comes to investing money. But whoever prefers to stuff his or her wealth under a mattress to avoid risk ends up facing a different risk: the creeping erosion of the value of his or her cash. Whoever would like to preserve the purchasing power of his or her money cannot get around investing it (in stocks). But that, too, has its pitfalls. Having access to investment experts and to a sophisticated range of investment products can help you to dodge hidden hazards and boost the real value of your assets. November is also a time for financial-market outlooks and (erroneous) forecasts for the year ahead. A recapitulation of the last forecasting season doesn’t necessarily speak well for the analyst community or for ritualistic gazing into the crystal ball because the two most frequent predictions made for 2023, which projected a US recession and a stellar year for bonds, didn’t come true. On the contrary, the massive increase in long-term market interest rates and the attendant bond price declines caused big surprises for holders of corresponding interest-bearing securities. But the last forecast is always followed by the next forecast, and many outlooks for next year will probably closely resemble their forerunner version this time. In fact, the prospects for bonds for 2024 are now even much better than they already were going into 2023, and the probability of a recession is also increasing. In any case, the longer that higher interest rates and higher financing costs persist, the more they are likely to contribute to throttling back the pace of economic growth in the USA.
Kaiser Partner Privatbank AG | Monthly Market Monitor - November 2023
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Macro Radar
Taking the pulse of economic activity
Strong growth in the USA, stagnation in Europe – that’s the lingering picture leaving an imprint also on year-end 2023. A US recession remains more a medium-term risk, whereas the continued possibility of a government shutdown threatens to dampen sentiment in the near term. Receding inflation is a positive development, but it doesn’t necessarily make the job of central bankers any easier.
The majority of macroeconomic data points have come in above average in recent weeks, as reflected also by the Economic Surprise Index, which is well in positive territory.
US momentum machine The US economy’s growth dynamics have remained robust to date. The preliminary GDP growth estimate for the third quarter, at +4.9%, far exceeded the US economy’s potential growth rate and turned out better than expected. The more restrictive monetary policy climate also hasn’t made itself felt in the employment market thus far. The majority of macroeconomic data points have come in above average in recent weeks, as reflected also by the Economic Surprise Index, which is well in positive territory. The momentum looks set to diminish a bit in the fourth quarter, but a recession is still not in sight, at least not in the near term. However, the continued possibility of a government shutdown remains a risk to the upbeat sentiment heading into the end of the year. Muted sentiment in the Eurozone Stagnation, in contrast, characterizes the picture in Europe at present. The weak October purchasing managers’ index data for the Eurozone confirmed the gloomy state of the economy and came in below the consensus estimates (composite reading of 46.5 vs. consensus estimate of 47.4 points), leaving this key momentum indicator in contraction territory
for the fifth consecutive month. One of the causes of the poor business sentiment is the massively tightened bank lending conditions brought about by the European Central Bank’s interest-rate policy, which is reflected in an equally sharp drop-off in demand for loans. The fact that consumers have cut back their spending lately in the wake of a vibrant tourism season also does little to help the economic picture. Inflation on the retreat Meanwhile, though, there are positive signs on the inflation front. Producer prices of German industrial products, for example, fell 14.7% in September from the same month a year earlier, marking the biggest year-on-year decrease since records began in 1949. This leading indicator is signaling that further disinflation potential is in the pipeline also for consumer prices. Given the slump in economic activity, a pullback in inflation to below 3% could be on tap by as early as the first half of 2024. After expectedly having reascended slightly in recent months, inflation in the United States as well looks set to resume retreating. A delayed disinflationary effect from housing rent prices in particular is likely to materialize after the turn of the year at the latest.
More restrictive… | …than policy rates suggest Effective federal funds rate and proxy rate 8%
6%
4%
2%
0
-2% 2006
2008
2010
US Federal Funds Effective Rate
2012
2014
Monthly Market Monitor - November 2023 | Kaiser Partner Privatbank AG
2018
2020
2022
US Federal Reserve San Francisco Proxy Effective Funds Rate
Sources: Bloomberg, Kaiser Partner Privatbank 6
2016
Central banks on the sidelines Given the current macroeconomic conditions, central bankers at the moment can do little more than watch from the sidelines. Although the Fed and the ECB left all options open at their respective monetary policy meetings in October, behind the scenes central-bank officials probably are already discussing when and under what scenario they should revert to cutting
interest rates because high refinancing costs are putting an ever greater strain particularly on small and midsize enterprises not just in Europe, but also in the USA. The San Francisco Fed’s Proxy Funds Rate, which additionally factors in the effects of forward guidance and quantitative tightening, stands at approximately 7% and is thus considerably higher than the federal funds target rate of 5.5%.
Consensus estimates
Kaiser Partner Privatbank interest rates view 2023
2024
2025
GDP growth (in %)
Last
3M
12M
Key interest rates (in %)
Switzerland
0.8
1.0
1.6
Switzerland
1.75
→
→
Eurozone
0.5
0.8
1.5
Eurozone
4.00
→
→
UK
0.4
0.4
1.3
UK
5.25
→
→
USA
2.3
1.0
1.8
USA
5.50
→
→
China
5.1
4.5
4.5
China
2.50
→
→
Inflation (in %)
10-year yields (in %)
Switzerland
2.2
1.7
1.4
Switzerland
1.10
→
↘
Eurozone
5.6
2.7
2.1
Eurozone
2.71
→
↘
UK
7.4
3.1
2.2
UK
4.40
→
↘
USA
4.2
2.7
2.3
USA
4.71
→
↘
China
0.5
1.8
2.0
China
2.66
→
→
Kaiser Partner Privatbank AG | Monthly Market Monitor - November 2023
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Satellite View Geopolitical heat map
Political stock markets are short-lived, but does this apply also in the midst of the reignited conflict in the Middle East? Investors have to think in scenarios and mustn’t underestimate the potential for an escalation of hostilities. But even in view of this new, old geopolitical hotspot, it will likely pay to stick to a long-term investment strategy.
But as hard as it may be to do under the current circumstances, investors also have to give thought to the potential consequences for global economic activity, financial markets, and their own investment portfolios.
8
Another hotspot gets activated The attack by Hamas against Israel on October 7 shocked the world. Even the Israel Defense Forces and the Shin Bet security agency were surprised by the assault. The supposed calm in the complicated web of relations in the Middle East in recent months proved delusory in hindsight – the international community now finds itself confronted with an additional geopolitical hotspot alongside the war in Ukraine, which has been raging for more than 20 months now. The reactivated conflict between Israel and Hamas is resulting first and foremost in a lot of human suffering and has already caused an ongoing humanitarian catastrophe. But as hard as it may be to do under the current circumstances, investors also have to give thought to the potential consequences for global economic activity, financial markets, and their own investment portfolios. Given the importance of the Middle East as the chief source of oil for the world economy, an escalation of tensions there could indeed have lingering and reverberating consequences. Thinking in scenarios In what direction might the crisis evolve? This can hardly be predicted with certainty, not least due to the fluid dynamics of the situation. Moreover, the geopolitical intertwinements in the region are extremely complex and extend far beyond both sides involved. The attack by Hamas, for instance, appears to have halted the US-brokered negotiations for a normalization of relations between Saudi Arabia and Israel. The situation between Israel’s armed forces and the Iran-backed Hezbollah militia on the Lebanon border appears to be worsening. And there’s the question of whether Iran was involved in any way in Hamas’s assault on Israel. As observers of economic activity and as investment strategists, we must think in future scenarios, though we don’t claim to be able to designate percentage probabilities with pinpoint accuracy for the wide array of possible ways in which the situation in the Middle East may evolve going forward.
Monthly Market Monitor - November 2023 | Kaiser Partner Privatbank AG
Regional conflict or an escalation? We essentially see two main scenarios with different repercussions for the world petroleum market and consequently also for corporate earnings (at publicly traded companies), inflation, and consumer sentiment. In scenario 1, the conflict remains regional and confined primarily to the Gaza Strip and limited to the two combatants Israel and Hamas. In this baseline scenario, to which we ascribe a rough probability of two-thirds, there undoubtedly would be severe losses and heavy casualties on both sides, including among the civilian population. Since neither of the parties involved is a major player on the petroleum market, the consequences for the price of oil would be negligible and of short duration aside from a certain risk premium for a potential escalation. Things would look different in scenario 2, under which other neighboring countries would join the conflict and to which we ascribe a probability of around one-third. In this adverse scenario, there would be multiple potential escalation stages. In an initial stage, the Iran-backed Hezbollah militant group would escalate beyond the cross-border skirmishes thus far to become a direct warring faction. The maximum escalation stage would be reached if a resulting intensification of hostilities were to lead to direct involvement by Iran in the warfare. If that were to happen, one could expect to see a significant jump in the price of oil, triggered perhaps by a blockade of the Strait of Hormuz initiated by Iran. Approximately 20% of the petroleum that the world consumes gets shipped through this narrow waterway linking the Persian Gulf with the Gulf of Oman. Today it takes around 70% less oil than in the 1970s to produce one unit of economic output (the world economy’s oil intensity has decreased), so a multifold surge in the price of oil like during the Yom Kippur War in 1973 (as a result of an oil embargo by Arab OPEC states) would therefore be unlikely, but an instant USD 25–40 price increase per barrel could nonetheless occur also this time.
Strategies for investors Geopolitical crises regularly cause volatility on financial markets. In the long run, though, even the more momentous crises rarely leave a long-lasting footprint. Exceptions confirm the rule: in instances when a geopolitical crisis arises before or during a recession (Nov. 1956, Oct. 1973, Dec. 1981, Sept. 2001) or during a period of rapidly tightening monetary policy (Feb. 2022), the equity market can still be down 10% even six and/or 12 months later. Investors, however, should bear in mind that it has consistently paid off in the past to stick to a defined investment strategy and a diversified portfolio. Attempts to time the market and, for example, to pinpoint in advance exactly when a recession will begin are seldom successful, as evidenced not least by this year, at the start of
which a recession had been predicted by many economic experts. Diversification, in contrast, usually provides inherent (partial) protection against adverse scenarios. In the midst of the current conflict, gold, for example, gained 10% in the first three weeks after the attack by Hamas and acted as a portfolio stabilizer. Looking ahead, a mildly increased allocation to government bonds and defense stocks could likewise help to fine-tune a diversified portfolio for the conceivable worse-case scenario. In addition, depending on one’s personal risk profile and risk appetite, more sophisticated option-based hedging strategies can even be employed. For example, in exchange for paying a small insurance premium, one can hedge against the jump in the price of oil outlined above without otherwise tinkering with one’s existing portfolio.
Upward in the long run | Timing the market has scant chances of succeeding Performance of the S&P 500 index before and after geopolitical crises* 140 130 120 110 100 90 80 Beginning of geopolitical event
70 60 -12
-6 11/1956
0 10/1973
6 12/1981
12 09/2001
18 02/2022
24 Average
Months
Sources: JPMorgan, Kaiser Partner Privatbank *
Geopolitical events: Korean War (06/1950), Hungarian Uprising (11/1956), Six-Day War (06/1967), Prague Spring (08/1968), Yom Kippur War (10/1973), Afghanistan War (12/1979), martial law in Poland (12/1981), Falklands War (04/1982), US invasion of Grenada (10/1983), USA’s “Operation Desert Storm” in Kuwait (02/1991), Kosovo War (02/1998), “9/11” (09/2001), US invasion of Iraq (03/2003), North Korea sinks South Korean submarine (03/2010), Russia annexes Crimea (03/2014), the fall of Mosul (06/2014), Russian invasion of Ukraine (02/2022)
Kaiser Partner Privatbank AG | Monthly Market Monitor - November 2023
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Asset Allocation
Notes from the Investment Committee
Equity markets continued to move lower in October. However, the orderly downward momentum indicates that this is nothing more than a typical autumn correction. There are still good chances of a year-end rally. And now that the 10-year US Treasury yield recently crossed the 5% mark, the chances are improving also for bondholders for both a conciliatory closure to the current year and a good 2024. Asset Allocation Monitor -
+
Cash
Equities
Fixed Income
Global
Sovereign bonds
Switzerland
Corporate bonds
Europe
Microfinance
UK
Inflation-linked bonds
USA
High-yield bonds
Japan
Emerging-market bonds
Emerging markets
Insurance-linked bonds
Alternative Assets
Convertible bonds
Gold
Duration
Hedge funds
Currencies
Structured products
US dollar
10/2023
10
Private credit
Euro
Infrastructure
British pound
Real estate
Equities: Good chances of a year-end rally • Equity markets continued to move lower in October. The price decline for blue-chip indices in Europe and the USA since the summer high amounts to a more than 10% drop by now. The orderly downward momentum indicates thus far that this is a typical autumn correction – signs of panic have not been observable despite the elevated geopolitical risks and the further increase in bond market yields. However, the large-cap stock indices distort the overall picture for equities somewhat. To wit, second-tier stocks – i.e. small caps and mid-caps – have turned in a significantly below-average performance year-to-date and have declined by around 15% on both sides of the Atlantic over the last three months.
Scorecard
Monthly Market Monitor - November 2023 | Kaiser Partner Privatbank AG
+
-
+
Private equity
Swiss franc
• The reporting season for the third quarter was mostly mixed. As so often happens, upside surprises predominated, particularly since analysts had lowered their expectations shortly before the start of the reporting period. However, this time, companies beat earnings and revenue estimates by a much narro-
-
Macro Monetary/fiscal policy Corporate earnings Valuation Trend Investor sentiment
wer margin than the average for the last five years. Earnings disappointments in particular were punished severely to an extent not seen in more than a decade. There are also no positive impulses for the future coming from earnings momentum right now. In fact, analysts’ earnings estimate revisions have recently turned negative again. Meanwhile, earnings estimates for 2024 look relatively ambitious and are realistic only in a no-recession scenario. • In the near term, though, seasonal factors are likely to play a bigger role than the earnings and economic activity outlook for the year ahead. The chances of a strong close to the year are very good
in the third year of the US presidential cycle. The fact that at least US large caps are up for the year by double digits as of end-October also improves the statistical probability of a year-end rally. Fixed income: The (potential) final selloff • The year 2023 was actually supposed to have been a great one for bonds – at least that’s what many, if not most, analysts wrote a year ago in their outlooks for 2023. There likely was scarcely an analyst at that time who had a 5 in front of the decimal point for the 10-year US Treasury yield as a conceivable scenario on his or her radar screen. But it’s precisely this psychological barrier that was overstepped in recent weeks, even if only briefly. In any case, investors are sitting on price losses on their bond holdings shortly before year-end, contrary to previous expectations. The fact that the performance correlation between bonds and stocks has been predominantly positive lately and both asset classes have been trending downward at the same time is also not particularly uplifting. Whoever had too few alternative assets in his or her portfolio has been hit hard by this. • Experts are in disagreement, as they so often are, about the cause of the massive increase in longterm market interest rates this year. One of the best explanations, in our opinion, is the “term premium” argument, which posits that bond investors typically demand a premium for the uncertainty and volatility entailed in holding long-term interest-bearing securities. During the era of quantitative easing and forward guidance, this law of nature was suspended and the term premium was actually even negative. The return of monetary policy to normal now means no more and no less than a return to a more normal investment world, also with regard to risk premiums. • For investors who were caught on the wrong foot (i.e. for those holding high exposure to bonds), it’s important to look ahead to the future despite – or especially in view of – the disappointing performance in 2023 because the latest increase in market interest rates has further improved the outlook for the next 12 to 18 months. Bonds look poised to turn in a solid performance in 2024 in a good economic activity scenario, and returns well in double-digit territory can be expected in an adverse macro scenario. The situation is exactly the other way around for high-yield bonds. It therefore makes sense to widely diversify one’s exposure to bonds. A (semi-liquid) position in private credit, which is likely to deliver a double-digit return next year in any scenario, is ultimately also a suitable additive to the part of one’s portfolio allocated to liquid bonds.
Alternative assets: Two rallies with different causes • The price of gold defied the further sharp increase in real interest rates in October and intermittently advanced by as much as around 10% during the month. Gold thus proved itself to be an investment instrument that investors seek during times of elevated geopolitical uncertainty (keyword: Israel/Gaza). In the bigger picture, though, the strong upward impetus was just a blip within a long and broad sideways channel. The all-time high of USD 2,075 per ounce remains the crucial obstacle that needs to be overcome to turn the medium-term technical analysis picture from neutral to positive. However, the starting position for a successful breakout is rapidly improving. A US recession and/or a pullback in real interest rates could generate the decisive momentum for a breakout next year. “Virtual gold” likewise posted significant gains in October as the price of Bitcoin hit a new year-to-date high above the USD 35,000 mark. Hardcore crypto fans are likely the only ones who believe that this was attributable to a flight to safety by risk-averse investors. In our opinion, the cryptocurrency market is still being driven at the moment mainly by speculation that (spot) Bitcoin ETFs will soon receive regulatory approval.
The year 2023 was actually supposed to have been a great one for bonds – at least that’s what many, if not most, analysts wrote a year ago in their outlooks for 2023.
Currencies: The Swiss franc is also in demand • EUR/USD: The EUR/USD exchange rate initially found stability at the support level around the 1.05 mark in October, as expected. Whether or not it will lastingly stabilize at that level will depend especially on the outlook for future economic activity since interest-rate differentials are likely to hold steady in the near term. A medium economic activity scenario would be the best one for the euro. A recession, regardless of whether in Europe or the USA, would be bad for the euro, in contrast. • GBP/USD: The British pound has lost some of its interest-rate tailwind lately. The Bank of England’s surprise decision to refrain from another rate hike in September could now mark the end of the rate-hiking cycle in the United Kingdom as well. Weaker economic growth prospects and a flagging employment market also figure on the list of negatives for the pound. Its established downward trend since July remains intact for the time being. • EUR/CHF: The Swiss National Bank has drastically scaled back its currency interventions lately. Nevertheless, the franc has appreciated further even without the support of central-bank officials. The EUR/CHF exchange rate fell to a new all-time low just above 94 centimes in October as a consequence not only of capital flows to safe havens in view of the escalation in the Middle East, but also as a result of constant capital inflows due to Switzerland’s big current-account surplus. Internal and external factors portend sustained Swiss franc strength.
Kaiser Partner Privatbank AG | Monthly Market Monitor - November 2023
11
In the August edition of Monthly Market Monitor, we introduced readers to the magazine cover indicator and its remarkable track record. The idea behind this indicator is that prominent cover stories in financial and news magazines are often a reflection of moods and positionings on the global stock market merry-go-round and mostly get published precisely when a trend has already outrun its course and is about to reverse. Mass investor psychology never changes. Consequently, the magazine cover indicator, which tactically minded investors can use to time countercyclical buying and selling, hit the bull’s eye again in recent weeks. On November 19, 2022, The Economist ran a cover story titled “Crypto’s Downfall” at a time when Bitcoin was trading at a price of USD 16,700. One year later, the price of Bitcoin has roughly doubled. Looks like it’s time to take profits (and it’s time for a new magazine cover…).
Chart in the Spotlight Bad timing once more | The magazine cover indicator in action Bitcoin price in US dollars 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 01/21
07/21
01/22
07/22
Sources: Bloomberg, Economist, Kaiser Partner Privatbank
12
Monthly Market Monitor - November 2023 | Kaiser Partner Privatbank AG
01/23
07/23
Theme in Focus
Is now the time for… hedge funds?
Hedge funds evoke a certain fascination. In the past, however, the have regularly fallen short of investors’ expectations. To this day, this asset class remains a black box to many people. The rise in the general interest-rate level has recently improved the return prospects for many hedge fund strategies, at least on paper. But in order to make sure that the added value of hedge funds actually finds its way into an investment portfolio, a purchase decision must not only be well thought out, but also implemented well. Expensive investment products wrapped in black Hedge funds have exerted a certain fascination over investors since time immemorial, but not without a proper dose of skepticism on top. That dubiety sometimes stems from the fact that it isn’t always clear, or is at least hard to understand, what exactly is inside the wrapper and how hedge fund managers (intend to) earn profits for their investors. In fact, hidden behind the blanket term “hedge fund” is a very diverse array of strategies with different risk profiles. Hedge fund managers, for example, try to spot and take advantage of macroeconomic disequilibriums (macro), to play good stocks against bad ones (equity long/ short, market-neutral), to exploit mispricings between different assets (relative value, arbitrage), to profit from opportunities arising from corporate mergers and acquisitions and other events (event-driven), or to systematically follow existing price trends (CTAs), to name just some of the strategies. Besides this blatant complexity, periodically surfacing news about spectacular hedge fund failures or closures also isn’t necessarily conducive to a good reputation and makes this asset class appear to be one thing above all: risky – and at a high price to boot. The old “2 plus 20” formula (2% management fee plus 20% performance
fee) admittedly is no longer a law of nature these days because downward pressure on total expense ratios has since spread to the hedge fund industry as well by now. Nevertheless, hedge funds still rank among the rather expensive investment products alongside private-market assets. Yet, an aura of fascination lingers. Hedge fund managers juggle billions and earn billions (in the best of cases). They bet against the world’s biggest companies and are masters of the universe. The hedge fund sector generates enough script material to turn into a streaming series, which of course hasn’t slipped the attention of Hollywood. In seven seasons thus far, the series “Billions” peers behind the scenes of the hedge fund industry. One can safely assume that the show deviates to some degree from the reality of hedge funds. The soap opera nevertheless does well at portraying how tough the business is – a business in which only the fittest survive. The quest for alpha, which by definition exists only in a limited quantity, is a grueling competition. It requires continual innovation and investment. The costly competition to recruit finance whizzes is also intense. In this environment, the big hedge funds grow ever larger while newcomers come and go. The overall number of hedge funds in existence has stagnated for years.
Hedge funds have exerted a certain fascination over investors since time immemorial, but not without a proper dose of skepticism on top.
Survival of the fittest | No growth on balance Total number of hedge funds 10,000
8,000
6,000
4,000
2,000
0 1990
1994
1998
2002
2006
2010
2014
2018
2022
Sources: HFR Global Hedge Fund Industry Report Q2 2023, Kaiser Partner Privatbank Kaiser Partner Privatbank AG | Monthly Market Monitor - November 2023
13
At the limit of capacity…| …or simply unattractive? Annual hedge fund net inflows/outflows 200
100
0
-100
-200 1990
1994
1998
2002
2006
2010
2014
2018
2022
Sources: HFR Global Hedge Fund Industry Report Q2 2023, Kaiser Partner Privatbank What investors want | A golden goose Professional investors’ return expectations
Infrastructure Real Estate Hedge Funds Private Debt Venture Capital Private Equity
Less than 4%
4.01- 6%
6.01- 8%
8.01- 10%
10.01- 12%
12.01- 14%
14.01- 16%
Sources: Preqin Investor Survey Q2 2023, Kaiser Partner Privatbank
What are realistic expectations today for the years ahead, in general and return-wise?
14
(Un)realistic return expectations It’s understandable that the average retail investor may have a distorted picture of hedge funds and the returns that can be achieved with them. But even many a professional investor is susceptible to misconceptions about hedge funds. According to a survey of investors conducted by Preqin, over 15% of the institutional investors queried expect this asset class to deliver a return of more than +12% per annum. That’s ambitious to say the least, and far removed from the reality of what hedge funds have actually delivered over the past years and decades. The average annual return on the Eurekahedge Hedge Fund Index since the year 2000, for instance, stands at a much lower +8.1% (and just +5.8% since the year 2010). And even those numbers likely misrepresent the true portfolio reality experienced by many investors, in part because some of the funds contained in the index are not investable (because they’re hard-closed), and in part because hedge fund indices’ performance figures are systematically skewed upward by a number of biases. Hedge
Monthly Market Monitor - November 2023 | Kaiser Partner Privatbank AG
fund managers, for example, report their performance voluntarily and only when it has been good up to that point in time (selection bias and backfill bias), and usually without verification by an independent auditor (self-reporting bias). Moreover, hedge fund index data do not get adjusted when funds are dissolved due to poor performance (survivorship bias). Fund-of-hedgefunds indices provide a better indication of what the hedge fund industry has earned for investors in the past. According to the Eurekahedge Fund of Funds Index, the industry’s performance, at +3.4% per annum since 2010, has tended to be disappointing. But that’s looking in the rearview mirror. What are realistic expectations today for the years ahead, in general and return-wise? As a general rule, hedge funds should have a low performance correlation with other assets in a portfolio, should diversify a portfolio, and should reduce its volatility. They should be a low-risk and lowvolatility portfolio component that ideally delivers a high single-digit percent annual return (+8% to +9%) with mid-single-digit percent volatility (6%–7%).
Attractive (again) thanks to interest-rate turbocharger? | Risk-free interest rate plus 3 to 5 extra percentage points Hedge funds vs. global equities, rolling 3-year return (annualized) 30%
20%
10%
0
-10%
-20% 2002
2004
2006
2008
2010
Eurekahedge Hedge Fund Index
2012
2014
2016
S&P 1200 TR Index
2018
2020
2022
US Federal Fed Funds Rate
Sources: Bloomberg, Kaiser Partner Privatbank
Better times in sight? Returns of that kind from the better hedge fund managers are in fact likely to not be unrealistic looking ahead at least to the nearer-term future because the increased interest-rate level in the wake of the lengthy series of policy rate hikes by central banks automatically puts hedge funds in an improved starting position going forward. Many hedge funds use financial derivatives to implement their strategies and hold a cash allocation above 50%. Whereas this cash usually parked in the money market hardly yielded any interest over the past 10-plus years, today it is generating an annual income stream of 4% to 5% that ultimately accrues to investors in hedge funds. The tailwind produced by the new interest-rate regime also benefits managers that short sell stocks (in a bet on falling share prices). They now receive higher inte-
rest rates on the proceeds from short sales (pocketing a so-called “short rebate”). Taking a market-neutral equity strategy as an example (100% long/100% short), the interest-rate boost on US stocks (or in US dollars) can amount to up to 5% p.a. here as well. Besides this “base effect,” the return of interest rates to normal should also create greater potential for genuine alpha in the future because the end of the artificial ultralow interest-rate environment also means more volatility (and generally more opportunities) on financial markets, higher stock dispersion (more chances for stockpickers), and stronger price trends (greater potential for trend followers). A look back at the mid-2000s reinforces positive expectations. The US federal funds rate at that time was at the same level as today at around 5%, and hedge funds at that time were capable of generating an alpha of 5 percentage points.
High fees… | …erode alpha Hedge funds vs. funds of hedge funds and UCITS hedge funds
The tailwind produced by the new interest-rate regime also benefits managers that short sell stocks (in a bet on falling share prices).
220 200 180 160 140 120 100 80 2010
2012
2014
2016
Eurekahedge Fund of Funds Index
2018
2020
2022
Eurekahedge Hedge Fund Index
Eurekahedge UCITS Hedge Fund Index
Sources: Bloomberg, Kaiser Partner Privatbank
The implementation challenge The performance prospects for hedge funds have thus brightened lately. But even if an investor approves in principle of allocating money to this asset class, he or she still has the real challenge to contend with: implementing the allocation, which initially involves choosing the right managers. This is crucially important in the realm of hedge funds because compared to conventional equity funds, the dispersion between good
and bad managers is much wider in the hedge fund space. According to calculations by Goldman Sachs, the performance differential between the 25th and the 75th percentile over the last 15 years amounted to more than 10 percentage points. Researching hedge funds requires a good deal of work, in part because the hedge fund universe constantly gets reshuffled – every year, around 10% of all hedge funds drop out of the market and an equal quantity of new managers Kaiser Partner Privatbank AG | Monthly Market Monitor - November 2023
15
join the fray. However, once a good manager has been found, there is no guarantee that one can invest in that specific hedge fund. Many of the top managers have closed their funds to new investors because they are already operating at the limit of their capacity. It is not unusual for those managers to regularly return capital to investors because they can no longer put it to work. Then comes the really challenging part of the implementation challenge, which is to put together a basket of hedge funds that’s as well-rounded as possible because hedge funds are a really good diversifying element only when as many sources of alpha as possible are captured and single-manager risk is minimized (an exception to this rule is multistrategy funds, which already implicitly provide a broad diversification of sources of return and risk). Trial and error Over the last 30 years, the financial industry has repeatedly tried to implant hedge-fund performance in investors’ portfolios in a variety of different wrappers. The outcome of those efforts in most cases, though, has been merely a high-priced, sluggishly performing, illiquid millstone in portfolios, albeit an uncorrelated one. The actual goal of creating a good risk/ return profile while attending to the four dimensions of diversification (many substrategies and managers), access (low minimum investment requirements), liqui-
dity (as high as possible), and fees (as low as possible) has regularly been missed with few exceptions. Funds of hedge funds, for example, have been around since back in the 1990s. They are widely diversified and correlate strongly with well-known hedge fund indices, but they make this already expensive asset class even more costly because they usually charge additional management and performance fees. In the past, this interweaving of hedge funds shaved up to 200 basis points off annual returns. In its early years, this product category also proved problematic due to the fact that some funds of funds offered monthly liquidity even though the underlying hedge funds had much longer redemption timelines. The development of investable hedge fund indices in the early 2000s aimed to counter this liquidity problem by making diversification and access to hedge-fund performance possible on a daily basis. However, many hedge fund managers at that time were unwilling to launch their strategies in parallel investment vehicles (managed accounts) for this new purpose. The consequence of this was a fatal adverse selection spiral (it was predominantly poorer managers that took part in this “innovative product”), which caused some investable indices to initially underperform “real” hedge fund indices by up to 500 basis points per annum. In later years, this underperformance diminished by roughly half, but this particular packaged product nonetheless never really caught on.
Backtests always look good | Live performance rarely does SG Multi Alternative Risk Premia Index 115
110
105
100
95
90 2016
2017
2018
2019
2020
2021
2022
2023
Sources: Bloomberg, Kaiser Partner Privatbank
The next product wave began in 2012 to 2014. Cloaked in the legal structure of conventional mutual funds, hedge funds were now being marketed explicitly to retail clients in a diversified and liquid form with low minimum investment requirements and relatively low total expense ratios (2% to 3%). This time, though, also credible hedge fund managers were willing to give retail investors access to their strategies. The problem now, however, was a different one: a systematic brake on performance that had multiple causes. Regulated investment funds, for example, are far less flexible
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Monthly Market Monitor - November 2023 | Kaiser Partner Privatbank AG
than hedge funds with regard to the employment of borrowed capital and derivatives, short selling stocks, holding illiquid assets, concentrated risks, and other criteria. They are also subject to higher regulatory and compliance costs. And finally, there were still too few incentives for participating hedge fund managers to make their best trades available for the new investment vehicles, which ultimately posed competition to hedge funds. The new product wrapper gave the general public better access to hedge fund strategies, but since the brake on performance amounted to as much
as 300 to 400 basis points annually and often left only low single-digit percent returns in the end, three-quarters of the funds of this type have already been liquidated by now. Products that attempted to capture “alternative risk premia” likewise failed to catch on in the mid-2010s. They were premised on the hypothesis
that hedge funds’ alpha stems from permanent market inefficiencies that can be exploited just as well by means of simple trading strategies. The hypothetical backtests looked fantastic, as they so often do, but in reality, these products turned out to be just another failed experiment.
Solid (hedge fund) performance… | …implemented cheaply Factor-based hedge fund replication 140
130
120
110
100
90 2018
2019
2020 SEI Liquid Alternative
2021
2022
2023
NN Alternative Beta
Sources: Bloomberg, Kaiser Partner Privatbank
A good copy suffices This brief historical account shows that there has been plenty of trial and error during the past decades. But it did produce one successful experiment: factor-based hedge fund replication. In layperson’s terms, factor-based hedge fund replication utilizes statistical risk models in an attempt to find out how a large number of (hedge fund) managers are invested in stocks, bonds, currencies, and commodities (factors) and then seeks to copy (replicate) those positions cheaply and efficiently. This approach can be implemented in the form of an investor-friendly UCITS structure with a low minimum investment requirement, daily liquidity, and at an acceptable total expense ratio. Although only 80% to 90% of the performance of good hedge funds can be replicated this way, the much lower costs leave a very competitive performance left over for investors on the bottom line. Even more than ten years after their invention, hedge fund products of this kind are not yet particularly widely disseminated or well-known, perhaps in part because they undermine the myth of hedge funds being inaccessible premium products and are primarily viewed by the hedge fund industry as black sheep that not only hurt its reputation, but also harm its business model. (Why should someone invest in illiquid hedge funds with a total expense ratio of 5% when he or she can get a liquid version for a fifth of the price that is tradable daily?). Their obscurity, in any case, certainly doesn’t owe to a disappointing performance. Two of the best-known factor replication products (the SEI Liquid Alternative fund and the NN Alternative Beta fund) have achieved a quite handsome annual return of +4% to +6% since 2016 with a high correlation of 0.8–0.9 to well-known hedge
fund indices. The performance of these strategies could even head in the direction of the +10% mark in the future because factor-based replication, like so many other hedge fund strategies, is implemented with the use of financial derivatives. Cash that doesn’t have to be deposited as margin collateral can thus be invested in the money market or in short-term government debt securities. The return formula therefore comes out to be 4%–5% (risk-free interest rate) + 5% alpha at the moment. Conclusion: Time for hedge funds, but selectively So, is now the time to invest in hedge funds? The answer depends on the individual investor. In any case, the hedge fund asset class has gained attractiveness relative to equity markets, some of which have become expensively valued again. At the same time, the fixed-income sector (government, high-yield, and cat bonds) is offering more alternatives these days in an environment of high market interest rates. Whoever has a big enough budget for alternative assets can reap added value from an allocation to hedge funds. If implemented properly and if all pitfalls are avoided, hedge funds really can improve a portfolio’s volatility and enhance its risk/return profile. Interested investors, though, no longer have to forgo liquidity in exchange these days. The illiquid part of a portfolio should remain reserved for those types of assets that are still available at most in a semi-liquid format (private equity, private credit, infrastructure, and real estate). After years of evolving, hedge fund strategies have become a feasible option for retail investors today, but this asset category is still not yet suitable for do-ityourself investors. Interested investors should therefore put their trust in a private bank’s investment expertise.
So, is now the time to invest in hedge funds? The answer depends on the individual investor.
Kaiser Partner Privatbank AG | Monthly Market Monitor - November 2023
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Better than the Benchmark Kaiser Partner Privatbank AG
2023 PERFORMANCE-PROJECT 7 P R I VAT E B A N K I N G P O R T F O L I O
Better than the Benchmark KAISER PARTNER PRIVATBANK AG
among 43 participants during 01.10.2021 to 30.09.2023
fuchsrichter.de
18
Monthly Market Monitor - November 2023 | Kaiser Partner Privatbank AG
Kaiser Partner Privatbank continues to beat the benchmark. Investing is a marathon, not a sprint. That also goes for the five-year Performance Project 7 competition being conducted by independent testing firm FUCHS|Richter Prüfinstanz. For two years now, Kaiser Partner Privatbank together with 42 other banks and asset managers in the German-speaking world have been engaged in the challenge of managing a fictional private client’s assets in a discretionary mandate with the goal of beating a benchmark composed of six ETFs. The fictional client’s ambitions are not trivial. She would like to invest 2 million euros and to withdraw 1% (EUR 20,000) annually for personal spending purposes. She would like to at least preserve her wealth over the long term. She is willing to take on a certain amount of risk to grow the value of her assets, but is unwilling to tolerate more than a 20% temporary drawdown from the last high-water mark. The hurdle for all participants in Performance Project 7 to clear is high once more in the once again challenging second year of the competition, a year in which the world equity market has drifted upward slightly to date, but which saw bonds come under heavy pressure at the start of the year, contrary to expectations. Two years into the project, 21 participating institutions have managed to beat the benchmark. This somewhat larger pack of frontrunners compared to a year ago includes Kaiser Partner Privatbank, just like it did in 2022. With a rigorous active strategy, we have succeeded in ranking among the very best in every single quarter and in persistently beating the benchmark thus far. For the remainder of the competition, our focus will stay on pursuing a robust investment strategy and a forward-looking tactical asset allocation.
Kaiser Partner Privatbank AG | Monthly Market Monitor - November 2023
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Drawdown: All about Private Banking Not investing has its own costs
Nothing is without risk, including when it comes to investing money. But whoever stuffs his or her wealth under a mattress to avoid risk ends up facing a different risk: the creeping erosion of the value of his or her cash. Whoever would like to preserve the purchasing power of his or her money cannot get around investing it (in stocks). But that, too, has its pitfalls. Having access to investment experts and to a sophisticated range of investment products can help you to dodge hidden hazards and boost the real value of your assets.
“Your capital is at risk” – this notice, like other warnings, belongs to the financial industry’s standard repertoire.
Nothing is without risk when it comes to money “Your capital is at risk” – this notice, like other warnings, belongs to the financial industry’s standard repertoire. However, it is such a standard phrase that people are all too happy to click past it or skip over it and it thus fails to fulfill its intended purpose: i.e. to enlighten (potential) investors about the risk of incurring losses on invested capital. The UK’s Financial Conduct Authority (FCA) thus called the small-print, boilerplate risk warning “white noise” in a research report published in January 2022. Forty-five percent of the do-it-yourself investors surveyed in the FCA study were in fact unaware that there’s a potential risk of losing invested money. Through experiments, the FCA demonstrated that “louder” risk warnings – for example in boldface type and with a red background – would be more effective than the standard disclaimers currently in use. However, investors shouldn’t let themselves be deterred by more prominent warning notices or more detailed online risk disclosures in the future because whoever prefers to let his or her
wealth sit in a bank account out of fear of facing too much “risk” shouldn’t forget that stashing one’s wealth under the proverbial mattress also presents a risk – the risk of losing purchasing power. Why? Because inflation causes (cash) money to lose value every year. Even at an inflation rate of just 2% per annum – a regime that many central banks deem as monetary stability –, the amount of goods or services that one unit of money can purchase decreases substantially as the years go by. Even the world’s most value-retaining currency – the Swiss franc – has lost a good two-thirds of its purchasing power over the decades since 1970. At the moment, though, most central banks have yet to reach their 2% inflation targets. If one makes an admittedly somewhat exaggeratedly pessimistic assumption that future inflation will stay as high as the average seen over the last 12 months, this means that the US dollar would lose another 85% or so of its value by 2050 while the euro (measured in terms of German inflation) would lose around 90% and the British pound would devalue by 95%.
Socking away money in a piggy bank isn’t risk-free | Not investing costs money History: Purchasing power of 1 Swiss franc (US dollar, British pound, Japanese yen, euro) since 1970 1.0 0.8
0.6 0.4
0.2 0 1970
1980 Switzerland
1990
2000
Germany
United Kingdom
Sources: Bloomberg, Kaiser Partner Privatbank
20
Monthly Market Monitor - November 2023 | Kaiser Partner Privatbank AG
2010 Japan
United States
2020
The compounding interest effect… | …to the disadvantage of piggy bank savers Scenario: Purchasing power of 1 Swiss franc (US dollar, British pound, Japanese yen, euro) by 2050 based on average inflation rate over last 12 months (in parentheses) 1.0
0.8
0.6
0.4
0.2
0 2020
2025 Switzerland (2.5%)
2030
2035
Germany (7.3%)
2040
2045
United Kingdom (9.0%)
Japan (3.4%)
2050 USA (5.1%)
Sources: Bloomberg, Kaiser Partner Privatbank
Investors therefore should also take a different kind of risk warning into account: i.e. not investing is risky. Whoever would like to protect his or her wealth from losing real value has to invest it. The best (and most easily accessible) protection against a loss of purchasing power is to invest in businesses by buying shares in them. In the near term, the performance of stocks can sometimes be very volatile, but the longer the investment horizon, the more robust their returns and the more likely it is that they will outperform classical alternatives like bonds or gold. Thanks to the com-
pounding interest effect, which Albert Einstein called the eighth wonder of the world, investments in stocks not only can preserve the purchasing power of one’s wealth, but can also increase it considerably when adjusted for inflation. The fact that stocks should yield a higher return than the risk-free interest rate or bonds do is one of the ABCs of stock-market knowledge and is the foundation of the strategic asset allocation for billions upon billions of assets under management around the world. Selecting the right stocks, though, is more important than one might think.
Buy and hold (the boring way) | Stocks return the most in the long run Cumulative performance taking the USA as an example 16 14 12 10 8 6 4 2 0 1990
1995
2000 Stocks
2005 Bonds
2010 Gold
T-Bills
2015
2020
Inflation
Sources: Bloomberg, Kaiser Partner Privatbank
Kaiser Partner Privatbank AG | Monthly Market Monitor - November 2023
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The longer the investment period… | …the steadier the investment performance Rolling returns on S&P 500 60% 40% 20% 0 -20% -40% -60% 1950
1960
1970 1 year
1980
1990
2000
5 years
10 years
20 years
2010
2020
Sources: Bloomberg, Kaiser Partner Privatbank
More than half of all stocks actually even destroyed shareholder value in the long run.
Wheat and (lots of) chaff This is because although aggregate price levels on the equity market invariably head upward in the long run, this isn’t true by a long shot for every individual stock. The opposite is true, in fact, because many stocks underperform short-term (risk-free) government bonds or lose value over a long time horizon. Arizona State University Professor Hendrik Bessembinder has taken up this subject in multiple studies. In a research paper published in 2018,1 he demonstrated that over the period from 1926 through 2016, only 42.6% of all stocks listed on US exchanges performed better (including reinvested dividends) than 1-month T-bills. More than half of all stocks actually even destroyed shareholder value in the long run. However, it’s not exclusively an American problem that
so many stocks do not help investors to preserve their purchasing power or are even a total bust – it’s actually a worldwide phenomenon. Bessembinder delivered the latest data on this in an updated working paper published in March 2023.2 And even if an investor does succeed in largely skating around value-destroying stocks when picking equities, the return on investment still doesn’t necessarily turn out satisfactory enough because it’s also a statistical truth that only a very small percentage of positively performing stocks account for the bulk of the equity asset class’s overall performance. Depending on the equity market in question, over the period from 1990 to 2020, for instance, the top 1% of the best-performing stocks accounted for 34% (Israel) to 72% (South Korea) of the aggregate equity value appreciation.
Many stocks are detrimental to one’s wealth | One should nonetheless invest anyway Percentage of stocks with a long-term negative return, 1926–2016 US Canada France Germany Italy Netherlands Spain Sweden Switzerland UK Australia Hong Kong Israel Japan South Korea Taiwan 0
10%
20%
30%
40%
50%
Sources: Bessembinder et al. (2023), Kaiser Partner Privatbank
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Monthly Market Monitor - November 2023 | Kaiser Partner Privatbank AG
60%
70%
80%
The winner takes all | Stock returns are not uniformly distributed Contribution by best performers (top 1% of all stocks) to the total return on local equity markets, 1990–2020 US Canada France Germany Italy Netherlands Spain Sweden Switzerland UK Australia Hong Kong Israel Japan South Korea Taiwan 0
10%
20%
30%
40%
50%
60%
Sources: Bessembinder et al. (2023), Kaiser Partner Privatbank
What conclusions can be drawn from these statistics? Once again it becomes clear that stock-picking is a difficult thing to get right. It requires special expertise, and very few people consistently succeed at it over the long haul (note: somewhat better chances for success exist in smaller markets like the Swiss equity market, which are usually less covered by analysts). But anyone with enough luck or skill can earn considerably above-average profits with a concentrated portfolio of stocks. The stock-picking problem can be circumvented by employing passive investment strategies that replicate a market capitalization-weighted stock index.
Going that route automatically makes an investor increasingly heavily invested in winning stocks. But the return on investment with this strategy can never beat the benchmark. Private markets offer a different way to get in on the winners of the future early on. Growth companies these days are staying in private hands for longer and longer and usually don’t go public until after the bulk of their value appreciation has already taken place (and has accrued to venture capitalists). However, the era in which investments in venture or growth capital were the exclusive preserve of institutional investors is over by now.
*1) Hendrik Bessembinder (2018): “Do Stocks Outperform Teasury Bills?” *2) Hendrik Bessembinder, Te-Feng Chen, Goeun Choi, K.C. John Wei (2023): “Long-term shareholder returns: Evidence from 64'000 global stocks”
Kaiser Partner Privatbank AG | Monthly Market Monitor - November 2023
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The Back Page Asset classes
Performance as of 31 October 2023 Asset class
YTD
1 Month
1 Year
3 Years
Cash CHF
1.2%
EUR
2.9%
USD
4.5%
Fixed Income
1.4%
0.3%
3.3%
2.7%
0.5%
5.2%
7.1%
0
Sovereign bonds
-1.0%
-0.7%
-1.1%
-15.5%
Corporate bonds
-0.5%
-1.2%
5.3%
-16.1%
0.7%
4.1%
9.7%
-0.7%
-2.1%
-12.8%
-1.3%
5.1%
2.3%
-1.5%
7.7%
-15.5%
1.7%
21.5%
21.5%
-3.7%
3.3%
0.7%
Microfinance
3.9%
Inflation-linked bonds
-2.1%
High-yield bonds
3.9%
Emerging-market bonds
-0.5%
Insurance-linked bonds
17.3%
Convertible bonds Equities
1.4% 0
Global
9.1%
Switzerland
-1.4%
Europe
6.6%
UK
1.4%
USA
10.5%
Emerging markets
-4.3%
Alternative assets Commodities Real estate Switzerland
-7.3% 8.8% -4.3%
Hedge funds
2.5%
Currencies EUR/USD EUR/CHF GBP/USD
Monthly Market Monitor - November 2023 | Kaiser Partner Privatbank AG
-2.6%
9.5%
31.9%
-5.1%
-2.4%
11.2%
-3.3%
11.4%
36.1%
-3.6%
7.1%
51.4%
-2.3%
9.5%
30.0%
-3.9%
7.9%
-17.1%
-0.2%
-7.7%
45.6%
7.3%
21.4%
5.6%
-4.3%
-1.4%
-3.9%
-0.5%
5.7%
15.0%
0
Gold
24
0.1% 0.3%
0 -1.2% -2.7% 0.6%
0.0%
7.0%
-9.2%
-0.5%
-2.7%
-9.9%
-0.4%
6.0%
-6.1%
On our Agenda • November 9 to 19: World Trampoline Gymnastics Championships This year, like every year, the ATP Finals – the multimillion-dollar concluding event of the tennis season – is on the sports calendar in mid-November. A niche sport will take place probably less in the public spotlight at the same time when more than 1,000 gymnasts from over 40 countries meet in Birmingham, England, for the 37th World Trampoline Gymnastics Championships. Be it singles or synchronous doubles and whether on a big or mini-trampoline, agility in the air is called for in every discipline. • November 19: Presidential runoff election in Argentina Annual inflation in Argentina tops 130%, and more than 40% of the country’s population lives in poverty. There’s a lot of bottled-up anger among the public, but also prevalent fear about an upcoming shock therapy that is arguably unavoidable. The presidential campaign showdown has thus come down to a duel between Sergio Massa, who promises to preserve social programs, and libertarian firebrand Javier Milei, whose election campaign has stridently agitated for adopting the US dollar as Argentina’s national currency and shutting down the country’s central bank. • December 4: International Day of Banks The reputation of the banking industry didn’t necessarily improve in 2023 in the wake of the collapse of Silicon Valley Bank and the sudden demise of Credit Suisse. Nevertheless, there’s an annual remembrance day even for banks. But the International Day of Banks also serves as a reminder of something else: the potential of multilateral development banks to promote sustainable development and the vital role that national banking systems play in improving the standard of living in United Nations member states.
Kaiser Partner Privatbank AG | Monthly Market Monitor - November 2023
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This document constitutes neither a financial analysis nor an advertisement. It is intended solely for informational purposes. None of the information contained herein constitutes a solicitation or recommendation by Kaiser Partner Privatbank AG to purchase or sell a financial instrument or to take any other actions regarding any financial instruments. Furthermore, the information contained herein does not constitute investment advice. Any references in this document to past performance are no guarantee of a positive future performance. Kaiser Partner Privatbank AG assumes no liability for the completeness, correctness or currentness of the information contained herein or for any losses or damages arising from any actions taken on the basis of the information in this document. All contents of this document are protected by intellectual property law, particularly by copyright law. The reprinting or reproduction of all or any parts of this document in any way or form for public or commercial purposes is expressly prohibited unless prior written consent has been explicitly granted by Kaiser Partner Privatbank AG. 26
Monthly Market Monitor - November 2023 | Kaiser Partner Privatbank AG
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