Blue Horizon: From depression to optimism (or to complacency?)
Thomas Trauth, Blue Horizon Wealth Partner AG (Foto: Blue Horizon).
Zurich – It looks like a different world. Since the turn of the year the sentiment has changed fundamentally. The fear of falling off the cliff – not only in US fiscal terms – turned into a thoroughly positive mindset, an upbeat mood confirmed in numerous comments by many of the global leaders at the WEF in Davos. As a result, the year-end rally extended into January.
While, throughout 2012, we believed in improvements and stronger markets for risky assets, we are starting to ask ourselves whether we could end up in a phase of complacency and overheating. For now, however, we continue to be optimistic about the outlook for risky assets.
In Europe the possibility of a Eurozone break-up is much less of a concern
Not only did equity markets rise strongly in January (the S&P500 index climbed 5.7%, the EuroStoxx50 by 4.3% and the Nikkei by 4.5%), but also the VIX – the index for the cost of US equity options, a measure of investors’ fear – fell to its lowest level since 2007. There were a number of reasons for the positive developments. The US managed to avoid the fiscal cliff – although some fiscal braking tracks will be seen throughout the year – and the next big debate about the debt ceiling has been postponed. The Republicans rather surprisingly agreed to a 3- month deferral. In Europe the possibility of a Eurozone break-up is much less of a concern, although fundamental problems have not been solved. In fact the growth outlook remains poor for Europe as a whole and very depressing for some of the peripheral countries. (BH/mc/hfu)
