Over the course of May there were a series of danger signals that all point towards the same conclusion: for the first time in more than a year, readers of the monthly report are advised to be underweight shares in relation to their long-term target allocations, writes Sparinvest’s chief strategist, David Bakkegaard Karsbøl, in his June report.
In short, the story is that during the month we came even closer to seeing an inverted interest curve in the USA, where short-term interest rates rise higher than long-term interest rates, the leading indicators for the OECD region have peaked and now threaten to drop and cross 100, oil prices are falling and the general raw material index (Thomson /Reuter) is falling. In addition, the Italian problem is growing larger after the recent election and subsequent government that includes both the Five Star Movement and the Liga. This is presumably also the reason that European investor confidence (Sentix) has fallen more than expected in May.
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