May 19, 2022
We experienced a bloody session in the US equity markets yesterday with Nasdaq closing down 4.7% and the S&P 500 down 4%. Nasdaq is now down 27% y-t-d and S&P 17.7%. Disappointing results from US retailer Target due to increased costs and tightening margins are seen as the main culprit. Retailers globally lost the outperformance against the overall market built over the pandemic. Our conclusion: markets are now technically oversold and ripe for a near term rebound. Medium term however, inflation, its economic consequences and central banks reaction to it remain the central themes for investors as many of the valuation excesses in the market are being washed out violently. We stay defensive in our portfolios.