Investment strategy: Markets appear to be in a fragile period as most important news has been discounted. At the same time, there are indications that in the past led to the market’ fragility. Indications of macroeconomic "peak growth" and investment euphoria (peak sentiment. With the summer expected to be somewhat different from usual, the XSpot Growth investment portfolio is already set to face a possible negative scenario. We also estimate that portfolios such as XSpot High Income, XSpot Conservative and XSpot Balanced are likely to record an exceptional upcoming period.

Inflation remains in the forefront, especially after the rise in oil prices to the highest levels since 2018. It is a given that the global rise in commodities has created an upward pressure on the entire production chain.

The rise of oil and other commodities has favored countries such as Australia, Canada and Brazil, with some of them breaking up significant levels and offering significant opportunities for the near future.

However, it seems that the coming months could be different as commodities seem to have reached extremely high levels, so in the coming months it is normal for them to be lower or just not higher than the current levels. In addition, the manufacturing PMI for America, after being at its highest level for at least 15 years, seems to have peaked.

The sharp rise in the manufacturing index was accompanied by a sharp rise in inflation as the positive correlation between the two remains extremely high.

Rotation to emerging markets?

With the rotation in full swing between sectors in the US and elsewhere, there may be outflows from the S&P 500 towards the emerging markets, which may attract investors through better returns in the coming period.

With markets trying to manage the huge rise that has taken place over the past few months, with macroeconomic indices likely to have reached very high levels and with investors appearing confident that markets have nothing to fear, interest is skyrocketing.

It is highly probable that in the next period, sectors such as technology will record a correction, which will further facilitate capital outflows towards value sectors and emerging markets.

In the graph below we see an interesting development. This is the index that measures the disposition of smart money for protection against possible fall (white line) and on the other hand, the index which shows the negative investment sentiment of small investors (orange line). Short put, smart money is showing a high level of protection at a time when small investors are not seeing any negative developments.