Hawkish central banks continues to weigh on markets, as they're committed to bring inflation under control, despite the risks of recession. In fact, the US has already recorded two consecutive quarters of negative growth, while most economic data are showing how the global economy is cooling down. As such, bond yields went up (with prices down), together with equities also down, specially through the most cyclical and growth stocks. However most of our companies are reporting historic sales highs with no meaningful margin lost, while the portfolio is ~40% down on valuation.
We consider this is not justified by rising interest rates, and continue to think that holding long-term and sustained organic growth on high quality stocks is the best way to protect any equity portfolio from inflation and/or recession. As for bonds, we recently increased the duration on crossover-rated bonds, always through issuers clearly performing on fundamentals.
