By
Borsgade
First Eagle provides their assessment of the market here 2Q 2023. They see a market driven higher by a small group of very large US tech companies and AI as the underlying theme.
At the same time, they see that the stock market and bond market no longer seem to be aligned. Although central banks have raised interest rates countless times, the economic situation hasn’t changed much: “While the excitement around the AI narrative helped boost US equity markets to varying degrees, a paradox seemed to emerge under the upbeat sheen. Even though the Fed has raised rates considerably over the past year-plus, financial conditions haven’t actually tightened all that much thanks to ongoing fiscal expansion, and equity and fixed income markets seem to have fallen out of sync as a result.”
First Eagle sees particular opportunities in international equity markets, highlighting Japan and China as two regions that stand out:
Though perhaps not as seductive as AI, a number of global developments during the quarter caught our attention. In Asia, the currencies of China and Japan have been notably weak, as central banks in both countries-for similar but nuanced reasons-are pursuing accommodative monetary policy as much of the rest of the world tightens.
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