We had another eventful month, starting with markets shedding value on fears of rising interest rates.

The technology-heavy Nasdaq took a hit, giving back almost all of its 2021 gains. This was due to concerns that companies with stretched valuations may struggle to meet expectations if borrowing costs rise too quickly.

But after Federal Reserve Chairman Jerome Powell continued to forecast interest rates near zero until at least 2023 and raised GDP growth forecasts to 6.5% this year, investors started to recalibrate expectations.

The European Central Bank also announced that bond purchases under the Pandemic Emergency Purchase Program (PEPP) would be implemented “at a significantly faster pace” over the next three months to mitigate potential risks to the Eurozone economy.

Then, President Biden finally succeeded in passing his $1.9 trillion Pandemic Recovery Act, allowing more aid to flow to households, businesses and local governments. His goal is to spur America’s economic recovery and build momentum for another $2.25 trillion stimulus package mainly aimed at rebuilding infrastructure.

While the good news indicated that the economic recovery was accelerating, it again fueled concerns about future inflation. So investors tried to position themselves amid the good-news-bad-news narrative.

Risk appetite slowly returned in Europe and Asia as well, capping a volatile month marked by disputes over vaccine shipments, a traffic blockade on the Suez Canal and a further deterioration in relations between China and the West.
But there is still some room for recovery in stocks that are benefiting from the economic recovery and the reopening trade.

Of course there was movement on the crypto front as well: Bitcoin touched another all-time high at just over $61,000 and then dropped back over 17%. A new upswing began when Tesla started accepting payments in Bitcoin for its cars and PayPal announced that its users will soon be able to use cryptocurrency to pay for goods at millions of retailers. Even Visa and Mastercard said they would soon start processing crypto payments. All of this could push digital currencies further into the mainstream.

So after an eventful month the S&P 500 ended at 4.2% and the MSCI World Index at 3.1%. 20-year bonds and gold fell another -5.4% and -1.1%, respectively.

Our strategies all ended the month in the black: Universal at 2.3%, Progressive at 6.7%, while CryptoMax failed to fully capitalize on the Bitcoin upswing due to its high volatility, returning only 0.4%.

All in all, we had a good start to this first quarter with an average return of 8% across all three strategies, supported by the tailwind of a strengthening dollar which boosted performance by another whopping 6% for Swiss investors.

Let’s keep our fingers crossed that our strategies can repeat this in the coming quarters.

Stay happy, healthy and wealthy!

Omar