Another difficult quarter for markets in June, recording theworst first half of the year in developed markets in over 50 years. Not onlyequities and credit saw a tough start, but government bonds also tumbled asinvestors expect interest rates to rise while central banks seek to fightinflation. Recession is around the corner, leading equity valuations todecline. So far this year only commodities and commodity-linked companies areperforming, while the worse returns come from growth stocks, with an aggregateslump of nearly 30%.
Since we're already in full 2Q earnings season, we're monitoringall the companies across our portfolios, and what we see for now is a positiveoutlook based on secular growth, from debt-free stories, and protected margins.That said, market drawdowns plunge multiples even more, so that we see theseprices as a great opportunity to overweight some highly hit names, speciallythrough the quality-growth spectrum.
