SZ-NLP APRIL UPDATE: A FEW OF THE RECENT THEMES

Market Comments:

The fear of inflation together with the potentially fabricated exaggeration of this fear, had created a strong momentum in long term [yields] in the US despite repeated effort from the FED to reenforce the message about FAIT (Flexible Average Inflation Targeting).

In addition, these levels of yield, obviously, were only sustainable if the FED would hike earlier than the consensus suggested, which was a key assumption for this bet to fully materialise.

As the FED maintained their position on rates during April, this momentum progressively lost steam and resulted in a pause in the [tightening] trend. Consequently, we observed even more liquidity in the market and this time, as opposed to very clear rotations during the previous months, TINA (There Is No Alternative) was manifested as timing S&P500 and some simple [smart_beta] factors (value).

[medical_products], [value_chain], [supply_shock], [resilience], [cost_effectively]

Picking up the theme of [supply chain risk] and the extraordinary need for uninterrupted and efficient production and distribution of [medical products] around the world, our NLP engine suggested a medical device company that has heavily invested in smart [value chain] design and deployment. Approved by the SZ-alpha model, this asset contributed significantly to April’s returns, during the short period of holding (8th-19th April).

[Supply chain] vulnerabilities and inefficiencies have been largely magnified in the aftermath of the global pandemic. Identifying the type of risk and the right solution for each individual business, at a time when [cost efficiency] is critical, calls for a thorough reimagination of supply chain that can deliver [resilience] and efficiency and prepares businesses’ whole [value chain] for not only ongoing business challenges but more profound shocks such as financial crises, extreme weather, pandemics, etc.

Smart [infrastructure investments] and bold [structural change] decisions are more needed than ever before, in order to minimise any costly disruption such as the one that the entire world is facing today.

The future leaders in global businesses are those, who realise [resilience] is not guaranteed only with technological advancements. New solutions can widely vary from re-shoring and local production and distribution facilities to distributed multi-layer supplier networks, depending on the individual circumstances.