Over the weekend, a Chinese AI start-up funded by quant fund manager Liang Wenfeng released a new version of its large language model (LLM), named DeepSeek. Early reports indicate that DeepSeek’s performance is similar to that of U.S. competitors such as OpenAI and Meta.
The start of monetary easing by the Fed is always a global event. Firstly, because of its impact on the global cycle. With more than 30% of world consumption (in dollars), US demand clearly steers the development of global demand.
Macro surprises deteriorated over the summer before stabilising in September. The slowdown in activity is most marked in the developed countries (United States, Europe) and China. Nevertheless, global growth remained at satisfactory levels, close to 3% (Purchasing Power Parity) in Q3 according to the August composite Purchasing Managers’ Index (PMI).
Europe has recently seen an acceleration in the number of companies buying in their free floats and taking the decision to “go private”.
The trend to delisting may be bad for stockmarkets in the long term, but will benefit small cap investors in the short term.
On a global level, macro-financial conditions in the second half of the year will be dominated by the continuation of global monetary easing.
The underperformance of Swiss small caps compared with large caps over the last 2 years has been particularly marked (see chart below).
With a jump of +151.5% in 2024, leading graphics card manufacturer Nvidia has clearly been the winning bet of the year, given that the company seems unavoidable if one is to capitalise on the AI craze.
The infrastructure sector (defined by the S&P Global Infrastructure TR USD) has had a reasonable first half of the year with a performance of +4.3% YTD. The two key sources of performance for the index were the power generation and the midstream energy sectors.Mehr lesen
The capitulation point in small caps may have passed… and the tide seems to be turning.
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