La Masterclass
illustration of a highway

da Roman Balzan

Chief Marketing and Brand Officer di Alpian

Roman Balzan, Chief Marketing and Brand Officer at Alpian

A bit of softness in this brutal world, this is what we needed for May. Our pick for the newsletter is “Don’t know why” by Norah Jones. A haunting tune, smooth harmonies, and the silky voice of Norah… The song released in 2002 is a jazz-pop gem, a true invitation to introspection. Why did we choose this quiet tribute to romantic indecision? Which market muse didn’t show up? 

The missing lover is Recession. The one economists have fallen in love with and seem to be calling since 2022, didn’t come —at least if you trust common economic measures. Yet, all the forward-looking economic indicators one can possibly look at to predict it is coming are clear: It should be here! So, what could be the reasons for this no-show? 

There are a couple of reasons that come to mind:

  • The most popular among financial professionals is that it has not come yet. It is just a matter of time. Indicators don’t lie. Central banks can’t hike rates that fast to curb inflation with impunity. If you make it difficult for consumers, businesses, and governments to borrow, this must have consequences for the economies. And the effects are dose-related even if there are lags, so this level of hiking implies a significant economic slowdown.
  • The second reason, that contradicts the first, is that central bankers know what they are doing: they can engineer a soft landing, i.e., slow down the economy just enough to cool inflation but avoid recession. Central banks are usually accused of all evils by investors, but they employ an army of PhDs, economists, and strategists who leverage an immense amount of data most investors can only dream of, to closely monitor the economy. They must have some sort of plan, right? And one that, apart from a couple of poorly managed banks and businesses failures, could work.
  • A third reason that could be argued, is that maybe a recession is already here, or it will come but not under the traits we expect. A recession is defined as a pronounced, persistent, and pervasive decline in aggregate economic activity. What if it is not pronounced and pervasive but persistent? Is it hard to imagine for example a prolonged period of weaker growth and muted returns with parts of the economy operating at different speeds? That’s sort of what the markets are discounting now. The lover finally came back, but time did its work —a few kilos and wrinkles here and there, but love is eternal, right?
chart of the market updates during may 2023

Between these three scenarios, our heart sways but you know our philosophy: Our job is to adapt, not to forecast.

We like the third reason because it is less consensual, but we prepare our portfolios for the likely occurrence of the three. This means 1) keep exercising critical judgment, 2) avoid staying underinvested if there is no good reason for that, and 3) reallocating the capital to the assets that show the greatest potential. 

Did you miss the analysis of April 2023? Find it here: Push it to the limit: The market at a glance [April 2023]

L'autore

Roman Balzan

Roman è Chief Marketing and Brand Officer di Alpian, la prima banca digitale premium svizzera autorizzata dalla FINMA con servizi di private banking, dove guida anche il programma aziendale di adozione dell’IA.

Ha conseguito un master in economia all’Università di San Gallo HSG e ha costruito la sua carriera tra imprenditoria e brand leadership: cofondatore di Suxedoo.ch, Programs Lead per l’employer brand marketing in Google EMEA, poi il lancio del primo mercato europeo di Lime, la Svizzera, prima di guidare marketing e brand di Lime in EMEA. Una volta ha percorso 2.300 km sul Cammino di Santiago con il suo cane Nelson, da San Gallo a Santiago de Compostela.

Firma il filone IA dell’editoriale settimanale di Alpian, sul lato umano dell’IA nel banking.

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