Romano Sala Tenna, Portfolio Manager at Katana Asset Management, thinks recent volatility is here to stay for a few months or even years. As sentiment in the US has turned positive, they’ve had to invest some of their cash balance, but the current rally is “low-quality,” he says. “We’ve got one eye on the door, at the first signs of trouble we’ll be moving back and building our cash position back upwards.” He describes “the ideal rally” as one driven by growing EPS, with share prices following EPS. The current rally is being driven by sentiment, money flowing out of bond markets, and confidence in Trump’s policies. “At some point, we need to see earnings tick upwards. Otherwise, the rally will falter.” In the short video below, he explains why what we’re witnessing is a “multi-decade event.”
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