Investment Committee – March 2023


Focus on attractive levels of positive carry and commodities exposure

The Investment Committee of KM cube suggests that investors should remain positioned into positive-carry trades, as interest rates in the US do not appear relatively low. In fact, real rates might actually be too high against their long-term trend when considering inflation-linked note yields. The potential growth rate of the economy has been declining for a protracted period of time, and interest rate hikes should end sooner rather than later when viewed in this context.


Investing in commodities may also be a good idea in the current environment. According to Credit Suisse Yearbook Report (see here) a balanced portfolio of commodities seems to provide a hedge against inflation, and they are negatively correlated with equity and bond returns, making them a good option for positioning in commodities. An increased exposure to commodities may be well warranted in this environment.

Responding to Market Nervousness

The Investment Committee remains cautious with a focus on yield-generating assets, USD, and range-trading opportunities as market nervousness seems very likely. They recommend holding a substantial percentage of cash in all portfolios.

Federal Reserve’s Potential Actions

At some point, the Federal Reserve will be behind the curve and will need to pivot, but this is not expected to happen in H1 2023. A preceding step could be either some credit event or S&P500 at 3400. The Investment Committee suggests that unless the Federal Reserve has made a conscious decision to clear the many imbalances in the financial system, which would surely cause some major collapse in the stock-exchanges going forward, it must take into account the economy’s potential growth rate.


In conclusion, investors should consider the Investment Committee’s recommendations and focus on yield-generating assets, USD, and range-trading opportunities. They should also consider investing in commodities and holding a substantial percentage of cash in all portfolios.

Authors: John Couletsis and Kostas Metaxas


Topic: Investment Strategy, Market Analysis
Investment Theme: Inflation Hedge, Diversification
Portfolio Positioning: Cautious
Implied Buy signals: Commodities, Positive-carry trades
Implied Sell signals: Long-term bonds
Probability of Stock Market Rally: Neutral