In Germany, fears of Russian company Gazprom cutting off gas supplies entirely after a shutdown for maintenance purposes proved unfounded. However, while natural gas continues to flow in via the Nordstream 1 pipeline, volumes flowing through are only a fifth of what it was before the shutdown. A slight recovery seen in the forward prices for German price after the resumption of flow has now been lost altogether with prices climbing even higher.

The flow into healthcare stocks is likely a “defensive” manoeuvre by fund managers, as seen in energy stocks over the weeks prior to the past week. This could face correction over the course of this week and the next: in the face of a recessionary outlook, overvaluation tends to get shut down rather swiftly.

The overall bearish outlook on equities also show an interesting possibility: as shown above, there is currently very low confidence that the Federal Reserve’s proposed measures will contain inflation in the short run. A similar sentiment is likely prevalent to some measure in Western European countries, where the Debt to GDP Ratios tend to be higher than in Central and Eastern European countries. However, its likely that flows towards bonds will increase over the course of the quarter. While the rate of return isn’t historically as high as in equities, earning low returns is preferable to earning none (or, for that matter, losing value). This is, of course, dependent on whether fund managers can sway their clients into gaining increased exposure to government bonds and other fixed-income securities.

For investors, the current scenario also lends weight to the proposition of utilizing pragmatic momentum-driven tactical investments to build portfolio returns as opposed to conviction-driven investing.

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