Asset Allocation Monthly - May 2022

After a bounce of 10% or more from this year’s lows, we have downgraded European equities to underweight, thereby also reducing our overall directional equity risk and risk taking overall. We remain long Japanese and emerging market stocks. With both European company cash flows (i.e., earnings) and discount rates moving in an increasingly unfavourable direction, the recent rally feels more like a ‘dead cat’ bounce than a durable upturn.