Comitê de Investimento Internacional - Fevereiro/26

Name: Comitê de Investimento Internacional - Fevereiro/26
Uploaded: 2026-02-12T18:18:35.000Z
Duration: 2 h 4 min 16 s

Market Overview and Volatility Analysis

Introduction to the Meeting

The speaker welcomes participants and expresses gratitude for their attendance.

Emphasis on keeping the committee meeting concise, productive, and focused.

Current Market Conditions

February is characterized by extreme volatility, causing concern among clients regarding significant drops in various assets.

Notable declines observed: gold down 10%, silver nearly 30%, platinum 17%, mining companies around 15%, and software firms in the U.S. down 20%.

Market Corrections

The recent downturn is viewed as a correction following a substantial rise rather than a trend reversal.

Graphical analysis shows both gold and S&P holding moving averages; gold maintains its 20-day average while S&P has lost it but holds at the 50-day average.

Portfolio Performance Amidst Volatility

Client Portfolio Insights

Discussion of four recommended client portfolios: AI, defense, commodities, and best ideas; all experienced declines but maintained strong year-to-date returns.

Year-to-date performance: commodities up 13%, defense up 9%, AI up 6%, despite recent market shocks.

Recovery Observations

Commodities portfolio showed recovery after initial losses; overall market behavior indicates no systemic issues despite volatility.

Impact of Federal Reserve Leadership Change

Key Developments

The decline in commodity prices linked to Kevin Warsh's nomination as Fed Chair announced on January 30th coinciding with significant market drops.

Profile of Kevin Warsh

Background on Kevin Warsh: Stanford and Harvard educated, former Morgan Stanley employee, youngest Fed governor (2006–2011), economic advisor to President George W. Bush during financial crises.

Implications for Investment Strategy

Understanding Warsh's potential impact on investment strategies is crucial; he brings experience but may not align with more sophisticated economic policies.

Disruptive Economic Proposals and Market Reactions

Overview of Kevin Warsh's Disruptive Ideas

Kevin Warsh is a critical figure with disruptive views on the Federal Reserve (FED), known for his strong criticisms of its current policies.

He aligns with supply-side economics, advocating for a more predictable and limited FED, reminiscent of past economic strategies in the U.S.

Warsh criticizes the expansion of the FED's mandates beyond inflation control to include unemployment and social inequality, labeling it as "woke" or "Marxist."

Key Proposals by Kevin Warsh

Advocates for an aggressive reduction of the FED's balance sheet to manage market liquidity and interest rates effectively.

Calls for ending the Dot Plot guidance tool used by the FED, which has created significant market focus and uncertainty.

Suggests greater coordination between the Treasury and the FED to improve public debt management, drawing parallels to historical practices from 1951.

Implications of Proposed Changes

Emphasizes that fiscal dominance affects monetary policy; excessive government spending limits the FED’s ability to raise interest rates without impacting debt costs.

Proposes that improved integration between fiscal policy and central banking could lead to sustainable public debt management.

Market Reactions and Company Earnings

The market perceives Warsh as a disruptive force, leading to potential confrontations between him and market expectations.

Recent corporate earnings reports exceeded expectations, showing an aggregate growth rate of 15.6% year-over-year, indicating robust economic performance despite concerns about valuations.

Sector Performance Insights

Notably strong earnings growth was observed in industrial sectors, particularly capital goods, which saw a remarkable increase of 90%.

This trend suggests a reindustrialization movement within the U.S., aligning with supply-side economic principles often associated with Trump-era policies.

Market Consensus and Growth Insights

Market Fundamentals and Valuation

The current market consensus indicates that the stock market is supported by strong company growth, dismissing concerns of a bubble due to solid fundamentals.

Projected earnings growth for Q4 shows an increase of 15% compared to last year, suggesting reasonable valuations despite a low equity risk premium.

A graph from Morgan Stanley illustrates that while the price-to-earnings (P/E) ratio stands at 22, projected earnings growth supports this valuation as reasonable rather than cheap.

Risks Affecting Market Sentiment

Key risks include potential delays in interest rate cuts by the Federal Reserve, influenced by political pressures from figures like Trump.

Geopolitical tensions, particularly trade wars and tariffs, pose significant risks that could lead to economic uncertainty or recession.

Concerns Over Capital Expenditure

High capital expenditure (capex), especially in artificial intelligence sectors, raises concerns about sustainability; companies like Amazon have seen stock declines despite strong results due to increased capex announcements.

The competitive landscape for AI firms such as OpenAI is shifting, with emerging players gaining ground and raising questions about financial viability.

Investment Strategy and Portfolio Composition

IPO Trends and Market Dynamics

Upcoming IPO plans from major players like Starlink and Anthropic indicate a rapidly evolving tech landscape where traditional leaders may face challenges.

Cautionary Approach to AI Investments

While maintaining recommendations for AI investments, there is a shift in portfolio composition reflecting heightened caution regarding future returns.

Political Climate's Impact on Markets

The political environment under Trump's administration presents uncertainties that could affect pro-market policies amid social unrest in certain U.S. regions.

Geopolitical Tensions: A Growing Concern

U.S.-China Relations

Ongoing geopolitical tensions between the U.S. and China are increasingly serious; these dynamics could have detrimental effects on market stability.

Commodity Investment Focus

Diversification Strategies

The investment strategy emphasizes commodities with significant allocations: 15% in gold, 10% in uranium, and 5% in copper; highlighting the importance of diversification within investor portfolios.

Investment Strategy Update

Portfolio Adjustments and Sector Focus

The team has made significant changes to their investment strategy, particularly in the software sector, which saw a 26% decline. Concerns about AI's impact on Software as a Service (SaaS) have influenced these decisions.

Palante was added to the "Best of the Gears" portfolio following its recent drop. Google remains a strong performer among the "Magnificent Seven" big-cap stocks, contributing positively to their position.

The current portfolio includes two stocks and one sector ETF, with a notable shift away from Nvidia due to stagnation. Technology and AI still represent 20% of the portfolio, while defense investments are split evenly between U.S. and European markets.

The ETFs in defense are not perfect indicators due to globalization; many companies within them are American. However, they maintain an important role in the overall strategy.

The S&P Equal Weight index comprises 10% of their holdings as company performance becomes less reliant on major tech stocks like Nasdaq. This diversification is seen as a positive development.

Performance Overview

Year-to-date performance shows BSTID up by 5.9%, significantly outperforming the S&P index. There is optimism about closing gaps in performance over the next twelve months.

Projections for macroeconomic growth have been updated, indicating an upward trend for various economies including the U.S., India, and emerging markets while Europe remains stagnant.

Inflation and Economic Indicators

Morgan Stanley projects U.S. inflation at 2.8% for 2026, reflecting a slight decrease from previous estimates. Interest rates remain unchanged despite fluctuations in inflation metrics.

Core CPI ended December at 2.6%, slightly below January levels but still relevant for Federal Reserve considerations regarding housing costs versus broader economic indicators.

Recent CPI data indicates stronger-than-expected results driven by producer price increases; expectations suggest Core PCE may rise above 0.3% soon.

Labor Market Insights

A stable labor market is crucial; however, it remains weak with no significant improvements noted recently despite Federal Reserve policies aimed at managing inflation through employment stabilization strategies.

Expectations indicate that by mid-year there will be progress towards achieving a target inflation rate of around 2%, although this goal remains challenging given current economic conditions.

Reflection on Past Predictions

Historical projections regarding inflation were overly pessimistic; current forecasts suggest much lower outcomes than previously anticipated during last year's tariff discussions, highlighting improved economic resilience compared to earlier fears.

Macroeconomic Insights and Industrial Performance

Overview of Economic Indicators

The latest corporate indicators show a stagnation at 0.2% from July to November, with expectations for an adjustment upwards to 0.3% due to the impact of shutdowns.

A positive surprise in the Manufacturer PMI, reaching 52.6, indicates expansion in manufacturing activity, marking the highest level since October 2024.

This growth is attributed to reshoring policies and revitalization efforts initiated during Trump's administration, reflecting positively on U.S. industrial performance.

Durable Goods Orders and Retail Sales

Excluding defense aircraft, durable goods orders have shown consistent growth over five months, averaging a 0.5% increase.

Retail sales data indicates stability with a standard change of 0% in December; however, construction materials have seen a notable increase of 1.2% over two consecutive months.

Industry Growth and Stock Performance

Positive trends in retail demand suggest benefits for wholesale and industrial sectors; this aligns with strong fourth-quarter results showing significant industry growth.

A correlation between PMI data and stock performance highlights the effectiveness of current industrial policies.

Labor Market Dynamics

The unemployment rate remains concerning as there are more unemployed individuals than job openings; this ratio has been above one for six months.

An increase in labor force participation could rapidly elevate unemployment rates due to limited job availability.

Productivity Trends and Future Projections

Recent productivity growth reached 4.9%, while labor costs decreased by 1.9%, indicating efficiency improvements within the workforce.

Historical comparisons show that productivity spikes often follow major technological advancements or economic shifts; current AI developments may lead to similar outcomes.

Predictions suggest that from 2025 to 2030, advancements in AI could significantly enhance productivity levels beyond previous historical peaks observed post-war or during the internet revolution.

Economic Insights and Projections

U.S. Economic Growth and Interest Rate Cuts

The importance of economic growth is highlighted, emphasizing a stable debt-to-GDP ratio with decreasing inflation and interest rates due to increased productivity.

Anticipation of two interest rate cuts in 2026: the first in June by 25 basis points, followed by another in September, influenced by economic data on inflation and labor markets.

Chinese Export Dynamics

China's exports grew by 5.5% this year; however, there are concerns about transparency in reporting these figures compared to developed nations.

A significant portion of China's export increase is attributed to shifts in invoicing rather than genuine demand increases from the U.S., as exports redirected through countries like Vietnam and Indonesia.

Consumer Demand and Loan Trends in China

New loans showed improvement, indicating a potential rise in consumer demand within China despite historically weak consumption patterns.

Upcoming fiscal package confirmation for 2026 is expected to significantly impact Chinese stock market dynamics.

Manufacturing Indicators and Challenges

Manufacturing PMI indicators remain below break-even levels, suggesting ongoing challenges for China's economy despite recent export growth.

Concerns persist regarding new export orders remaining below necessary thresholds for positive economic momentum.

European Economic Stability

Inflation Trends and Economic Growth

Eurozone inflation remains stable at 2.3%, with projections indicating it may undershoot 2% throughout the year.

The European Central Bank anticipates two interest rate cuts for 2026 amidst modest growth forecasts across member states.

Corporate Earnings Outlook

Projected corporate earnings have declined by 1.2% across Europe; expectations remain low but indicate potential recovery if companies deliver positive results soon.

Historical trends show that U.S. corporate earnings consistently outperform those in Europe, raising questions about future performance comparisons.

Political Developments in Japan

Election Outcomes and Political Landscape

Japan's recent elections resulted in historic outcomes for the ruling party, securing two-thirds majority—marking their strongest performance since 1947.

Japan's Political Landscape and Economic Implications

Overview of Japan's Current Political Climate

The recent political victory for Taita-Kashi provides a strong mandate to implement desired policies, particularly with support from housing sectors.

The alignment between the U.S. and Japan is emphasized, noting positive diplomatic interactions such as Trump's visit to Japan earlier in the year.

Taita-Kashi's administration is expected to be stable and long-lasting due to internal political support following her historic election win.

National Security Focus

Taita-Kashi is characterized as a nationalist prioritizing Japanese national security, with plans for increased defense spending and stricter immigration policies.

A significant review of Japan’s national defense document is anticipated this year, which will likely influence future actions taken by the government.

Market Reactions and Currency Stability

Following the elections, there has been an aggressive decline in Japanese stocks despite previous gains over the last 30 years.

The yen remains relatively stable around 155, avoiding extreme fluctuations that could necessitate intervention; however, vigilance is advised regarding currency stability.

International Market Summary

A brief overview of international fixed income markets indicates little change compared to previous months; short-term rates are slightly tighter while long-term rates have opened up.

There are ongoing uncertainties affecting medium-to-long-term forecasts against a backdrop of relative certainty in short-term sovereign bonds.

Geopolitical Tensions and Investment Trends

Concerns about geopolitical tensions are reflected in market behaviors, including reduced treasury positions and increased gold investments amid rising uncertainty.

Despite economic indicators suggesting a strong year ahead for U.S. growth, there remains caution regarding medium-to-long-term risks impacting investment strategies.

Private Credit Funds Dynamics

Discussion on private credit funds highlights their rapid growth over the past decade; these funds now represent a significant portion of non-investment grade corporate lending.

The appeal of private credit lies in its speed and lower costs compared to traditional bank loans, making it crucial for smaller tech companies seeking quick funding solutions.

Private Credit Market Insights

Overview of Private Credit

The private credit market offers lower volatility compared to the stock market, providing attractive returns that are higher than bond funds but not as high as equities.

A significant disadvantage for investors is the low liquidity of these funds, which operate with limited transparency regarding loan recipients and their financial health.

Recent Trends in Private Credit Funds

Major private equity firms like KQR, Blackstone, and Apollo have faced substantial losses in their private credit investments over recent months.

Fluctuations in the market are seen as somewhat normal; however, they could impact bond markets since these funds also raise capital through bond issuances.

Investment Strategy and Portfolio Management

Companies involved typically maintain a high level of debt; current levels are around 6.3 but are gradually decreasing. Business Development Corporations (BDCs) play a crucial role in issuing bonds for private credit funds.

The speaker's firm sold most positions in certain bonds by December last year due to market conditions but continues to monitor performance closely.

Fixed Income Portfolio Adjustments

The fixed income portfolio remains stable with gradual changes; new positions are being added while maintaining focus on existing holdings until maturity.

Morphe Oil has been identified as a promising investment due to its strong revenue margins and low debt levels, despite limited bond issuance from the company.

Risk Assessment and Future Outlook

Concerns about Ecopetrol's valuation arise due to political risks associated with Colombia's current leadership; thus, the firm opts not to increase its position despite favorable yields.

Observations on Kevin Warsh’s announcement highlight increased margin requirements at the Chicago Mercantile Exchange due to rising gold prices, contributing to market volatility.

This structured summary encapsulates key insights from the transcript while providing timestamps for easy reference.

Market Reactions to Economic Indicators

Impact of Gold and Silver Volatility

The volatility in gold and silver prices was notably influenced by the release of economic indicators, particularly the PPI (Producer Price Index), which came out higher than expected. This unexpected rise exerted pressure on interest rate curves.

Influence of Federal Reserve's Image

Kevin Walsh's perspective may reflect a broader sentiment regarding the strength of the U.S. dollar and the Federal Reserve's independence. This perception can shift investor behavior, leading to reduced concerns about inflation and possibly less demand for gold as a safe haven asset.

Investors who were previously buying gold due to worries about economic stability might reconsider their positions if they feel more secure about market conditions, indicating a potential shift in investment strategies based on economic signals.