Celestino Brunetti
Italy
6m
Dear copiers, investors, and followers, The month of August closed with a financial landscape heavily influenced by the Federal Reserve, and in particular by the recent remarks of its chairman, Jerome Powell. His speech acted as a catalyst for market trends, sparking a wave of optimism and reshaping investor expectations. Powell’s comments, widely perceived as signaling a potential dovish shift in monetary policy, were interpreted as reassurance from the central bank. Investors saw this as confirmation that the Fed stands ready to support economic growth—even at the cost of tolerating persistently high inflation—amid mounting concerns over the labor market. The market’s reaction was immediate, underscoring the significance of the event. Global equities rallied, with major indices climbing to new highs. The prospect of a rate cut prompted traders to reassess valuations, fueling multiple expansion and driving the outperformance of small-cap stocks, as reflected in the Russell 2000’s sharp advance. At the same time, the U.S. dollar weakened considerably. Expectations of lower interest rates eroded its appeal as a safe-haven currency, resulting in a notable depreciation. This decline had direct spillover effects on other asset classes, boosting commodity prices such as gold, which benefited both from the weaker dollar and from the broader inflationary backdrop. As for our portfolio, it was negatively impacted primarily by the weakening of the U.S. dollar, which is hovering near its 2025 lows. Nevertheless, I do not expect a sharp and linear decline; rather, I anticipate fluctuations from which we will seek to benefit. Our short positions on indices remain in place as a hedge. Looking ahead, I believe that, to a greater or lesser extent, the effects of tariffs will begin to weigh on markets by the end of the year. Ad maiora!
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