Key Takeaways
- • Matthias Ramser, CIO of Swiss private bank Reichmuth & Co Privatbankiers, says oil at $115 a barrel, its highest since May, is not expected alone to push the economy into recession; he estimates prices would need to stay well above $140 per barrel for an extended period to do so.
- • Ramser expects oil to remain above pre-war levels even after tensions ease, citing inventory rebuilding and energy security priorities that will sustain a geopolitical risk premium.
- • Reichmuth recommends keeping energy equities and gold exposure, viewing gold at around $4,000 per ounce as an attractive entry point following a recent correction.
- • Ramser sees the ECB as especially challenged by energy-driven inflation given Europe's import dependence and weak growth, while the Fed is expected to deliver one or two more rate hikes before pausing.
- • On AI, Ramser views CalPERS' 26% reduction in Magnificent Seven exposure as a diversification measure rather than a negative view on technology, and favours banks, biotechnology and established healthcare as alternatives.
Summary
In an interview with finews.com, Matthias Ramser, Chief Investment Officer at Reichmuth & Co Privatbankiers, a Swiss private bank, outlined his view of the macroeconomic and market implications of elevated energy prices. With oil at $115 a barrel, its highest level since May, higher prices are already squeezing consumers and raising costs for companies. Ramser said that at current levels oil alone is unlikely to trigger a recession, though prices would probably need to remain well above $140 per barrel for an extended period to do so, making the duration of the shock the key variable.
Ramser linked the outlook to the upcoming US midterm elections. He noted that voters hold the president responsible for high fuel prices and that Trump risks losing control of both chambers of Congress, while stating that the S&P 500 has risen in the twelve months following every midterm election since 1950 regardless of the outcome. He described the firm's base case that any renewed escalation involving Iran would be relatively short-lived, since a prolonged energy crisis is not in the interest of major economies or Iran. Even so, he expects oil to stay above pre-war levels as depleted inventories are rebuilt and governments prioritise energy security, sustaining a geopolitical risk premium.
On monetary policy, Ramser described a dilemma for central banks, which face higher inflation alongside eroded purchasing power and slower growth. He said the ECB faces particular difficulty because Europe is heavily dependent on energy imports and growth is already weak. In the US, second-round effects have so far been limited and long-term inflation expectations remain anchored, leading Reichmuth to expect one or two further Fed rate hikes followed by a pause. Ramser identified a move in inflation expectations away from the Fed's target as one of the biggest risks to global equities.
For asset allocation, Reichmuth has maintained exposure to energy companies since the Middle East escalation, acknowledging they could fall on a clear de-escalation. Alongside energy, the bank favours gold as a geopolitical diversifier and sees attractive entry points around $4,000 per ounce following a recent correction.
Ramser said concentration in US equities is very high but partly justified by above-average earnings growth among the largest technology companies. He flagged portfolio-level overlap through index, active and thematic funds as a particular risk, and described CalPERS' 26% reduction in its Magnificent Seven exposure as a deliberate diversification step. Reichmuth would retain meaningful exposure to the Magnificent Seven and high-quality AI infrastructure, while adding banks, biotechnology and established healthcare.
On AI capital expenditure, Ramser warned that infrastructure spending could temporarily run ahead of demand, drawing parallels to railways, electrification and the internet. He distinguished between a failure of AI as a technology, which would trigger broad market corrections, and failure of individual business models, whose losses would be more concentrated. He argued that a slowdown in AI investment could reflect greater capital discipline and that the key test is whether investments generate attractive returns.
Ramser linked the outlook to the upcoming US midterm elections. He noted that voters hold the president responsible for high fuel prices and that Trump risks losing control of both chambers of Congress, while stating that the S&P 500 has risen in the twelve months following every midterm election since 1950 regardless of the outcome. He described the firm's base case that any renewed escalation involving Iran would be relatively short-lived, since a prolonged energy crisis is not in the interest of major economies or Iran. Even so, he expects oil to stay above pre-war levels as depleted inventories are rebuilt and governments prioritise energy security, sustaining a geopolitical risk premium.
On monetary policy, Ramser described a dilemma for central banks, which face higher inflation alongside eroded purchasing power and slower growth. He said the ECB faces particular difficulty because Europe is heavily dependent on energy imports and growth is already weak. In the US, second-round effects have so far been limited and long-term inflation expectations remain anchored, leading Reichmuth to expect one or two further Fed rate hikes followed by a pause. Ramser identified a move in inflation expectations away from the Fed's target as one of the biggest risks to global equities.
For asset allocation, Reichmuth has maintained exposure to energy companies since the Middle East escalation, acknowledging they could fall on a clear de-escalation. Alongside energy, the bank favours gold as a geopolitical diversifier and sees attractive entry points around $4,000 per ounce following a recent correction.
Ramser said concentration in US equities is very high but partly justified by above-average earnings growth among the largest technology companies. He flagged portfolio-level overlap through index, active and thematic funds as a particular risk, and described CalPERS' 26% reduction in its Magnificent Seven exposure as a deliberate diversification step. Reichmuth would retain meaningful exposure to the Magnificent Seven and high-quality AI infrastructure, while adding banks, biotechnology and established healthcare.
On AI capital expenditure, Ramser warned that infrastructure spending could temporarily run ahead of demand, drawing parallels to railways, electrification and the internet. He distinguished between a failure of AI as a technology, which would trigger broad market corrections, and failure of individual business models, whose losses would be more concentrated. He argued that a slowdown in AI investment could reflect greater capital discipline and that the key test is whether investments generate attractive returns.
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