Individual investors are often bombarded with specific stock calls and targets.
However, we believe you can get a better medium to long term perspective by considering asset class, sector, thematic and macro economic views.
To help you, every week, we pour through the research produced by some of the larger institutions, and summarize their market thoughts.
Below are this week’s 3 updates:
US rate-hike cycle nearing end, but Europe has room. US Eq risk-reward is unattractive. S&P500 year-end forecast price in soft landing is 4,400 (+7%) and is 3,300 (-20%) in recession. Market currently failing to price in tighter financial conditions, declining corporate earnings, and relatively high valuations. USD to weaken further, the debt ceiling safe-haven outlook is short lived. Gold offers attractive hedge with forecast price of USD2,200/oz by Q1 2024. Oil market to tighten and price to rise amid Arline travel rebound and OPEC+ production cuts despite weaker Chinese economic data. Thematic - AI hardware market to reach USD 90bn by 2025.
3 of 7 US indicators signal recession, more to follow. Recession expected Q3 2023. Fed to cut rates to 4.50%–4.75% by 2023 end. US government debt offers attractive yield and downside protection. Positive on US high yield corporate debt despite growing recession risks as yields offer adequate compensation. Debt-ceiling limit risk is a bigger issue than market is currently pricing in, expect further volatility, in rates, equities and FX this year. Geopolitical risk base case – Russia & Ukraine negotiate settlement in 2023.
Market is currently pricing in 3 Fed rate cuts by Q1 2024 end, expect these to come later than market anticipates. Expect USD to weaken given peak Fed policy rates approaching and its long-term overvaluation. Anticipate earnings downgrades should continue in the financial, real estate, and technology sectors. China 2023 growth revised upwards to 6.3% from 5.6% Beijing pro-growth mindset will result in both fiscal and monetary policy support, specifically benefitting manufacturing and infrastructure.
* Please note these are not the thoughts or analysis of illio but the respective institutions. We have summarized what we believe are key points. We assumes no responsibility or liability for any errors or omissions in the content of this site. The information contained herein is not intended to be a source of advice and the information contained in this website does not constitute investment advice.
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