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:
Fed, BoE and ECB pause hike cycles at 5.5%, 5.0% and 4.0% after all entering mild recessions. Modest 2024 rate cuts. China growth below market consensus. Headline inflation retreats, but core inflation remains above 2% target. Diverse portfolio with alternatives exposure, such as infrastructure, simultaneously provides defensive stance, inflation protection and attractive income. Volatile equity market with muted total returns, benefitting Hedge funds Higher quality stocks outperform, and DM ex-US leads US given higher dividend yields and cheaper valuations. High yield credit spreads widen as default rates rise gradually to long-term averages. USD to modestly weaken. YCC removal strengthens JPY. EUR supported by convergence of growth and interest rates.
Forecast mild US contraction. Expect China Q2 1% GDP growth (compared to 9.6% in Q1), and full year forecast lowered to 5.3%. Euro are already in technical recession and stagnant growth for year end. Rate termination for Fed at 5.75%, ECB at 3.75% and BoE at 5.75%. BoJ still expected to exit YCC in July. Core inflation to remain above target at around 3.5-4.0%. Major assets, such as bonds and stocks, likely to trade in a range.
Base Case: more moderate downturn in 2024. New York Fed’s model suggests there is 70.85% probability of recession in the U.S. in the next 12 months. However, moderating domestic demand growth, big energy price declines, loosening labour market, and softening wage growth have boosted confidence in soft US landing. Fed hikes, expected in July and September. Fed to begin cutting rates in May 2024.
* 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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