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 recession still base case with Real US GDP forecasts of -1% and -2% for Q3 and Q4. Year on year inflation has decreased, and further deceleration likely in store given its lagged response to monetary policy tightening and cooling economic activity. Debt ceiling issue will be resolved, but expect market volatility to increase. Equity sector breakdown; overweight Healthcare, Energy & Utilities and underweight Consumer discretionary, Real Estate & Materials.
Fed rates have terminated, however, market currently assigning 69% probability of June hike at next meeting. Futures market previously expected three full cuts in 2023 following May’s FOMC meeting, but now only expect one full cut by year-end. Investors holding cash should add duration when rates terminate as bonds significantly outperform cash when rates were cut during previous cycles. Expect 0.25% rise by BOE in June despite substantial drop in headline inflation.
US Default is not base case, yet if no debt ceiling agreement is reached, expect USD to still serve as a reserve currency, but significant market volatility and recession will follow. Equity-bond correlations have shifted negative since recent US regional bank stress. Bullish oil and commodities despite 2023 under performance - demand data holding and destocking driven by macro conditions nears inflection. Global housing market risks remain to the downside, but recent data suggests this risk is more limited than historical models imply. Alpha (particularly through income, tax efficiency, & security selection), and not Beta, is key to investing for near future.
* 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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