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:
1Q23 real GDP growth come in weaker than anticipated. Likelihood of the economy entering recession by the end of the year have increased, however, only mild recession forecast. Rates have peaked at 5.00-5.25% after 0.25% May increase. Growth outlook and the heightened risk of a debt ceiling stalemate suggest that an emphasis on quality, diversification and defensive mix of asset classes is necessary.
Recession on its way. Historical data on high inflation periods are consistent with our view that this expansion could be running out of steam. Weakest part of the current business cycle is likely to be felt starting H2 2023 and in 2024. Fed serious about 2% inflation target. Early rate cut from the Fed and other major central banks will require a much worse economic outlook than currently forecast.
US recession foretold. Strong US wage growth hints persistent inflation above 2% policy targets. Hopes for 2023 rate cuts are therefore misplaced, overweight inflation-linked bonds. Share of fixed income indexes yielding >4% at highest level since 2008, tactically overweight very short-term, high-quality government paper. Income is attractive, with limited credit and duration risk, or sensitivity to interest rate swings. Traditionally, long-term government bonds shielded portfolios from recession, however, negative correlation has flipped – bonds and equities can fall together. Underweight DM equities as not pricing in recession.
* 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.
.svg)
