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:
No rate cuts yet, but higher probability hiking cycles will end sooner. Increase exposure to high-quality fixed income given yields and capital gains potential. China recovery to boost industrial metals and oil. Brent crude to reach US$100/bbl by June as fundamentals support oil market tightening. USD fell 2% in March given Banking industry turmoil and likely interest rates peak. Expect further repatriation into the EUR, CHF. EM currencies attractive, specifically long the IDR, INR, MXN, ZAR, and CZK against the USD, EUR, and TWD. Consider gold (traditionally rises when USD falls and interest rates are declining). US$2,100/ounce forecast price in next 2 years.
Base Case - moderate US Recession. Potential for further credit tightening increases recession probability. Cautious equity returns outlook, noting that while earnings are falling and valuations are hardly cheap, sentiment is already subdued, and positioning is light. Diversification beyond the dominant U.S. equity market will help overall equity returns. U.S. and UK bonds favoured. In currencies, JPY and EUR to USD are preferred. Both the yen and the euro are supported relative to the dollar by policy differentials.
Both ECB and Fed to stay the course. ECB to increase rates by 100bp in next few months. FED to hike by 25bp in both April and May. Oil prices direction upwards, equity energy sector to benefit. Mortgage rates to decline to ~5.25% by year-end, down from ~6.5% today, positive outlook for homebuilders. Venture Capital investments “in the ground" may have to work through further valuation pressures, but “fresh capital" may be looking at an attractive opportunity set.
* 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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