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:
Absent a large reacceleration in price pressures, BoC, Fed and ECB rates terminated, despite consensus view, and hedge fund positioning, which forecast higher Fed rates. Expect one further BoE 25bp hike in 2023. Rate cuts to start; Q2 2024 for Fed, H2 2024 for BoC, and both ECB and BoE to hold steady throughout 2024. Early signs suggest further softening in US economic activity to come, and still expect GDP growth to dip negative later this year.
High quality US bonds preferred and both Treasuries and IG to outperform cash and HY in next 6m. Current US Treasury yields reflect good entry point and suggest rate cycle turn priced in. Strong structural reasons to keep overweight IT despite valuation run up, whereas shift to Healthcare from US Communications. Global sub-sector data processing, key AI component, to increase from USD7.5bn to 24.5bn by 2025. Downgrade Chinese hard currency bonds, and China and HK stocks, to neutral. Increasingly selective, specifically service consumption sectors including internet leaders, travel-related stocks, consumer discretionary and Macau gaming. USD weakening over, move neutral USD against EUR and GBP. Unconvincing BoJ reduces short term strength, JPY neutral downgrade. Positive outlook in EM, specifically MXN, BRL and INR.
Forecast Fed rate hike cycle to have peaked, because inflationary pressures are easing, slowing Bank loan growth and job growth moderating. Recommend defensive growth posture as recession fears or financial distress could return any moment in late cycle environment. Chinese policy required to avert debt deflation cycle and economic growth outlook recently marked down. Japan stocks appeal as valuations on 12m basis are in line or below 10-yr historical average whilst 10% earnings growth expected in 2023 and 2024. $3.6tn required by private sector for Europe to reach 2030 Clean Energy Goals.
* 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)
