Mar 08, 2023

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:

Bank of America
Fed expected to persist with rates hikes as fiscal policy will not be used to reign in demand and inflation. Anticipating three more 0.25% rate hikes. February employment report - expect non farm payroll growth moderated to 230k, reversing much of January’s acceleration. However, this should be enough downward pressure on the unemployment rate to remain at3.4%. AI could boost the world economy by $15.7 trillion by 2030, but has cost and energy use issues.

Credit Suisse
Expect higher central bank rates for longer. Terminal rates reached by mid-2023 and maintained throughout the year: FED 5.25%, BOE4.5%, ECB 3.5% (risk of higher rates), and SNB 1.75%. Questions over the sustainability of the equity rally. The equity risk premium is unattractive. Bond yields offer attractive entry points in anticipation of central banks eventual inflation victory.

Morgan Stanley
Intermediate term view - bear market is not over because the earnings recession has much further to go. The gap between reported earnings and cash flow is the widest in 25 years. This analysis supports negative operating leverage thesis, estimates therefore have room to fall over next several quarters. Stock valuations do not reflect this risk and is why the risk reward for U.S. equities remains poor, despite the positive price action last week.

* 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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