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:
Economic data (resilient growth and uncertain inflation path) indicates US recession not imminent.Expect more monetary tightening than previously thought. Value favoured in both equities and bonds, specifically those with cyclical upside, such as EM. Avoid bond markets with scope for increased rate hikes, e.g. Japan. Correlation between stocks and bonds to decline or turn negative again. US housing prices to fall after a decade of house price inflation. Europe to avoid recession as natural gas prices decline.
UK recession in 23 (-0.6% growth y/y). US soft landing (1.3%growth 23). US recession probability lowered to 25%. Inflation to remain above2% target – expect 25bp Fed hikes in March, May & June, terminating at 5.25-5.5%. ECB terminal rate of 3.5% with 50bp hike in March and 25bp in May and June. European equities trade on 13x P/E, a larger-than-normal discount to current US 18x P/E. 5.5% 23 China growth. BoJ to adjust yield curve control, targeting 5y yields over 10y. Dollar to remain supported and despite the Yen’s current extreme undervaluation, expect only a modest appreciation. EM EPS to rise 9% over next 12m. Oil prices at $107 by year end.
SVB prominent victim of the 2022 rate-hike cycle. Neutral on U.S. and Euro high yield as spreads have widened significantly while fundamentals remain sound and default rates low. 2023 GDP growth forecasts y-o-y: US (0.7), Eurozone (0.8), UK (-0.5), Japan (1.0), China (5.5) and Global (2.7). Mar 2024 Benchmark rates forecast: US (5.25-5.50), Eurozone (4.00), UK (4.25), Japan (0.10) and China (3.65). Gold and Copper to reach 1,940 and 9,250 prices by Mar 2024.
* 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.