Market Projections | August 28, 2023
This proverbial question aptly sums up the dichotomy of views related to growth, interest rates, inflation and the consumer, to name a few.
As we enter the later stages of the economic cycle, it is common to have disparate views on the future trajectory of the markets, as economic data becomes more nuanced and the timing of when the cycle might bottom and turn into a new one is murky.
Despite all the headlines churning back and forth each day, there are a couple of areas where “consensus” views have formed. Such as:
While there is no consensus on the back half of 2023 in terms of GDP growth and soft landing or recession, the general acknowledgement is that the Federal Reserve has succeeded in slowing economic growth. The question remains, it is enough? Or is it too much?
As we take stock of the first half and look towards the back half of the year, here are some key metrics to consider:
So, is the glass half full or is it half empty?
Consensus views on the second half of 2023 are divided. This outlook gives the scenarios for glass half full (soft landing) and glass half empty (recession).
We remain cautious about what is in store for equities, especially on areas of the market that have outperformed in the first half, so we encourage rebalancing back to targets.
We remain positive on the outlook for fixed income assets and since we are in the late innings of the rate cycle; some stability should bring yield into focus.
For the first time in a long time, we have seen a divergence in performance among private assets. Namely, real estate valuations so far in 2023 have seen negative valuations, and while private credit and private equity saw revaluations, most returns are still positive for the first half of 2023.
The August 2023 Investment Outlook includes tables that provide a snapshot of our forward-looking observations on the direction of specific asset classes.
Specifically, for 22 asset classes, we select one of five outlook signals based on our 12–18-month perspective relative to our 10+-year CMAs. The signals range from an above-normal return outlook to a below-normal return outlook.
The asset classes include equities, fixed income and these alternatives:
The information and opinions herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This article and the data and analysis herein is intended for general education only and not as investment advice. It is not intended for use as a basis for investment decisions, nor should it be construed as advice designed to meet the needs of any particular investor. On all matters involving legal interpretations and regulatory issues, investors should consult legal counsel.
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