Timely commentary, strategic perspectives and in-depth analysis from our investment teams to help guide your portfolio decisions.
We expect moderating growth, cooling inflation and policy rate cuts in 2024. We overweight equities and credit and are neutral on duration. In equities we favor U.S. cyclicals, Japan and emerging markets ex-China. In fixed income, we prefer shorter-dated U.S. high yield and securitized credit.
Recent years remind us that significant central bank tightening does not automatically lead to recession. Sub Trend Growth is still our base case at 70% probability; we’ve raised Above Trend Growth’s likelihood to 15% and lowered Recession to 10%. Crisis is unchanged at 5%.
Our portfolio managers are a little more cautious on the outlook. Many prefer quality stocks and find less expensive names in the more cyclical, industrial areas of the market. Fundamentals of corporate profits still look good.
Factors had a strong first quarter, particularly equity factors. Equity value rose in nearly every region and remains inexpensive. Prospects remain attractive for a range of factors, including equity value and quality in the U.S., and macro carry
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