Despite projections of 20%+ S&P 500 earnings growth and 4% GDP growth in Q2, and despite good news from consumer/business surveys, jobs, housing and wages, so far this year US equity markets are only up ~6%.  The reasons are clear to me: Fed tightening, the eventual fade in fiscal stimulus and market-unfriendly actions of the Administration.  In this note, we walk through four investment strategies that have performed well over multiple cycles as this one enters its latter stages.   I conclude with a summer reading list inspired by the Helsinki summit.
  • Regional equity overweight to US and Emerging Markets, underweight to Europe and Japan
  • Within US equities, overweight to Tech, Staples and Healthcare vs all other sectors
  • Allocate more to BB-rated high yield bonds than B-rated or CCC-rated bonds
  • Take positions that benefit from the pattern of Eurodollar forwards overestimating Libor

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