Capital Market Outlook

The looming debt ceiling crisis is pressuring the U.S. Treasury to drain money from its account at the Federal Reserve, easing financial conditions until mid-year. Plus 10 questions on the outlook for international markets in 2023, and a watch list alert for small-caps.

January 23, 2023

Data has made it increasingly clear that a 2023 economic contraction is baked in the cake. Plus Equities could see elevated volatility in the first half of the year but eventually stabilize toward the latter part, and China's growth prospects for 2023 are rapidly being upgraded.

January 17, 2023

We believe consumers will continue to trade down and defer discretionary spending as economic data deteriorates. Plus Janet Yellen is right about the conflict in Ukraine being key to the year ahead, and some market segments that worked relatively well in 2022 could continue to see tailwinds in early 2023.

January 9, 2023

The age of “permacrisis" necessitates that investors rethink their investment playbook. Plus post-bubble periods tend to sort out valuation discrepancies, and 2023 could prove to be a foundational year for long-term investors.

January 3, 2023

The repricing in stocks likely offers investors an attractive entry point for the next cycle's thematic market leaders. Plus the labor market appears poised to cool meaningfully, and headwinds to housing activity have developed as tighter monetary policy has pushed up mortgage rates.

December 19, 2022

We identify what we believe will be the major drivers of asset prices for 2023 and their implications. Plus our outlook for the dollar in 2023 and a look at whether the international market recovery can be sustained, weighing challenges against key developments.

December 12, 2022

Some of the key macro lessons of 2022 concern protectionism, state subsidies and budget deficits. Plus history suggests that current monetary tightening is on course to follow post-war deflation patterns, and the U.S. may be facing its own energy crisis this winter.

December 5, 2022

Despite popular narratives, the U.S. is still the top destination for foreign direct investment. Plus, as we look to 2023, we believe conditions are coming together for forward returns to improve, and a look at the stealth quantitative tightening that's been going on since December 2021.

November 28, 2022

Demographic changes in coming years should have long-term implications for the global economy and markets. Plus we expect risk asset rallies to remain on shaky ground until signs of an upturn in the global economic outlook emerge, and COP27 brings slow progress in the right direction.

November 21, 2022

Incoming data suggest financial stress is spreading from markets primarily affected by interest rate volatility to areas impacted by deteriorating credit quality. Plus 10 key facts about U.S. government finances, and a trend in Brazil's fiscal accounts that is considered unsustainable.

November 14, 2022

The consumer is still strong, but headwinds are building. Plus economic data is still mixed, but with a negative tilt, and the prospect of a Great Wall Of Pain if China “closes.".

November 7, 2022

The U.S. economy confronts a structural worker deficit only accelerating the substitution of labor for capital. Plus Treasurys are at the epicenter of brewing financial market stress, and the equity market will likely see more volatility.

October 31, 2022

The odds of a more protracted recession and bear market in stocks are rising. Plus we review positive and negative factors that have influenced markets, in our view, and some factors on our radar, and examine whether the growth of private markets will resume its previous trajectory.

October 24, 2022

There are many pitfalls and potential unintended consequences to reshoring that could ultimately impair U.S. earnings and undermine corporate competitiveness. Plus gold is likely to remain a relative bright spot for the foreseeable future, and jobs data show the Fed has more work to do.

October 17, 2022

There have been few places to hide in the markets this year, and a choppy and highly uncertain environment is expected in the next six to 12 months. Plus the energy crunch remains in full effect, and we believe that the central bank tightening policy will continue to pressure the riskier areas of the market.

October 11, 2022

If the Federal Reserve sticks to its current schedule for quantitative tightening, we believe inflation is likely to peak in 2022 with a recession probably to follow in 2023. Plus global recessionary risks are rising, and we consider whether equities are cheap.

October 3, 2022

Investors should be mindful of signs that could ultimately indicate the beginnings of a new equity bull cycle. Plus the growing exchange rate challenge for international markets, and China's Real Estate sector may be starting to show signs of weakening.

September 26, 2022

Taking stock of the global supply chain for electric vehicle batteries, we find there may be more hard-asset investment opportunities for investors. Plus signals at bear market bottoms, and inflation moderation may be rough for markets to stomach.

September 19, 2022

The Federal Reserve’s recent forecast errors and policy mistakes are sources of heightened economic uncertainty and financial-market volatility. Plus how Europe’s recession will be transmitted to the U.S., and King Dollar is going from strength to strength.

September 12, 2022

Many have declared the bear market over while others expect new lows. Plus, the outlook for Equities over the next several years could improve, and rarely have the Big Three—the U.S., Europe and China—struggled in tandem as they are today.

September 6, 2022

Financial conditions are likely to remain under pressure as the Federal Reserve's quantitative tightening program kicks into a higher gear. Plus, the world's population is expanding at its slowest pace since 1950, and the investment case for gender equality.

August 29, 2022

China recently has been set back by a range of economic and policy challenges. Plus pressures to suppress global oil consumption are likely to remain strong given increasingly ambitious climate change policies, and debt-servicing costs are set to rise modestly over the near term.

August 22, 2022

The more overvalued the dollar becomes, the harsher the unwinding is likely to be. Plus we review factors currently favoring consumers and others that call for getting cautious, and anticipate a decline in earnings in 2023 on economic weakness and margin pressures.

August 15, 2022

The need to reverse growing pressure on U.S. corporate profit margins may suggest a reset in business hiring and investment that typically triggers recessions. Plus recent legislation attempts to jumpstart a manufacturing comeback, and investor sentiment remains in a bearish zone.

August 8, 2022

The economy is expected to lose steam until the Federal Reserve stops its aggressive quantitative tightening. The U.S. chip industry requires funding in the hundreds of billions of dollars. Plus, diverging equity and bond volatility sends mixed signals.

August 1, 2022

Returns for European Equities have exhibited significant dispersion across countries this year. Plus we survey potential market catalysts for the back half of this year, and after 10 Years of Xi ask why Chinese Equity indexes have significantly underperformed global benchmarks.

July 25, 2022

Economic forecasters continue to mark down their growth estimates while raising the outlook for inflation. In addition, we consider a decay in wealth as a portent of weaker consumer spending, and 25% of the way through ask what lessons we've learned from the 2020s.

July 18, 2022

We highlight a few possible scenarios that markets may not be fully factoring into prices. Plus underwhelming economic data have continued to sap confidence in the longevity of the expansion, and we consider what shape the recovery for global consumer confidence will take.

July 11, 2022

Untethered money supply fluctuations have created a new, more volatile environment for asset allocation. Plus we believe U.S. Equities should be at the forefront (and at the core) of portfolios, and we take a midyear look at how performance has varied across asset classes.

July 5, 2022

The same rules that apply to bear sightings may also apply to recessions: Don't run, don't panic, and stand your ground. Plus investor attention is now turning to earnings as the third leg of the fundamental stool for Equities, and bear market history as a guide.

June 27, 2022

Production, international trade, corporate earnings and sentiment are likely to remain headed in the wrong direction. Plus muni valuations, once cheap, have since richened, and we present a scorecard framework for Emerging Markets.

June 21, 2022

We go back to the past, in particular to the 1970s, in search of potential clues about the future for portfolio management strategies. Plus firms are pressed to boost productivity and strengthen supply chains through localization and/or diversification, and the technology sector turmoil.

June 13, 2022

Inflation is dimming the economic outlook. In the U.S. it needs to peak, China needs to aggressively reflate, and Europe needs to counterbalance the growth shock from soaring energy costs. However, we believe there are some bright spots in these markets for long-term investors.

June 6, 2022

Surging inflation and interest rates with deteriorating global growth prospects have diminished the outlook for U.S. growth and profits. Plus a rethink on traditional portfolio construction and positioning may be in order, and consumer spending in China should gather momentum.

May 31, 2022

We believe we are “starting our initial descent" toward a landing for the labor market and the overall business cycle. Plus the U.S. has been the target zone for inflows measured by foreigner flows into U.S. securities and foreign direct investment, and the secular bull case for commodities.

May 23, 2022

Much of the adjustment to limited energy supply will likely continue to take place on the demand side, creating headwinds to global economic growth. Plus the markets are captive to a toxic trifecta, and market weakness is common ahead of midterm elections and post-election rebounds.

May 16, 2022

Global growth is weakening fast, and the Fed is on track to make matters worse. Plus we outline a three-pronged approach to manage through volatility, and the decline in equity markets has shown that it's driven by a compression in valuation even as forward earnings are expected to grow.

May 9, 2022

The same rules that apply to bear sightings may also apply to recessions: Don't run, don't panic, and stand your ground. Plus investor attention is now turning to earnings as the third leg of the fundamental stool for Equities, and bear market history as a guide.

May 2, 2022

Stagflation ahead—the markets are revaluing across sectors and asset classes to better align with the structural shift. Plus: Remain vigilant, but it may be too early to become cautious, and the ability to reinvest cash flows at higher yields is a welcome outcome of a transparent Fed.

April 25, 2022

In our view, the possibility of aggressive quantitative tightening is now the biggest downside risk to the outlook. Plus globalization is under strain but will most likely bend not break, and the surge in coronavirus cases has added another headwind to China's growth outlook.

April 18, 2022

Shifting supply-side shocks are creating persistent inflation, we would broadly categorize macro financial conditions as “flashing yellow," and we believe the divergence of yield curves is simply a glaring sign of how far behind the curve the Federal Reserve is at the moment.

April 11, 2022

Which yield curve matters?—Investors are focusing on central banks' response and whether they will cause recessions. Plus inflation, coronavirus and energy (I.C.E.) are key challenges for the world's largest economies, and what went right in Q1.

April 4, 2022

Rising interest rates, geopolitically refueled energy and other commodity prices could mean even higher fencing will surround the housing sector. Plus, we expect China's primary challenge this year to come from domestic policy, and market returns one month into the Ukraine conflict.

March 28, 2022

Markets will remain choppy and volatile in the near term, with our portfolio tilt toward inflation and geopolitical hedges and opportunities. Plus, is the dollar's reserve currency status at risk, and for gold, how monetary authorities balance worries with economic growth concerns would be key.

March 21, 2022

The Ukraine/Russia conflict has the potential to sow the seeds of a global recession. Plus the changing forces driving asset allocation, and a combination of weak European growth and a stronger dollar versus the euro could trim U.S. earnings in the next few quarters.

March 14, 2022

We take stock of our key macro views and assess the effect of the Russia-Ukraine crisis, and consider sign posts that speak to the current investment landscape and the implications for investors. Also, our version of FAANG 2.0 reflects a new world of geopolitical risks.

March 7, 2022