Portfolio

When does rising unemployment become a bigger problem than inflation? The Fed won't cut rates until that happens, probably thwarting market hopes of big cuts in 2H.

Informe especial

We measure the effects of inflation and growth cycles on the returns of various assets using the four-quadrant approach, where we classify periods into the following buckets: Slowing inflation/slowing growth (slowdown), rising growth/slowing inflation (goldilocks), rising growth/rising inflation (overheating), and slowing growth/rising inflation (stagflation). Our analysis provides insight into the coming macro environment. As growth and inflation begin to decline, the best choices for asset allocators will be fixed income, precious metals, CTAs and timberland.

MacroQuant is underweight equities and overweight bonds and cash.

Slowing growth would be bad for equities, but so would stronger growth since it would mean more rate hikes.

Informe especial

Our recommendations for podcasts (on macro and markets, as well as non-work-related topics) to try over the holidays.

MacroQuant is overweight bonds, underweight equities, and neutral on cash. Within the equity universe, the model is underweight the US and overweight Japan, the UK, and Australia.

Recession is not yet fully priced in, so markets have further to fall next year. But watch for a buying opportunity in the second half.

MacroQuant is overweight bonds, underweight equities, and neutral on cash. Within the equity universe, the model is overweight Japan, India, Brazil, the US, and the UK.

The economic outlook continues to deteriorate, geopolitical risks have increased, and every indicator in our recession checklist will flash red by the end of the year. The Fed will keep hiking until monetary policy becomes restrictive. Markets are still too complacent: The risk premium is very low, option prices show no sign of capitulation, and profit estimates remain too optimistic. Emerging markets ex-China equities are starting to look attractive. Not only are they trading at cheap multiples, but their return on equity is at the highest level in decades.

MacroQuant is overweight bonds, underweight equities, and neutral on cash. Within the equity universe, the model is overweight Japan, the US, and the UK, underweight the Euro Area countries and China, and neutral the remaining countries. The sector model favors defensives and Energy over cyclical sectors.