Currencies

In this report, we argue that the dollar will enter a volatile trading range, before a bear market begins in earnest. That said, fundamental forces are aligning for US dollar downside.

In this <i>Strategy Outlook</i>, we present the major investment themes and views we see playing out next year and beyond.

The pandemic gave older Americans and Brits a massive carrot and stick to retire early. The carrot being a surge in wealth, the stick being a risk to health. In other major economies, the carrots and sticks were smaller or non-existent. Hence, the shortage of older workers, and the resulting wage inflation, is a specific US and UK problem. We go through the important economic and investment implications for 2023.

Commodity currencies have been rather resilient, despite the broad rise in the dollar this year. In our view, we are about to experience a big rotation in commodity currency market performance at the crosses, from NZD, to CAD and finally to AUD.

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.

Web 3.0 plays will boom in the coming decade. Play this through a diversified exposure to today’s main blockchain tokens. But the Web 2.0 oligopolies, like Amazon and Meta, are in big trouble.

The S&P 500 is down by 17% year to date, while our portfolio is up 15%. US political analysis is essential for investors but it is best done by geopolitical method rather than Washington punditry.