Equities

US domestic politics, hypo-globalization, and Great Power Competition favor a revival of US manufacturing capacity. The industrial sector will benefit from the attempt to rebuild US manufacturing. Go long physical infrastructure and defense stocks. Find opportunities to take a long position on the universe versus the metaverse.

China’s housing market adjustment will be protracted, causing several years of sub-par growth in the world’s second largest economy. We go through the major investment implications.

The rebound in growth is pushing up inflation. More aggressive monetary policy is likely to trigger recession over the next 12 months or so. Investors should stay defensive.

Bulls and bears are perplexed because they suffer from recency bias. The investment roadmap and framework of the past 15 to 20 years should not be used to analyze current US financial markets. US corporate earnings will likely plunge substantially even in the case of a mild recession.

It is easy to conclude that European equities are attractively valued by looking at multiples; however, a method rooted in fundamentals is essential to find out which bourses are genuinely cheap.

Investors should avoid / stay underweight Turkish stocks and local currency bonds versus their respective EM benchmarks. Stay underweight Turkish sovereign credit.

We analyzed US bear markets since 1954 to identify reliable indicators for distinguishing new equity bull markets from bear market rallies. Our checklist of indicators does not suggest it is time to overweight equities in a multi-asset portfolio. Remain underweight on equities, overweight on fixed income, and neutral on cash.