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Capital Market Outlook
Your resource for the latest thinking from our experts on the markets and economy in the coming year and beyond
More Inflation, Less Growth
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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. |
What the Markets May Not Be Pricing In?
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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. |
Volatile Times Ahead
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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. |
About Bears and Recessions
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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. |
All Together Now
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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. |
The 1970s: Back to the Future?
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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. |
Inflation Dimming Economic Outlook
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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. |
Anatomy of a Bear Market
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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. |
Intensifying Global Headwinds
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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. |
Intensifying Global Headwinds
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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. |
Global Growth Weakening Fast, Fed On Track To Make Matters Worse
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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. |
Assessing Recession Risk: The Recession Indicator
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We expect the economic expansion to continue, and view monetary policy as still highly accommodative. Plus: tapping more, not fewer, external resources to ease supply chain issues; and FAANG stocks have been undergoing some of the most pronounced market rotations in recent history. |
Stagflation Ahead
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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. |
From Wild Turkey To Cold Turkey
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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. |
Shifting Supply-Side Shocks
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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. |
Which Yield Curve Matters?
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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. |
Housing — Unaffordable and Vulnerable
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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. |
Taking Stock of the Rip-Roaring '20's
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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. |
No Respite For The Weary
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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. |
Taking Stock of the Geopolitical Shock
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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. |
New Leaders for a New Economy
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The conflict in Ukraine has amplified trends already under way since inflation took off in 2021. Plus rate hiking cycles don't necessarily mean negative total returns for Fixed Income, and there is vast room for improvement in the sustainable investing space. |
Russia-Ukraine Frictions Escalate
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The U.S. and its allies have announced new trade, investment and financial sanctions on Russia, adding more uncertainty for global investors. Plus the risks of a shorter-than-normal expansion are rising, and why the S&P 500 may have evolved into a unique asset class. |
From Détente to Decoupling: Investing in China 50 Years after Nixon’s Visit
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A new geostrategic landscape has emerged over the past few years—U.S.-Sino ties are less sweet, more sour. Plus wage inflation suggests growing pressures on margins, and while headwinds may remain, valuations and forecasts for earnings growth suggest reason for optimism on small caps. |
Risky Business (Cycle)
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Business cycle risk is rising, with inflation being one of the biggest risks. Plus, the push for clean energy helps support an elongated up cycle for energy and mining; and, we respond to frequently asked questions on rising interest rates and other potential headwinds. |
A Pivotal Year for World Leaders
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The Chief Investment Office Market Balance Sheet is tilting positive, indicating a supportive backdrop for Equities. Plus we look at a number of transitions of world leaders likely to be consequential for global investors in 2022, and elevated geopolitical risk creates upside risk to oil prices. |
Vaccines, Variants and Vulnerabilities to Supply Chains
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Vaccines, Variants and Vulnerabilities to Supply Chains. Plus risks of another Federal Reserve policy mistake have increased, and it's likely the trend in higher rates will persist through 2022 and 2023. |
The Coming Boom in “Urban Mining"
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A prosperous and digital world has created a potential future profits stream for leading e-waste and material management firms. Plus we see no signs of peak inflation, and 2022 gets off to a shaky start for markets. |
Expansion and Profits Growth to Continue in 2022
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We expect profits and equity markets to continue to advance in 2022, albeit at slower rates. Plus, taking stock of potential 2022 catalysts; and, for a variety of reasons, don't sweat America's public sector debt. |
2022 The Return to Normal With Normal Returns?
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Major U.S. indexes yet again notched double-digit gains for 2021. Leading indicators of economic growth point to a strong first half for 2022. High single-digit total returns for the S&P 500 is our base case for 2022. |
Our Wish List for a Happy Holiday and 2022 Outlook
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After a year of upside surprises to both growth and investment returns, our base case for 2022 is for Equity outperformance to continue. Plus high-growth stocks have pulled back in recent weeks, and consensus expectations reflect a continued reluctance to bet against the greenback. |
Can Non-U.S. Equities Regain Ground in 2022?
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As we look into 2022, it will be important to consider whether this span of underperformance could extend further or begin to reverse for Non-U.S. Equities. Plus commodity prices could eventually get a boost from modest dollar depreciation, and for now, the fundamentals for consumer spending remain positive. |
Corporate America and Globalization: Ten Facts
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Globalization remains hugely important to U.S. firms and long-term investment returns. In our view, 2022 will be dominated by major shifts in the investment terrain; and the transition to green energy will be measured in decades, not years. |
An Equity Culture is Building—and it's a Positive for the Secular Bull Market
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The increased participation of individual investors could shape market trends moving forward. Plus supply may continue to lag demand, keeping upside pressure on inflation, and investors have the potential to play a crucial role in the shift to a more sustainable planet. |
What the Political Tea Leaves Portend for the Markets
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According to recent polling data, there could be a challenging political backdrop heading into 2022 but based on history, markets don't mind a divided government. Plus nominal gross domestic product growth has reaccelerated, and a key reason we prefer U.S. Equities to Emerging Markets. |
Energy Supply Uncertainty Rising
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Risks of chronic energy shortages and higher prices are growing. Plus rising bond volatility portends higher equity volatility, and a $4.5 trillion trifecta from U.S. consumers, U.S. corporations and the U.S. federal government represents future spending into 2022. |
Inflation Expectations at Risk of Coming Loose
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The rise in inflation is starting to affect longer-term inflation expectations; severe stress in the global energy system may call the green transition into question; investors may be starting to believe the rise in consumer prices could be higher and more persistent than expected. |
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