Here’s our summary of the markets

The economic cycle has turned negative, driv­en by increased inflationary forces and geopolitical issues. The US economy could experience a period of stagflation, while the eurozone will most likely see a mild recession. The Chinese economy is suffering from inadequate COVID-19 policies and regulatory measures.

In the United States, macro data continues to suggest resilience, with consumer spending and labor markets showing signs of strength.

Europe is expected to fall into a recession in the fourth quarter of 2022. The inverted yield curve in German bond markets also suggests that Europe’s leading economy is heading for a recession.

China’s economy will miss its GDP growth target of 5.5% for 2022. The latest estimates show Chinese GDP growth in 2022 at 3.2%, the country’s weakest performance since the 1970s (excluding the pandemic year 2020).


Given the uncertain economic backdrop, market volatility will remain elevated. Things can change rapidly in this environment, which makes agile and tactical portfolio management crucial. At current valuation levels and from a risk/return perspective, we prefer selective credit over equities. Therefore, we are maintaining our small underweight position in equities. We consider non-cyclical short-term high-yield bonds (8%) very attractive and hold duration risk primarily as a portfolio diversifier. Overall, in an environment like this, we prefer an absolute return approach over a classic relative value mandate.

Don’t miss our complete 1st quarter 2023 investment letter, which includes a more detailed look at the regional macroeconomic backdrop, market consensus forecasts, and more.


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Follow the links below to review our 2022 quarterly investment letters:
Q1 2022

Q2 2022

Q3 2022

Q4 2022

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