Global Macro Outlook Q2 2023: Navigating turbulence
Macroeconomic Strategy Team
4 April 2023
Events of the past quarter have strengthened our conviction on several of the team’s core economic views.
To be cautious about the risk-on price action in January given we had expected the first half to be bumpy
The full impact of prior policy tightening has yet to filter through to the real economy
A global recession is likely within the next 12 months
Investors may need to reassess its belief that the U.S. Federal Reserve (Fed) will always come to the market’s rescue
In our view, the macro backdrop will get worse before it gets better in the current global economic cycle, and investors should expect to experience higher and longer bouts of volatility through the first half of 2023.
At this point, we believe it’s crucial to reassess how we should be thinking about the Fed’s approach to policy making, especially in the context of the second biggest bank failure in U.S. history which has raised doubts about the health of the U.S. banking system.
A “Better Income” approach seeks to understand an investor’s investment objective alongside the underlying risk of certain levels of income generation. “Better” income may not refer to the highest income level but the stability and consistency of reasonably higher yields generated throughout various market cycles.
When it is time to enjoy what you’ve always dreamed of doing, the retirement planning doesn’t end there. It’s important to regularly review your withdrawal strategy and make adjustments as needed to keep changing economic conditions from throwing you off track. Consider the four tips to help keep inflation from depleting your retirement savings sooner than you expected.
Strike a balance in life, and most importantly, in your portfolio!
A balanced asset allocation usually provides investors with a smoother investment experience and perhaps helps protect them from selling equities after they have already fallen in price. If you believe that we are likely to enter a period of further economic weakness, we’re likely to be reminded of the importance of bonds in a portfolio.
If we focus too much on chasing the highest yield and upfront yield generation, we could suffer from early capital depletion and miss the total return opportunity towards the later stages of the investment journey.
Amid volatile market conditions and higher interest rates, seeking security by burying your savings in a deposit account is tempting. As the saying goes, “cash is king”. Or is it?
A “Better Income” approach seeks to understand an investor’s investment objective alongside the underlying risk of certain levels of income generation. “Better” income may not refer to the highest income level but the stability and consistency of reasonably higher yields generated throughout various market cycles.
