Takeaways
- Global economic growth has remained resilient during this rate hiking Near term growth, although moderate, is now trending towards an economic slow down as most major economies seek to reduce high levels of inflation.
- Within the U.S., monthly inflation has nearly returned to trend and job creation continues to support economic growth.
- U.S. equity markets, which fell moderately during the quarter, remain ahead for the year but equity returns have been driven by a small group of names.
- The average S&P stock is reasonably priced, trading at a P/E of 14x.
- Fed policy makers are forecasting a ‘soft landing’ for the U.S. economy with growth moderating and inflation falling.
- S&P 500 is priced more opportunistically with valuations and volatility levels implying a ‘no landing’ scenario.
- Fixed income markets are priced for ‘no landing’, given tight credit spreads across corporate and municipal bonds.
- Though recession talk abounds, no asset category is priced for a ‘hard landing’.
- Private markets continue to gain assets, provide broad exposure to critical market segments and offer strong potential to offset public market risk and generate stable levels of income.
- Global economic policy uncertainty, which was already running near records highs, increased further with the outbreak of war in The U.S. will need to make decisions on providing aid as it runs its largest ever peace time debt and deficit burden.
- A reshuffling of the global order, which has seen dramatic changes in global trade, regional alliances, cyber warfare and manufacturing production is now likely to experience even further upheaval.
