Global

Prefer government bonds over stocks, defensive sectors over cyclicals, and large caps over small caps. Favor North America over other markets. Favor emerging markets like Southeast Asia and Latin America over Greater China, Turkey, and emerging Europe. Stick with aerospace/defense stocks.

Prefer government bonds over stocks, defensive sectors over cyclicals, and large caps over small caps. Favor North America over other markets. Favor emerging markets like Southeast Asia and Latin America over Greater China, Turkey, and emerging Europe. Stick with aerospace/defense stocks.

In this report, we discuss our most important investment themes for global fixed income markets in 2023, and present our main investment recommendations based on those themes. Our broad conclusion: an environment of slowing global inflation, much weaker global growth and less hawkish central banks will be positive for global government bond returns, but problematic for growth-focused spread products like corporate bonds.

In this <i>Strategy Outlook</i>, we present the major investment themes and views we see playing out next year and beyond.

MacroQuant is overweight bonds, underweight equities, and neutral on cash. Within the equity universe, the model is underweight the US and overweight Japan, the UK, and Australia.

Our best calls of the year were long defensives over cyclicals, short Russia and emerging Europe, long aerospace/defense, short Greater China, and long Latin America. Our worst call of the year was long cyber security stocks.

Recession is not yet fully priced in, so markets have further to fall next year. But watch for a buying opportunity in the second half.

Web 3.0 plays will boom in the coming decade. Play this through a diversified exposure to today’s main blockchain tokens. But the Web 2.0 oligopolies, like Amazon and Meta, are in big trouble.