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The Outlook Remains Uncertain
Wayne Gillespie • January 27, 2023
In his Q4 update, Wayne Gillespie offers his perspectives on a tough year in the markets and why he is optimistic about a recovery in 2023.
“Economic shocks are still rippling through global economies, meaning that any forecasts for 2023 are going to remain uncertain.”
Here are a few highlights:
- The most aggressive monetary tightening cycle in decades shook global markets in 2022 on concerns that central bank efforts to rein in inflation will cause a recession.
- He sees three factors that continue to weigh on the markets: Continued rate increases, a slowing global economy, and elevated stock valuations.
- A strengthening of core bond holdings has occurred. After a period where bonds failed to provide meaningful diversification, a modest increase in duration through higher-quality investment grade issues and a reduced exposure to high-yield debt appear justified.
- Economic shocks are still rippling through the global economy meaning any forecasts for 2023 remains uncertain.
- Accordingly, we are maintaining an underweight position in equities and overweight fixed income. We are lowering our short-term bond exposure to add duration.
- We expect an opportunity to increase equity exposure within the next 6-8 months.
- The recent deceleration in interest rate increases suggests there's now light at the end of the tunnel in 2023
Trusting his word is like forecasting the weather with a magic eight ball – you’ll get an answer, but don’t expect it to be the same tomorrow.
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