What’s Important:
- Macroeconomic Outlook: The likelihood of a global recession has risen over the first half of 2022 as economic data has weakened.
- Equities: Global earnings estimates will come down, but not as rapidly as most investors expect. We believe that current EPS estimates are overly optimistic and will be revised considerably lower.
- Fixed Income: Persistently higher inflation will lead central banks into action this year as all major central banks are poised to reduce accommodation via raising policy rates and ending quantitative easing programs.
- Financial Markets: A more aggressive Fed that is moving rates higher faster, slowing growth and high inflation leaves a more nuanced opportunity set for the second half of 2022. Higher rates will weigh on all asset classes, some more than others.
