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PORTFOLIO PERSPECTIVES | VIDEO – 7:57 MIN

Asset Allocation Video – A recession around the corner, or stagflation?

Maya Bhandari
Daniel Morris
By MAYA BHANDARI, DANIEL MORRIS 24.07.2023

In this article:

    Signals from fixed income and equity markets on the outlook and an answer to the question of recession or no recession are contradictory. Bonds appear to anticipate a sharp deterioration of the economic prospects, while equities reflect a more positive disposition.   

    Watch our quarterly asset allocation video with Maya Bhandari, Global Head of Multi Asset, and Daniel Morris, Chief Market Strategist, as they explore this conundrum. They conclude that the coherent answer must be a growth slowdown that is short of a soft landing. This would argue for a cautious stance towards (US) equities and a focus on bonds.

    Elsewhere, discounted prices and modest earnings expectations mean there may be opportunities in China and emerging markets, in particular Asian emerging markets.

     Disclaimer

    Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

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