3 Key (Cyclical) Questions - VP 2024 Themes (Part 1, December Macro Snapshot)
This is part 1 of our 2024 outlook focusing on the most top of mind cyclical investing questions. Upcoming reports will focus on G3 economies and outliers within DM and EM.
3 Key (Cyclical) Questions
- Why the equity resilience in 2023 and can this repeat in 2024?
- The level of liquidity / credit mattered more than the rate of change or the price of liquidity.
- Positioning matters: equity underweights bought back this year as Godot’s Recession dragged on.
- Were leading indicators too early or wrong?
- The business cycle has NOT been cancelled. US economic resilience is unlikely to repeat in 2024. Leading indicators did work for Europe and China.
- What’s priced in and where are the recession vs soft landing convergence trades?
- Bonds over equities, long TIPS & agency MBS, Fed easing largely in the price (wait for better entry on steepeners/front-end), overweight defensives, short hubris/long humiliation (short US semis vs China tech), USD long bias, goldminers over gold, long industrial commodities (RoW de-syncing vs US).
- Bonds over equities, long TIPS & agency MBS, Fed easing largely in the price (wait for better entry on steepeners/front-end), overweight defensives, short hubris/long humiliation (short US semis vs China tech), USD long bias, goldminers over gold, long industrial commodities (RoW de-syncing vs US).
Macro SnapshotThematicTacticalCyclicalStructuralEquitiesFixed IncomeCommoditiesFXUSChinaEurozone
