Outlook

Are stock markets poised for a good year in 2024? Jean-Louis Nakamura, head of the Convictions Equities Boutique takes a comprehensive look at the various factors that indicate it may well be.

Legendary investor Charlie Munger, who recently passed away, followed a simple philosophy of “soldiering on” – persevering through challenging times while also knowing when to seize opportunities. Munger’s wisdom guides us as we manage key risks and seek to find opportunities in 2024.

Luc D’hooge and Wouter Van Overfelt review the developments of the Emerging Markets Debt and Emerging Markets Corporate Bond strategies they manage.

Luc D’hooge and Wouter Van Overfelt review the developments of the Vontobel Fund – Emerging Markets Debt and Vontobel Fund – Emerging Markets Corporate Bond and share their forecast for the remainder of 2023.

Wouter Van Overfelt, Head of Emerging Market Corporates and Luc D’hooge, Head of Emerging Markets Bonds, provide a review on the developments in the first quarter, the current positioning of the strategies as well as an outlook for the remainder of 2023.

Luc D’hooge, Head of Emerging Markets Bonds and Wouter Van Overfelt, Head of Emerging Market Corporates, provide a review on the developments in 2022, the current positioning of the strategies as well as an outlook for 2023.

The euphoria in the financial markets has been driven by falling expectations of a severe recession. Although our models continue to indicate a US recession, this is likely to begin later in the year. This means there is no contradiction in the equity overweighting that is currently suggested by our model.

The markets are still unimpressed by the approaching recession. This is the case even though aggressive interest rate rises, an inverse yield curve, the global “contraction” status of the Wave, and the similarities between the current market environment and 1989 as highlighted by our risk model all clearly suggest that 2023 is likely to see economic collateral damage.

Market participants are eagerly awaiting the Fed meeting in mid-December. How it chooses to tackle inflation will determine the severity of the recession, which our models – especially the Wave and the risk model – are now clearly signaling.

The bear market has not yet reached its end. Meanwhile, concerns are also rising that economic stagflation - an economic situation in which stagnant growth is accompanied by inflation - could develop. This view is shared not only by our proprietary business cycle model, whose contraction signals are strengthening, but also by the continuously rising credit spread, which has reached levels of past recessions this month.

Our models are signaling that not only the economy but also the risk environment is deteriorating further. Possible further interest rate hikes are weighing on both equity and bond markets, with no relief in sight at present.

Our models signal that we are still in troubled waters. Moreover, the data do not yet give the green light for a sustained economic recovery. The bear market therefore still has room to run.