The sequence for 2024

What do you view as the principal risk to the 2024 macroeconomic outlook?

Slump in consumer spending

FED pivot on rates

Presidential elections

Boom investment spending

27%

26%

12%

Starting point

Compare your answer

12%

Weaker labour market

Slowing GDP amid weakening fundamentals

2024 evolution

Landing point

Slowing GDP amid weakening fundamentals

Lower consumption and sticky inflation in Developed Markets Developed Markets Central Banks on hold China on a weakening path amid structural changes to its economic model Limited fiscal support

Slowdown in DM labour market, real consumption, investments Inflation resumes its disinflationary trend Central Banks start to ease moving into H2

Mild recession in the US, weak global demand

Weak fundamentals, but improving consumption and investment trends Inflation lands around target Central Banks in easing cycle

Extension of below-potential growth

Energy costs US labour market dynamics China’s deleveraging and stimulus Policy mistakes Geopolitical tensions Less fiscal support

High inflation with low growth Risk premium repricing Debt rating (US/Europe) Extreme valuations in some sectors/stocks Credit spiral

The investment sequence

Macro factors to watch

Financial risks

2024 Evolution

Landing point

Follow the investment sequence

Back to landing sequence for 2024

Landing point

2024 evolution

Starting point

Start 2024

End 2024

Dynamic asset allocation when tides are turning

Bonds' appeal amid peaking rates

Seek resilience in equities

EM winners in a fragmented world

Energy transition and structural themes

Start with a conservative allocation including hedges, and play diversification across alternative assets and strategies (gold, volatility)

Gradually add to equities and rotate from govies to credit

Gradually add duration and focus on quality credit, EM focus on HC debt and Euro HY short-term

Add high yield and EM local currencies after the Fed starts cutting rates and USD weakens

Stay defensive entering 2024 with focus on dividends, quality and add low volatility. Favour Global to play regional divergencies and Japan, US equal-weighted (concentration risk)

Turn towards more cyclical markets when Fed starts cutting rates. Rotate into Europe, EM and small caps

Look at long-term winners (India), nearshoring stories across EM, winners in the energy transition (commodities) and technological advances (China)

Despite delays and a more disorderly trajectory towards net zero, energy transition remains in focus with: sustainable infrastructure, water, sustainable building and green bonds. Other relevant long-term themes are: ageing population and artificial intelligence

The investment sequence

Follow the investment sequence

The sequence for 2024

What do you view as the principal risk to the 2024 macroeconomic outlook?

Slump in consumer spending

FED pivot on rates

Presidential elections

Boom investment spending

27%

26%

12%

Starting point

Compare your answer

12%

Weaker labour market

Slowing GDP amid weakening fundamentals

2024 evolution

Landing point

Slowing GDP amid weakening fundamentals

Lower consumption and sticky inflation in Developed Markets (DM) DM Central Banks (CB) on hold China on a weakening path amid structural changes to its economic model Limited fiscal support

Slowdown in DM labour market, real consumption, investments Inflation resumes its disinflationary trend Central Banks start to ease moving into H2

Mild recession in the US, weak global demand

Weak fundamentals, but improving consumption and investment trends Inflation lands around target CB in easing cycle

Extension of below-potential growth

Energy costs US Labour market dynamics China’s deleveraging and stimulus Policy mistakes Geopolitical tensions Less fiscal support

High inflation with low growth Risk premium repricing Debt rating (US/Europe) Extreme valuations in some sectors/stocks Credit spiral

The investment sequence

Macro factors to watch

Financial risks

Back to landing sequence for 2024

Start 2024

End 2024

Start with a conservative allocation including hedges, and play diversification across alternative assets and strategies (gold, volatility)

Gradually add to equities and rotate from govies to credit

Dynamic asset allocation when tides are turning

Bonds' appeal amid peaking rates

Seek resilience in equities

EM winners in a fragmented world

Energy transition and structural themes

Dynamic asset allocation when tides are turning

Start 2024

End 2024

Gradually add duration and focus on quality credit, EM focus on HC debt and Euro HY short-term

Add high yield and EM local currencies after the Fed starts cutting rates and USD weakens

Bonds' appeal amid peaking rates

Start 2024

End 2024

Seek resilience in equities

Stay defensive entering 2024 with focus on dividends, quality and add low volatility. Favour Global to play regional divergencies and Japan, US equal-weighted (concentration risk)

Turn towards more cyclical markets when Fed starts cutting rates. Rotate into Europe, EM and small caps

Start 2024

End 2024

Look at long-term winners (India), nearshoring stories across EM, winners in the energy transition (commodities) and technological advances (China)

EM winners in a fragmented world

Start 2024

End 2024

Energy transition and structural themes