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The views expressed are those of the authors at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
Every quarter, the Wellington Investor Survey team polls around 100 of our Wellington colleagues across different investment disciplines and locations to get their views on what they see as the key macro questions of the day. The results can pinpoint where the firm’s views differ from the consensus and can also reveal important shifts in our collective thinking.
Given the current uncertainty about the economic outlook, we wanted to see what our survey respondents thought about the global cycle outlook for the next 12 months. As Figure 1 shows, growth concerns are rising, with the views on the cycle mix in our August survey including a 45% recessionary phase over the next 12 months. This compares with fewer than one third giving the highest weighting to that option when we conducted the survey in May. While August’s survey shows that the second-most likely phase remains the late cycle, based on our respondents’ views, the likelihood of this outcome has shifted meaningfully since May.
Interestingly, we also saw a slight uptick in the likelihood of the early cycle phase, suggesting we may be approaching the beginning of a new cycle.
Increasing pessimism over the global economic outlook reflects the challenging environment of rising inflation amid an economic slowdown, and the resulting concerns over the growth implications of central banks’ inflation-induced policy tightening. The risk to interest rates for the foreseeable future appears to be to the upside, and whether policymakers can bring inflation down to a comfortable level without sparking recession remains a pressing concern for our respondents and for investors more broadly. Against this backdrop, our survey respondents remain mildly bearish towards risk assets.
Wellington’s recurring macro survey originated from a conversation three of our macro thinkers had over six years ago about Philip Tetlock and Dan Gardner’s book Superforecasting. Tetlock and Gardner argue that forecasting is a skill which can be improved, and we thought their theory could work well in practice at Wellington, given the firm’s collaborative culture. The hope was to sharpen our collective and individual forecasting skills, enhance our internal investment dialogue, reveal where our views differ from the market consensus and identify how they change over time.
In January 2016, we launched an internal survey of macro thinkers across all disciplines, asset classes and office locations. The responses are anonymous. The precise formulation of the questions is important. Wherever possible, they are precise, time-bound, measurable, probabilistic and rollable from one quarter to the next, giving us a richer data set over time.
Recession risks and markets: Can we avoid a COVID hangover?Continue reading
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Fintech market overview: The intersection of disruption and dispersionContinue reading
Wellington investor survey: inflationary Europe seen as top “problem child” of 2023Continue reading
Thematic investing: Long-term thinking for a short-term worldContinue reading
EM equity in 2023: Will the longest bear market in history continue?Continue reading
November FOMC meeting: How slow can the Fed go?Continue reading
Recession risks and markets: Can we avoid a COVID hangover?
Current earnings forecasts and asset prices suggest overly optimistic expectations for the global economy and markets in 2023, according to Equity Portfolio Manager Dan Pozen.
2023: The year of disinflation for the US economy
In the coming year, US Macro Strategist Juhi Dhawan expects to see inflation begin to decline, the economy adjust to higher interest rates, and labor markets feel the pain of restrictive Fed policy.
Fintech market overview: The intersection of disruption and dispersion
In the latest episode of WellSaid, Portfolio Manager Matt Lipton and Global Industry Analyst Matt Ross join host Thomas Mucha to discuss their outlook for fintech in today's environment, exploring the recent pullback in the sector, disruptive fintech innovations, potential regulation, and much more.
Wellington investor survey: inflationary Europe seen as top “problem child” of 2023
In the latest Wellington investor survey, inflationary Europe was seen as the top "problem child" of 2023.
Thematic investing: Long-term thinking for a short-term world
With economic conditions expected to remain volatile in the coming year, members of our Investment Strategy team suggest that thematic allocations may help reduce the importance of the cycle to portfolio returns.
EM equity in 2023: Will the longest bear market in history continue?
We explore three key considerations for EM investors in today’s challenging environment and highlight potential winners and losers in 2023.
November FOMC meeting: How slow can the Fed go?
Investment Specialist Caroline Casavant shares her takeaways from the November FOMC meeting, including thoughts on the likely pace of further Fed interest-rate hikes.
Bank of Japan policy shift: Waiting for the other shoe to drop?
Client Portfolio Manager Jitu Naidu and Investment Director Masahiko Loo share their take on the consensus view that Japan has reached several key inflection points.
A new economic era: Why inflation, volatility, and cycles are back
Macro Strategist John Butler argues that a seismic global shift is underway that will disrupt the macro dynamics of the past two decades, challenging long-held investment assumptions.
Can agency MBS bounce back from dismal performance?
Fixed Income Portfolio Manager Brian Conroy and two colleagues weigh in on the mortgage-backed securities (MBS) market in the wake of a very challenging month.
Credit market outlook: Partly sunny with a chance of good value
In his 2023 credit market outlook, Fixed Income Portfolio Manager Rob Burn highlights some potentially attractive opportunities in the wake of this year's market sell-off.