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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.
CLOs: Poised to outperform in 2023?Continue reading
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Multi-Asset Outlook — A rocky road to recovery in 2023Continue reading
US recession risk: No longer if, but when and how badContinue reading
Take credit: Our five best credit market ideas for 2023Continue reading
Picture this: Our 2023 economic forecast in five chartsContinue reading
Navigating the new global economy in 2023Continue reading
CLOs: Poised to outperform in 2023?
Collateralized loan obligations (CLOs) have been sparking investor interest lately — and with good reason, say Investment Director Andrew Bayerl and Investment Specialist Celene Klimas.
Can US bank loans “carry” investors through 2023?
Fixed Income Portfolios managers Jeffrey Heuer, CFA and David Marshak and Investment Director Nick Leichtman describe what they see as the most prudent approach to the bank loans asset class in 2023 and why.
Multi-Asset Outlook — A rocky road to recovery in 2023
Markets may be jumping the gun when it comes to expectations for a policy pivot and the likely risk-asset rewards. Members of our Investment Strategy team still see bumps in the economic road, though their outlook has brightened a bit when it comes to China and other emerging markets.
US recession risk: No longer if, but when and how bad
Portfolio Managers Brij Khurana, Brian Garvey, and Nick Petrucelli believe many observers are underestimating the severity of a potential US recession this year.
Take credit: Our five best credit market ideas for 2023
Fixed Income Strategist Amar Reganti highlights credit market opportunities that he expects to arise over the course of 2023, against a backdrop of slowing growth.
Picture this: Our 2023 economic forecast in five charts
We explain the shifts the market is undergoing, analyze the implications for different asset classes, and identify potential risks and opportunities in a series of visuals.
Navigating the new global economy in 2023
This executive summary distills the points of view of several of our 2023 Outlook authors. Discover the risks and opportunities they see as we enter a new economic and market regime.
High yield: Opportunity to pivot in 2023?
Our high-yield bond portfolio managers have a guardedly optimistic outlook on the market and believe security selection will be key to benchmark-relative outperformance in 2023.
Health care outlook for 2023
Looking ahead to 2023, members of our health care team see meaningful innovation, supportive valuations, and a benign political and regulatory backdrop across biopharma, medical tech, and health care services sectors.
The Fed’s unenviable task for 2023
Fixed Income Portfolio Manager Jeremy Forster offers his forward-looking take on the Fed's comments and latest rate hike coming out of its December meeting.
Reality bites: Are equity markets too upbeat?
Cautious on global equity risk, Global Investment Strategist Nanette Abuhoff Jacobson suggests that investors favor higher-quality stocks and take a look at high-quality fixed income.