How some of the world’s brightest investors are tackling Q2 2023

Companies have earnings. Statisticians and economists have data. Central bankers have interest rate decisions. Financial markets regularly use these to help gauge where the most money can be made. It is the job of researchers, analysts, and CIOs to parse the noise and work out what elements or numbers will matter most for clients. These projects get mostly disseminated in outlook white papers, released every quarter. In this article, I’ll share with you the best quotes from some of the world’s leading investors. 

Goldman Sachs: Here, There, Everywhere

“Investors looking for liquidity may find comfort staying with short duration fixed income … However, reducing volatility may require locking in higher yields through adding duration.”

“While the fundamental backdrop for US equities still seems attractive over a long horizon, a global equity tilt may further amplify exposure to 1) China’s recovery momentum, 2) greater valuation tailwind, 3) higher dividend income, and 4) beneficiaries of a rising rate regime.”

BlackRock: It’s not 2008 but it’s not rosy either

“Higher short-term rates and the inverted U.S. yield curve make Treasury bills – with maturities of a year or under – more attractive for their income and lower duration risk.”

“On top of relying on rate cuts we don’t see coming, corporate earnings are running above trends and aren't pricing in the damage from higher rates we think. Cost pressures amid high inflation are likely to crimp profit margins.”

HSBC: There is no systemic crisis in banking

“We maintain neutral on US, European, and Asian financials under our base case of no systemic crisis and substantial valuation discounts. Panic selling is not a sound strategy.”

“We adopt a balanced approach between cyclicals and defensives, favouring (global) energy, healthcare, communications, consumer discretionary, and industrials.”

UBS: Signal or Noise? (No, not the Livewire show)

“We might just have heard the early cracking of a broader credit crunch. While undoubtedly painful for some sectors, this in itself could rein in growth and bring down inflation faster than anticipated.”

“Expecting rate cuts this year therefore seems like too much of a stretch based on what we know now.”

Deutsche Bank: Central banks 1 - 0 Market doubters

“Despite their knowledge and skills, central banks could still struggle to get this policy flightpath’ right. Ultimately, nonetheless, central banks will prevail: our forecast is for inflation to fall back over the next year, although it will stay above target levels.”

Barclays: No rate cuts in 2023

“Investors are likely to be disappointed if they expect the Federal Reserve and the European Central Bank to cut interest rates aggressively in response.”

“It is true that US regional banks seem vulnerable to deposit flight, but that is not a system-wide phenomenon. Broader financial markets have mostly kept their poise.”

ING: Everything, everywhere, (almost) all at once

“Much like in the Oscar-winning film, there seems to be a never-ending run of stressful events that we must face head-on – and financial markets have suffered. Unfortunately, there's no one hero to save us. And the fight will be fought for many more years to come.”

Jefferies: Breathe, people, breathe

“In times like these, nothing enables us to see the big picture better than stepping back from the immediate fires (yes, we still need to put them out hourly) and taking a look at the very big picture over a widely extended time horizon.”

KKR: Invest in the “security of everything”

“We think investors should prioritise thematic exposure to climate change mitigation, the energy transition, shifting demographics, the housing supply/demand imbalance, and ‘the security of everything’.”

“The crisis reaffirms our view that we have entered a new macroeconomic regime characterised by higher levels of inflation, higher rates, heightened geopolitical risks and slower, though positive, real economic growth.”