The formidable task of achieving a ‘soft-ish’ landing could result in further market turbulence
As global inflation recedes, attention has shifted to growth concerns across economies. However, a ‘soft-ish landing’ is possible, with profits growth broadening out. The start of a ‘great rotation’ in markets is already visible, with a shift from growth-oriented, large-cap equities towards more defensive, value-oriented areas, such as small caps, real estate and non-US markets. This trend is expected to continue. Emerging markets in particular could benefit as a weakening US dollar and China’s new stimulus measures provide a boost. However, elevated market volatility could emerge due to factors such as geopolitical risk. We prefer defensive strategies with geographic and sector diversification through non-US developed and emerging markets. Separately, a return to lower stock-bond correlations means fixed income could provide a hedge against equity-market weakness.
Top of mind: What are the implications of a soft landing for fixed income markets?
A soft landing would likely lead to a steepening yield curve as short-term rates decrease in a falling rates environment. We discuss why bonds remain relevant and outline which areas of fixed income stand out.
Top of mind: How does the outlook for the US dollar shape global FX dynamics?
As the Federal Reserve commences rate cuts, a trend of dollar depreciation is starting. A weaker dollar is advantageous for emerging-market economies and asset classes. We explore the impact.
Top of mind: How will China’s latest stimulus package impact the economy and broader markets going forward?
China’s recently-introduced stimulus package focuses on property-market reform, monetary policy easing, and bolstering capital-market liquidity with the goal of reviving domestic economic momentum. We provide details and discuss the potential impact on trading partners, while exploring the challenges and risks that remain.
Top of mind: With growth in AI adoption meaning more consumption of energy and resources, can it be sustainable?
As AI adoption grows, it substantially increases energy and resource consumption, leading to concerns about sustainability. This is particularly highlighted by the amount of electricity consumed by data centres, which is projected to double by 2026. AI could play a part in the transition to net zero by aiding in the development of decarbonisation technologies and optimising energy use, but its quick scaling is outpacing renewable energy sources. We elaborate on the innovative solutions being developed to manage these issues and the need for investments in sustainable infrastructure to support AI’s benefits sustainably.
Navigating disruption: the automotive industry
We explore the risks facing the global automobile sector from an extraordinarily disruptive mix of environmental transition, cyclical headwinds, legislative uncertainties, and a fiercely competitive Chinese electric-vehicle industry.
Gen AI: looking back to understand what comes next
The IT sector has undergone many platform shifts. The next potential transformative leap has arrived with the rise of Generative AI. We focus on historical insights as a guide to anticipate what lies ahead in the current platform shift.
Perils of a rising global debt burden
Amid rising global debt, governments face complex challenges impacting economic growth and risk exposure. We explore fiscal constraints, structural reforms and the strategies that governments could adopt, while considering the market implications.