Last year, markets may have experienced “the worst combined stock and bond performance since 1931”, but Mr Bailin advises against trying to time the market, which is “the number one destroyer of wealth”. “Once we digest higher rates and lower profitability, which is driving market volatility, we can have a meaningful, very robust recovery in equities for the next several years after that,” says Mr Bailin, explaining that unlike the “entrenched” inflation of the “Volcker days” in the 1970s, the current situation is a result of external inflationary pressures.
But once inflation is brought under control, most likely in 2024, the scenario will improve. And because of that success, we are going to see earnings coming down, a slowdown in the economy and higher unemployment,” he says.Ĭiti is predicting the slowest economic growth in four decades, with the US, UK and Europe expected to grow by just 1 per cent in 2023. “The Fed’s movement is so big, and its intention on crushing inflation is so large, that it will succeed. Click here for more coverage of PWM's eighth annual Global Asset Tracker surveyĬentral banks, led by the Fed, are using interest rates hikes as a “strong medicine” and “very blunt” instrument to slow aggregate demand across the whole economy, explains David Bailin, CIO at Citi Global Wealth.
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