LC Investment Playbook Monthly Update November

Macro

• Inflation seems to be receding.
• US rates are receding too.
• US Dollar Index is receding too.
• Another 100 bps hike priced by markets.
• Freight prices are decreasing sharply.

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Equities

• Mega caps have underperformed YTD
• The VIX has not even reached 40 this year.
• Restoring of confidence remains key in China.
• Central Bankers are deflating “the bubble” in an orderly manner.
• Corporate earnings (worldwide) likely to be revised lower in 2023.
• We expect a mild correction next year (-10% for developed markets) with several “Bear Market Rallies”.
• High dispersion amongst economies ( EU, China, India) and sectors ( Cyclicals, etc.)

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Fixed Income

• Are stocks still a good yield enhancer.
• US Treasury market pressure.
• US Treasury 10-Year/3-Month spread inverted.
• Central banks likely to remain “hawkish" in face of sticky inflation.
• Rates/Yields likely to drift higher until Q2 2023.
• Recession likely to happen in 2023 in the US/ Europe while China slows down quickly.
• Duration to be extended by Q2 2023

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