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.

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.)

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