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Time to question US exceptionalism?
This political theme, inspired by the theory of manifest destiny, starts from the premise that the United States, because of its history and its democracy, has a special role to play in the Concert of Nations. Rarely has this set of ideas seemed so topical either from a geopolitical, economical or market standpoints. We are coming back on these subjects in greater detail in our latest quarterly outlook and for the first subject in the geopolitical report recently issued in partnership with an intelligence and advisory firm. As far as financial markets are concerned, March has proved rather encouraging, with the market’s performance broadening : Gold, Japanese equities, S&P500 Equal Weighted, European cyclicals and even industrial metals... These factors are all reasons to hope for a slightly more balanced macroeconomic scenario and broader participation across asset classes, geographical zones and styles.
Disappointed in a good way?
One year ago, investors were dreading the arrival of a difficult 2023 against a backdrop of high inflation and a probable slowdown or even recession in the United States. However, neither geopolitical factors nor a major banking crisis managed to break US momentum. At nearly 2.5% for the year, US growth has more than held its own... The world’s major indices are up 20%, and the US stock market is doing even better, with a 24% gain for S&P500, (even if its Equal Weighted version is posting a more modest 11.5% rise). 2023 will have “disappointed in a good way”, but even the most optimistic forecasters will have been left in the lurch by the strength of the markets. In this euphoric phase, Asia excluding Japan is the exception, heavily penalized by the Chinese market. Throughout the year, the fixed income world was also very turbulent and more than ever, markets remain dependent on central bank policy and rate expectations. We have always believed this, and looking ahead to 2024 it’s essential to form an opinion on anticipated rate cuts. In this quarterly newsletter, we are discussing this topic and its implications, as well as our outlook in greater detail.
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