WEBVTT

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A number of factors
increased economic uncertainty

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and contributed to
historically negative equity

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and fixed income market
performance in 2022.

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High inflation spurred
aggressive Federal Reserve

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interest rate hikes, leading to
losses in both stocks and bonds.

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No wonder investors are anxious

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to turn the calendar
to a new year.

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The best way to work
through a rocky patch is

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to have a good map,
keep looking ahead,

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and take careful and
deliberate steps.

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We are pleased to offer
our 2023 Outlook as a guide

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to what we expect
should be easier terrain

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for investors by
the end of 2023.

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Our theme reflects the shift to
a better investment backdrop,

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especially after midyear.

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We expect a moderate U.S.
recession through the first half

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of 2023, followed by
a second-half recovery

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and a sustained rebound
into 2024.

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As the effects of
Federal Reserve rate hikes

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and recession take hold,

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we believe inflation
should noticeably drop,

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allowing the central
bank to pivot back

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to lowering interest rates.

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In our view, lower
interest rates

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and inflation should allow a
transition to stronger economic

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and earnings growth,
and stronger equity

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and fixed income returns.

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We expect corporate
earnings to contract in 2023

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as the projected recession
pressures company revenues

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and profit margins.

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We also believe market
expectations of a return

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to earnings growth should
lift equity valuations,

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even before the recovery
becomes noticeable.

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Our outlook describes how

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to manage the rocky
road just ahead.

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It also hints at
potential opportunities

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to position portfolios
less defensively

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as we eye early-cycle dynamics.

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In the fixed income market,
we forecast a decline

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in U.S. Treasury yields
during the recession

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as investors anticipate
eventual interest rate cuts

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from the Federal Reserve.

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We foresee a potential
opportunity

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for many fixed income
asset classes

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to produce positive
returns and begin

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to recover the losses
experienced in 2022.

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In real assets,

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we see commodities extending
their strong performance

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of the past two years,
as many remain

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structurally undersupplied.

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However, we feel that
commodity price gains are likely

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to be back-end loaded
in 2023 due

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to the forecasted
first-half recession.

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Finally, in the alternative
investment space,

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we believe portfolios may
benefit more from equity

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and credit market
diversification

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in the near-term.

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This can be implemented
through certain hedge fund

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and private capital strategies.

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But our Outlook also anticipates
potential opportunities may

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present themselves through the
economy's transitions ahead.

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For specific guidance across
asset classes, sectors,

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and industries, as well as
our top five portfolio ideas

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for next year, be sure to grab
a copy of our special report:

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2023 Outlook: Recession,
Recovery, and Rebound.