Market Commentary: Bird's Eye View for Q4 2023
The fourth quarter of 2023 starts with continued concerns about economic and stock market risks offset by the opportunities in international equities and fixed income, EverNest Managing Partner Frank J. Esposito explains in his just-published 6.5-minute video market update.
Watch the video for Frank’s analysis of:
The overall economy. As the Fed continues to fight against inflation, Frank spots cracks in the economy (e.g., rising credit delinquencies and a cooling job market). It’s been a long time coming, but the risk of recession is still relatively high.
Opportunities in equities. An earnings recession has already occurred, with companies in the S&P 500 reporting a 5% decline in earnings. Even so, US equities are already pricing in a rebound from a soft landing. At today’s valuations and with earnings growth uncertain, the compensation that equity investors are receiving is at an all-time low. The opposite is true for international stocks, whose prices are at decade-lows and offer significant compensation for risk. EverNest is boosting weightings of international stocks in client portfolios.
Fixed income as a buffer. The Fed’s efforts to raise interest rates to fight inflation have created an opportunity to earn much higher return in a more certain way with fixed income investments. The team is locking higher rates in, both because they’re attractive and they can provide some insulation during an uncertain economy and stock market.
