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2023 Mid-Year Global Market Outlook

‘Better Than Feared’ Markets

Mid-Year Macro Review & Strategy

Better than feared. Markets have been lifted by this general theme – ‘Better than feared’. Throughout 2022 many corporations spent the year lowering estimates for sales, growth, and earnings. Markets expected a recession this year and had even priced in a Federal Reserve that would be cutting interest rates by year end. We did not expect a recession and we do not see a recession on the short-term horizon.

Market Index Performance (Mid-Year 2023)

Nasdaq Composite+32.74%
S&P 500+16.38%
MSCI EAFE (Intl)+9.48%
Russell 2000+8.02%
Dow Jones Industrial+3.84%
Emerging Markets+3.51%
Aggregate Bond+0.40%
US Treasuries+0.26%
Crude Oil (USO)-6.05%

Our approach is to ‘stay alive, and look for the ball’. That sports analogy is a perfect way to explain investment management in today’s economy. We expect significant divergence in asset classes and within different sectors. Tactically, it is important to capture momentum in asset classes that present opportunities. However, it is just as important to thoughtfully control portfolio risk.

Scott Tremlett, CFP®, ChFC® | Managing Partner

Allocation Update13

Equity Style Allocation Chart
Stock Sector Allocation Chart

Equity Exposure13

Delta Air Lines
Apple Inc
Synopsys Inc
NVIDIA Corp
Palo Alto Networks
Salesforce Inc
Fortinet Inc
PDD Holdings Inc ADR
Interactive Brokers
Alphabet Inc
Livent Corp
Visa Inc
Mastercard Inc
Workday Inc
Berkshire Hathaway Inc
MercadoLibre Inc
HubSpot Inc
LPL Financial Holdings Inc
Southwest Airlines
Okta Inc
Year to Date through June 2023 Chart

2023 Investment Themes

(1) Overseas > United States

Growth in India and China contributing half of world GDP growth; weaker dollar acting as tailwind.

S&P 500 vs VEU Chart

(2) Overweight India & Japan

Domestic demand strength in India and corporate governance reforms in Japan offering structural growth.

International ETFs Chart

(3) Inflation Will Drop

Shelter and rental price moderation leading the disinflation trend.

Historical Inflation Rate Chart

(4) Treasury Yields Have Peaked

Bond yields peaking months before terminal Fed funds rate.

Fed Funds Effective Rate Chart

(5) Sustainable Growth & Popularity Premium

Top mega-cap tech stocks driving the majority of S&P 500 returns due to sustainable balance-sheet earnings. Studying behavioral popularity versus actual returns highlights value in disciplined active selection.

Sector ETF Performance ChartPopularity Premium vs Behavioral Reality Diagram

REFERENCES

  1. US Bureau of Labor Statistics
  2. CNBC, India as an oasis of growth
  3. JP Morgan Asset Management, Mid-Year Outlook
  4. Morningstar Advisor, Moderately Aggressive Composite

DISCLAIMER

The views expressed represent the opinion of Paramount Associates Wealth Management. The views are subject to change and are not intended as a forecast or guarantee of future results. Past performance is not indicative of future results.