Patience has often been said to be a virtue. In today’s markets, patience has the added benefit of making time work in your favor due to high interest rates. Risk free rates are at levels unseen in a decade. The more time that goes by, the more interest investors receive, and the more likely cracks across the economy form, and the odds tilt ever more in your favor to buy assets at attractive valuations. Recent developments across the sagging US consumer, struggling commercial real estate and signs of weakness in the labor market warrant concern rather than optimism, in our view. As the inflation remains sticky, the all-important question is whether inflation returns to the Fed’s target first or if markets crack first. It was only a few years ago when returns of 4% generated by multi-asset portfolios were deemed attractive; cash is returning over 5% today risk free. Returns alone are not sufficient; risk must be considered too. Patience is not only a virtue; it comes with its own rewards today. Therefore, patience – and carry – form the bedrock of our views and strategies in this environment.

We discuss our outlook and the factors we see as key to drive markets going forward below :