With an energy crisis, elections, geopolitical risks and ramping inflation, policy makers will have plenty of tough decisions to make into year-end.
We look back at what markets did in the first half of the year and highlight the main themes for the second half.
Quantitative Tightening, Market Sell-Off, and the Corporate Put is Back
We dive into the main themes coming out of Q1'22.
Peak profit margins and hawkish environment increase the downside risk of the liquidity trade, which still has a lot more to go.
We're not interested in buying the China Tech dip - there's plenty of opportunities elsewhere.
The energy crisis is likely to get worse, and China risks will likely be contained.
Record-high equity inflows promise a continued liquidity bonanza for markets, while the oil supply and demand imbalance is likely to grow more acute than what consensus expects.
Tapering is not yet an issue, growth is timidly coming back and oil is near 7 years high.
Positioning in the market has become less extreme, especially ahead of what has historically been a lower return period for the stock market.
The reflation trade is still alive, gold miners may provide an outsized opportunity, and the low carbon emission economy is becoming an important long-term economic driver of prices.
Asset price performance has been quite solid across the board and the Yield Curve has continued its steepening, with rates in the long end getting closer to 2%.