WisdomTree continues to listen closely to the advisor community and create new resources for advisors as well as all investors to provide the guidance they need to maneuver the daily market changes.
2023 Economic and Market Outlook
The economic and market landscapes continue to evolve, and we expect some significant changes as we make our way through 2023. In our Economic and Market Outlook for 2023, we lay out some of the “known unknowns” we believe could significantly affect the investing landscape and dive into our thoughts covering:
- Fixed income
- Real assets and alternatives
The Global Edge
Shaken, Not Stirred: The Impact from the Recent Banking Turmoil
What began as regional banking fear in the U.S. quickly spread to Europe. Two months later, the markets are still dealing with the fallout from bank runs and “walks,” whereby deposits flow out in search of better yields, not because of fear. In this edition of The Global Edge, our team of thought leaders explore the question of: how long can investors expect to see the potential ill effects from these developments as we move into the second half of the year?
Read the latest report
Is the Fed Fighting Yesterday's Battles?
March 22, 2023
During this Office Hours replay, Global Chief Investment Officer Jeremy Schwartz and Head of Fixed Income Strategy Kevin Flanagan discuss the developments from the March 2023 FOMC meeting. As part of this discussion, they address what investment solutions investors may wish to consider based upon the outlook for U.S. monetary policy.
Navigate Market Headlines with Professor Siegel
March 16, 2023
During this event replay, Professor Siegel, Senior Investment Strategy Advisor to WisdomTree, Jeremy Schwartz, WisdomTree Global Chief Investment Officer, and Kevin Flanagan, WisdomTree Head of Fixed Income Strategy, cover the recent bank failures and the government response, the latest inflation and economic data, and what it all means for the Federal Reserve Open Market Committee meeting on March 22 including an outlook for interest rates ahead.
Advisors can now join our thought leaders as they discuss current markets and actionable investment solutions. This small-setting format allows for advisors to ask questions and enter into a dialogue, leveraging our thought leadership to navigate the market uncertainty. The schedule is updated weekly.
4:00pm ET*No CE Credit
11:00am ET*No CE Credit
12:00pm ET*No CE Credit
1:00pm ET*1 hour of CE credit
4:00pm ET*No CE credit
The What’s Now Behind What’s Next:
Minds on the Markets
Week in and week out, our investment strategists Jeff Weniger and Kevin Flanagan, who live and breathe the market, translate the latest headlines, dissect the minutia of meeting minutes and break down the jargon to help inform your evolving investment decisions.
Actionable Ideas for 2023
The Decade of Dividends: U.S. Equities
Outlook: Our primary concern with regard to the S&P 500’s earnings outlook for 2023 is that banks are indicating a buttoning up of their lending standards, an occurrence that sometimes indicates corporate profit trouble. We await Q2 data on this front, as the Silicon Valley Bank (SVB) and Signature Bank failures were Q1 events.
Growth-oriented stocks led for some time, largely since the Global Financial Crisis, but was 2022 a turning point to kick off a value cycle? Historically, the value/growth cycle has been a pendulum with periods lasting several years.
- What We Like: The bear market has already aged—and maybe ended in October 2022—indicating a chunk of the pain may be behind us. Additionally, valuations are more reasonable than they were before the market peaked in January 2022, while the market is heartened by the ever-nearer prospect of a Fed pivot to lower rates. Further, unlike conditions at the peak of the mania, sentiment is sober. Equity longs are certainly not engaging a market that is populated by giddy, unrealistic expectations.
- What Could Go Wrong: The value cycle turns out to be just a value trade—a shorter term run for value. This risk was readily apparent in Q1, which witnessed growth outperform amid interest rate declines.
The Decade of Dividends: International Developed Equities
Outlook: We keep coming back to the dollar’s bull market, which got itself to the point where its real effective exchange rate (REER) reached highs last seen at the turn of the century. Should the dollar come off the boil, it may be the setup needed for non-U.S. developed market stocks. Like others, we are concerned that the war in Ukraine may not find resolution anytime soon. Nevertheless, we have eyes on two major components of developed market equity baskets—Britain and Japan—both of which are showing valuation appeal and potentially some newfound competitiveness because of the multi-year collapses in the British pound (GBP) and Japanese yen (JPY).
- What We Like: Many single-digit price-to-earnings multiples pervade across numerous developed nations. In terms of diversification, developed markets’ lighter exposure to Tech may round out a more even keel approach than allocations that are U.S.-heavy. Not yet appreciated by the market is the opening up of a large wage arbitrage between developed markets and the U.S., as Americans find themselves with notably higher wages than peers in places such as Europe and developed Asia. Finally, the EU’s natural gas crisis has been less severe than expected.
- What Could Go Wrong: Ongoing turmoil or worsening outcomes in Ukraine, the US- and Swiss-centric bank headlines become more global, Japanese bond market risk and stickier inflation causing the European Central Bank (ECB) and Bank of Japan (BoJ) to keep raising rates.
The Decade of Dividends: Emerging Markets Equities
Outlook: Especially in light of China’s COVID-19 reopening, we continue to believe China is investable, though the central government’s further concentration of political power breeds risk in equities. However, there’s significant inefficiency in the market’s pricing of China risk; overreactions to both good and bad news are common.
We continue to assess very low risk of U.S.-China conflict over Taiwan. At this juncture, due to the unknown path of the reopening process and the fact that China’s political calendar started in March, it is premature to put too much conviction behind the Street’s economic forecasts.
- What We Like: Many deep value and even quality-oriented value mandates have dividend yields that are near double digits. Emerging markets Value is also contrarian play, owing to years of historical underperformance. The emerging world could also benefit from a U.S. dollar that has become “too” strong, portending weakness that alleviates dollar-based debt burdens.
- What Could Go Wrong: China cozies up closer to Russia, Taiwan headline risk, firm-specific risk in companies that have close ties to the Chinese Communist Party and a possible continuing of tightening credit conditions.
Fixed Income: A Return to Normalcy
Outlook: The global sovereign debt markets arguably experienced their worst year on record in 2022. However, an interesting development has occurred in the process; the era of negative and ‘zero’ interest rates has seemingly drawn to a close. Government bond markets in the developed world (ex-Japan) have now seen yield levels move into positive territory for the key 2-, 5- and 10-year maturity sectors.
This development has created an interesting phenomenon: there’s “income back in fixed income.”
- What We Like: Yields have risen to (normal) levels that a generation of advisors and investors have never seen before.
- What Could Go Wrong: We could see no recession, with inflation remaining ‘sticky’. As a result, the Fed (global central banks) either raise rates more than expected, or don’t cut them until 2024. Or we could see a deep recession where the U.S. economy (labor market) rolls over and the Fed cuts rates sooner than expected. Other concerns include geopolitical developments (such as Ukraine or a China/Taiwan escalation).