Positioning in slowdown, Fed tightening, and inflation regimes

In this tense operating climate, we address three major themes for investors (i.e., economic slowdown, Fed tightening, and inflation) and how to position portfolios accordingly.
In a slowing macroeconomic environment, we’d expect stocks to do a bit better than government bonds. Having said that, we’ve been de-risking the portfolio by reducing our overweight in stocks and reducing our underweight in bonds. In other words, we think stocks can do well this year, just not as well as they did in 2021 and 2020. Indeed, we see returns converging across asset classes.
Looking ahead, does this situation devolve into a tactical contraction regime or something much worse, meaning a broad economic recession? That isn’t our base case, but it’s a tail risk worth monitoring.
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