10 charts we are watching_ GOAL_ Balancing act — remain balanced but tactically more hedges (PRESENTATION)

Summary of Key Points from the Conference Call Industry Overview - The report focuses on global investment strategies and macroeconomic conditions, particularly in relation to asset allocation and risk management. Core Insights and Arguments 1. Asset Allocation Strategy: The company suggests a balanced approach with a tactical focus on hedges to manage risks effectively [1] 2. Pro-Risk Sentiment: The current market sentiment is modestly pro-risk, emphasizing the importance of balance and tactical hedges in investment strategies [2] 3. Global Economic Growth: Resilient global growth is projected, with real GDP growth estimates for major economies as follows: - USA: 2.8% in 2023, 2.4% in 2024, 2.2% in 2025 - Japan: -0.2% in 2023, 1.2% in 2024, 1.2% in 2025 - Euro Area: 0.7% in 2023, 0.7% in 2024, 1.0% in 2025 - China: 5.0% in 2023, 4.5% in 2024, 4.5% in 2025 [4] 4. Inflation Trends: Headline inflation rates are expected to decline across major economies: - USA: 4.1% in 2023, 3.0% in 2024, 2.7% in 2025 - Euro Area: 5.4% in 2023, 2.4% in 2024, 2.5% in 2025 [5] 5. Risk Appetite Indicator: The Risk Appetite Indicator has been elevated since the beginning of the year, indicating a bullish sentiment in the market [16] 6. US Equity Demand: "US exceptionalism" continues to drive demand for US equities, with significant inflows from global investors [19] 7. Credit and Equity Valuations: Credit spreads are tight compared to historical averages, and equity valuations have risen from summer lows, indicating a favorable environment for equities [29] 8. Equity Risk Premiums: Equity risk premiums have fallen across regions, influenced by higher bond yields and growth expectations [32] 9. Drawdown Risks: There is an increased risk of equity drawdowns, particularly in the context of higher valuations and less negative inflation momentum [46][47] 10. Central Bank Policies: Central bank easing is expected to limit downside risks to both the economy and risky assets, with fewer Fed cuts anticipated in the next 12 months [48] Additional Important Insights 1. Regional Diversification: The divergence in economic cycles across regions presents opportunities for international diversification [83] 2. Tariff Concerns: Selective overlays such as the Dollar, Gold, and TIPS can help buffer against tariff shocks, with mixed performance observed around tariff concerns [65] 3. Safe Havens: Traditional safe havens like Gold are becoming more relevant again, with less correlation to equities and bonds [71] 4. Changing Drivers of Risk Appetite: Growth optimism is becoming a more significant driver of risk appetite compared to monetary policy and inflation [58] 5. China-Related Assets: Assets related to China have been underperforming, indicating potential investment risks in that region [87] This summary encapsulates the key points discussed in the conference call, providing a comprehensive overview of the current investment landscape and strategic recommendations.