1.2 Roadmap to recovery: Markets lead, the economy follows We expect global growth will deteriorate for some of 2023. Markets will then increasingly focus on the recovery that lies beyond. We enter the year defensively positioned but expect to pivot as a sequence of potential opportunities unfolds. STEVEN WIETING Chief Investment Strategist and Chief Economist ƒ The Fed’s cumulative monetary tightening will likely stifle the world economy no later than mid-2023 ƒ For portfolios now, we remain cautious, seeking returns through high-quality equities and bonds, as well as capital markets and alternative strategies for suitable investors ƒ Markets will start focusing on 2024’s recovery sometime in 2023, enabling us to take greater investment risks across a variety of asset classes ƒ As interest rates peak, we would expect to shift first to quality growth equities in non-cyclical industries ƒ A 10% decline in broad corporate profits in 2023 should hit many cyclical industries before any recovery takes hold ƒ As unemployment rises, we expect the Fed to reverse course by the second half of 2023, with fixed income yields dropping ƒ The US dollar’s bull market could overshoot even higher, but chances are building of non-US assets and currencies finding a “deep value bottom” in 2023 ƒ While Fed drama has distracted many investors, we call for renewed attention on the unstoppable trends transforming the world economy Citi Global Wealth overview | | 10 Investments