Citi Global Wealth overview | | 13 Investments The Fed has not been able to end recessions What might mark the bottom for markets amid reports of falling inventories. Such datapoints quickly once underway. However, it does have a the coming recession? As usual, producers will will be among the preconditions for recovery. history of frequent policy reversals. In the past overreact to demand weakness, cutting output Earnings per share will likely only follow equities 45 years, peak policy rates have been sustained too far. Within several months of that moment, higher, with the past lag having been about six for only seven months on average before cutting the “excessive caution” will be followed by months – FIGURE 5. rates. If the Fed can soon find a balance between the excessive easing of 2021 and the rapid tightening it has “rhetorically” encouraged in FiGUre 5. eArNiNGS Per SHAre BoTToM LATer THAN MArKeTS 2022, it might avoid amplifying financial and economic excesses. EPS estimate MSCI World AC (6-month lead) 90% Positioning for a year of 70 challenges and change r 50 Across 2022, investors braced for the forecast a e 30 2023 recession. The resulting bear market is r-y well underway, although incomplete. A new bull e v 10 market has never begun before a recession has r-o even started. Most typically, a bull market begins a -10 e at around the mid-way stage of a recession. Y The very strong communications of the Fed’s -30 intentions and a year of bearish anticipation may see markets bottom somewhat sooner -50 than usual. However, as of late November 2022, -70 a recessionary decline in employment and corporate profits has not even begun. '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23 Within 2023, we expect investors to start discounting 2024’s recovery. Only twice in the Source: Haver, as of 30 Nov 2022. Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes past century – including the Great Depression only and do not represent the performance of any specific investment. Past performance is no guarantee of future results. Real results may vary. – did US equities take more than two calendar All forecasts are expressions of opinion, are subject to change without notice, and are not intended to be a guarantee of future events. years to find a lasting bottom. But further losses might still come first.