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Global Private Banking Investment Outlook Report Our Portfolio Strategy The global economic slowdown will Fixed income: overweight keep rates high for longer, which should remain a key headwind for stocks continue to slow growth, with a lag. for some time and we are mildly Focus on high quality borrowers Housing markets are already seeing the underweight in global equities. An Keep overall duration below effect of higher rates, with prices, sales overweight in high-rated bonds benchmark and construction activity levels down can provide diversification, and in developed markets (DM). Consumers bond yields already price in a lot of have seen their mortgage payments rise tightening. As the growth cycle lags Equities: mildly underweight (sometimes double or triple) and the the rate cycle, we much rather take Prefer US over Eurozone and UK cost of petrol, food, clothing and utility rate risk than cyclical risk. We are bills shoot up. For the vast majority, also overweight in hedge funds to Prefer EM Asia and Latin America over wages have not kept up with inflation, diversify and mitigate uncertainties. EM Europe forcing them to reduce spending We look for the silver lining and Maintain a defensive sector tilt, with a on discretionary items in particular. explore what could eventually focus on quality and income Governments have come to the rescue, make us more bullish. And we but as their cost of borrowing has shot continue to highlight structural Alternatives: overweight up, their ability to act is limited: the most opportunities at attractive dramatic recent illustration was the UK, valuations, related to sustainability, Overweight in hedge funds where the government was forced by technology and in Asia. Keep core allocations to private markets to abandon spending plans markets and real estate and raise taxes instead (ending many 1. The way we see the world economists’ belief in Modern Monetary The global economic slowdown will Theory in the process). remain a major driver for markets. The downside tail risks for housing markets Slower economic growth should Eurozone and the UK are going through and ease COVID-related bottle necks, gradually lead inflation to come down, a recession, and although the US is more but economic activity is unlikely to and the October US CPI figure triggered resilient, growth is below normal there accelerate sharply. hopes in this direction. The good news too, and we may see one or two negative While low rates in the past decade were is that oil, natural gas and transportation quarters of US growth in 2023. China’s designed to boost growth and avoid costs are down already, and the shortage growth rate could bottom as supportive deflation, the interplay between rates, of semiconductors is easing. This monetary policy should start to pay some growth and inflation now works the other is contributing to lower goods price benefits. Recent policy measures reduce way around. Sticky inflation is bound to 6

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