“As the economic impact of the most aggressive monetary tightening cycle in a generation becomes more apparent in the second half of 2023, we believe equity prices are vulnerable to negative earnings surprises.”
“If history is any guide, a deeply inverted yield curve does not bode well for the economy. At this stage, we also don’t think that the Fed will meet current market expectations for rate cuts as early as this summer. That could be problematic for the S&P 500 given that it is already trading at a lofty level. This month, we are further reducing our equity allocation in favor of cash. This increase comes at the expense of US equities as we adopt a ‘sell in May and go away’ strategy.
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