In brief

• Despite remaining above central bank targets, inflation should start to moderate as the economy slows, the labour market weakens, supply chain pressures continue to ease and Europe manages to diversify its energy supply.

• Our core scenario sees developed economies falling into a mild recession in 2023.

• However, both stocks and bonds have pre-empted the macro troubles set to unfold in 2023 and look increasingly attractive, and we are more excited about bonds than we have been in over a decade.

• The broad-based sell-off in equity markets has left some stocks with strong earnings potential trading at very low valuations; we think there are opportunities in climate-related stocks and the emerging markets.

• We have higher conviction in cheaper stocks which have already priced in a lot of bad news and are offering dependable dividends.

Source: J.P. Morgan Asset Management - 30 Nov 2022