Year ahead views and thoughts - The consensus forecast for the Global Economy in 2023 is pretty clear, a peak in inflation and a sharp slowdown in GDP that will be ‘short but not painless’. The associated view for markets, however, is more diverse and largely depends on the extent to which this economic slowdown is regarded as being ‘already in the price’.

Currently, equity markets in general are stuck just below their long term moving averages and, as we might put it, look to be ending a bear phase but not yet entering a bull phase, similarly gold, while credit and Bonds are steadily recovering – albeit still well down on the year.

With the end to Mutual Fund tax-related selling in October and the closing out of the CTA hedge fund short positions ahead of Thanksgiving in November, the equity markets finally managed to put together two back to back positive months, reinforcing the seasonality trends of this time of year and taking negative returns from the 20’s to the teens for most investors.

The top down case for European Banks – this time it really is different...

Seasonality in markets often has underlying market mechanics behind it. The end of October for example is the deadline for tax loss selling by US mutual funds, something overlooked in a bull market, but obviously highly important this year, while the end of November is Thanksgiving, which has tended to represent a year-end for many macro funds, likely some of the few looking to lock in any profits and performance fees for 2022.