Institutional Investing / Market Outlook
Q4 2022 Global Markets Review & Outlook
Q4 brought some relief from 2022’s downturn. Turning points are impossible to predict and clear only in hindsight, and thus it is still too soon to know if October’s low marked the bear market’s end. However, whether the new bull market began in Q4 or arrives this year, we think equities are most likely to end 2023 higher.
- Global Market Recovery is Near or Underway: Global equities’ Q4 rebound demonstrates how a better than expected reality can quickly reverse market drawdowns. This also creates a path for material upside where growth likely proves more resilient and enduring than the current, dour forecasts expect.
- Overly Depressed Investor Sentiment Supports Coming Rebound: Universally dour sentiment, driven by concerns on inflation, energy crunches, the Russia-Ukraine War and a variety of other factors has significantly lowered investor expectations, allowing room for the new bull market to grow.
- US Politics Provides Clear Path Forward for Markets: Divided US government historically fuels a positive three quarter stretch for equities—the three quarters starting October 1 in a midterm year were positive 92% of the time, with average returns of 20%. Similarly, the third year of a US president’s term historically has the highest frequency of positive returns of the four-year cycle.