Michael Hartnett from BofA for 2023 asset allocation. For me, the question of whether or not inflation is cyclical or structural is still an open one but, for now, these allocations make sense either way.
The Biggest Picture: Main St outperformed Wall St in ’22…ratio of financial assets to GDP dropped from remarkable 6.2x to 5.4x (Chart 2) as wages rose, asset prices slumped.
The Price is Right: but Main St “hard landing” in ’23 as monetary policy drives mean reversion of abnormally low 3.7% unemployment rate (6.2% average past 50 years), 2.3% personal savings rates (9.0% past 60 years), 2.1% credit card delinquency rates (3.8% past 50 years–Chart 3), 1.5% corporate default rates (3.8% since 2005).
The full text of this article is available to MacroBusiness subscribers
