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Investment Ideas 2022: Explore three key themes dominating markets where investors might uncover potential opportunities. Read More

MARCH 2023


Macro Views

Global Growth

We estimate that a full recovery in Chinese domestic demand should raise global GDP by 1pp through 2023. In our view, reopening will impact global growth via three channels: 1) increased goods exports from other countries, especially those in the Asia-Pacific, 2) greater demand for foreign services such as travel, and 3) higher oil demand. We think any inflation impulses from renewed goods and oil demand will be mostly offset by supply chain improvements. Read More

US Labor

We believe corporate layoff headlines do not necessarily translate into a weak demand picture. Both the layoff rate and unemployment rate remain below pre-pandemic levels. Despite elevated tech layoffs, the job finding rate across tech and non-tech sectors is above historical trend. Meanwhile, businesses have seen improvement in labor availability: references to labor shortages on Russell 3000 companies’ earnings calls fell from 16.5% in 3Q21 to 4.9% in 4Q22. Read More


US shelter inflation remains sticky, but some explanation lies in the methodology. CPI captures rent on both new and continuing leases. As such, continuing leases must catch up to market rates, lifting overall prints despite rents on new leases already decelerating. We expect PCE shelter inflation to peak at 8% before slowing to 5.5% by YE. Read More

Monetary Policy

GIR now expects the Fed to hike in three 25bp increments to bring the terminal rate to 5.25%-5.50% following strong growth and inflation prints. They upgraded their ECB policy tightening expectations to 50bps in March and May, and 25bps in June, bringing the terminal rate to 3.75%. For the BoJ, GIR expects Kazuo Ueda to move policy incrementally, adjusting YCC by targeting shorter maturities. Read More

Market Views

US Active Management

US equities have been increasingly driven by micro factors, supporting our belief in selectivity. Even if market volatility fades, we believe lower stock correlations would heighten return dispersion and active management opportunities. Read More

Ex-US Equities

We are beginning to see green shoots in non-US equities, with greater potential upside in EM. Recent high-frequency data show activity normalization in China, which makes for a more durable, earnings-driven recovery compared to the valuation-driven rally of late. In DM, our colleagues in GIR recently upgraded their price targets for European equities. Read More


The recent rise in rates and hiking cycle extension risk has led some bond investors to fear 2023 will look like 2022. However, significantly higher starting yields may offset material risks of rate increases. Risk-adjusted yields remain most favorable at the front-end of the curve, but we believe reinvestment risk is best addressed with a barbelled structure that includes intermediate-maturity bonds. Read More


We expect municipal bonds to outperform US Treasuries, with reduced issuance aiding the technical set-up. We believe relative strength can continue, though with more potential in the HY space. Specifically, pricing dislocations leave opportunities for active selection. Read More


This year’s rally has been driven by short covering, fueling a liquidity comeback. We anticipate momentum and technical factors to further elevate market volatility. In this environment, we believe managed futures may be able to exploit such opportunities. Read More

Small Caps, Big Splash

Fading inflation, resilient growth, and a return of cyclicality has finally led US small cap equities to make a big splash on its year-to-date performance. We think this clearer US macro backdrop has presented a path for earnings and valuation to recover more swiftly for smaller US companies relative to larger ones. Still, with recession risk unresolved, we believe active selectivity remains paramount for investors re-establishing strategic weights while going down-in-cap. 


A peak in US large cap market concentration has historically been followed by sustained small cap outperformance. Small cap equities are less vulnerable to a top-heavy market, reducing the index’s sensitivity to individual company performance. Importantly, a cyclical-, services-, and innovation-tilt in this universe creates room for earnings and discounted valuations to potentially unlock further upside for investors.

Source: Furey, Bloomberg, and Goldman Sachs Asset Management.

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