In Pries Capital's October Market Trading Report, we embarked on a journey through the fascinating world of macroeconomics. The webinar began by emphasizing the goal of providing valuable information and knowledge to our audience. We delved into the intriguing dynamics of September, shedding light on the current late-cycle phase in the economy. With historically low unemployment rates and central banks' recent tightening of monetary policies, a crucial sequence of events was unveiled. This sequence highlighted the impact of rising interest rates on asset prices, particularly stocks, which plays a pivotal role in influencing the investment landscape.
The report then dissected the current market landscape, showcasing unique factors such as expectations of robust earnings growth amid economic weaknesses and the anticipation of a "perfect soft landing." It explored asset valuations in the bond and equity markets, revealing opportunities and challenges. The data illustrated a moment in time when assets were attractively priced, though waiting for a shift towards looser monetary policy was essential for potential price rallies. US mega-cap stocks appeared relatively expensive compared to global markets, and the report underlined the prospect of finding value beyond the US in light of economic headwinds.
As we looked ahead, the report discussed the possibility of a late-cycle economic weakening and the expected time frame for advantageous asset holding in early 2024.