2022 Midyear Outlook
Long-term perspective on markets and economies
MIDYEAR OUTLOOK
Late cycle is a time for "all-weather" investing
The economic environment is changing rapidly, and risks are rising. But signs of growth remain as the world recovers from the pandemic. Maintaining a balanced all-weather portfolio makes sense in any climate.
Sources: Capital Group, FactSet. GDP data are in USD and are the latest available through 12/31/21. Country positions within the business cycle are forward-looking estimates by Capital Group economists as of April 2022.
U.S. OUTLOOK
In the midst of uncertainty, boring is beautiful
Is the U.S. headed for recession? Much will depend on the labor market and the actions of the Federal Reserve, but there continue to be areas of solid growth across the economy. With market volatility rising, look for a mix of old-economy companies that make tangible products and tech leaders with proven earnings growth.
Rising dividends can counter inflation
Proven dividend growers can help mitigate market volatility and bolster returns when inflation is rising. In addition, select health care companies with promising drug pipelines appear attractively valued relative to the broader market.
INTERNATIONAL OUTLOOK
What’s old is new again
The war in Ukraine has cast a pall over much of Europe, but a renewed investor focus on value-oriented stocks could prove to be a silver lining.
Sources: MSCI, RIMES. As of April 30, 2022.
Mining and industrial companies may represent long-term value
Some commodity prices could remain high for years, creating opportunity for mining companies. And some industrial companies are making buildings more sustainable, a key focus in Europe and other international markets.
Sources: MSCI, RIMES. As of April 30, 2022.
FIXED INCOME OUTLOOK
Are better days ahead for bonds?
Fixed income had a rough ride in the early months of 2022, but history suggest better days may be ahead. Bonds still offer investors income, diversification, inflation protection and a measure of stability when equity markets are volatile.
Income is returning to fixed income
Rising yields have resulted in short-term pain for bond investors, but they can also translate into more income from bonds.
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Long-term perspective on markets and economies
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