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Citi Global Wealth Investments

Wealth Outlook 2023:
Mid-Year Edition

Opportunities on the Horizon:
Investing Through a Slowing Economy

Our Expectations

  • US real GDP growth: +1% in 2023, +1.4% in 2024
  • Rolling recessions across US sectors, below trend global GDP growth of +2.5% and 2.4% in 2023 and 2024
  • US CPI inflation to decline to 3.5% by end-2023, 2.5% by end 2024
  • Fed to start cutting interest rates in 4Q 2024
  • The US dollar has peaked, weaker USD over the next few years

Putting Cash to Work in a Slowing Economy

bulb icon What you need to know:

We are not yet at the end of the bear market, but significant valuation improvements point to higher long-term returns. Investors may benefit from immediate income-generating assets while investing in long-term growth opportunities.

  • Equity market sentiment remains bearish, but there is a significant amount of cash waiting to “buy the dip”
  • Divergent equity markets, with very narrow breadth, are creating strong valuation opportunities in certain categories of US and non-US markets for the future
  • Our expectation is for policy interest rates to decline by year end
  • We favor various investment-grade corporate bonds
  • We like dividend grower equities in resilient industries
  • Qualified investors may consider private credit opportunities

Unstoppable Trends are Changing the World

bulb icon What you need to know:

Unstoppable trends are long-term forces transforming how we live and do business. We seek portfolio exposure to these powerful trends.

  • Digitization: Generative AI is the beginning of (another) technological revolution
    • The rapid adoption of AI opens the door to significant investment opportunities in the ecosystem that supports AI
  • Energy Security: Unusual opportunities in an atypical energy cycle
    • World events and the rise of renewable energy are reshaping the energy landscape
  • G2: Putting national security interests ahead of economic cooperation
    • Intensifying US-China tension creates challenges and opportunities for investors as reshoring and nearing become more common
  • Invest in Longevity
    • Healthcare demand continues to grow faster than the world economy providing non-cyclical growth for portfolios

Building Dynamic Portfolios

bulb icon What you need to know:

While our asset allocation strategy remains defensive, investors should consider staying invested and modify portfolios over time.

  • The bear market is not yet over. It’s too soon to price in a recovery
  • Today we favor quality, such as longer-duration bonds and investment-grade corporate or municipal bonds that could offset potential credit spread widening
  • Likewise, we also favor defensive equities, with an emphasis on dividend growers and companies with strong balance sheets
  • Some small- and mid-sized firms in the US and some emerging markets are becoming undervalued
  • We’re overweight US government issues and investment-grade corporate bonds
  • While there will be periodic rallies, we see a weaker US dollar ahead, making currency diversification more important
  • A weaker USD creates value potential in non-USD investments, including non-US equities and unhedged bonds

All forecasts are expressions of opinion, are subject to change without notice and are not intended to be a guarantee of future events.

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  • Form Client Relationship Summary ("Form CRS") is a brief summary of the brokerage and advisory services we offer.
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Please review both of these important documents online at http://www.citi.com/investorinfo/. If you prefer paper copies, Please contact your advisor or call us at (800) 846-5200 | TTY: We accept 711 or other Relay Service.

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Important Information

The Market Insights commentary should not be considered a recommendation or research report. Nor should it be considered a solicitation, advice or a recommendation with respect to any investment strategy, asset allocation or particular investment. The Market Insights commentary is not intended to constitute “research,” as that term is defined by applicable regulations. The views expressed herein are those of the author and do not necessarily reflect the views of Citigroup Global Markets Inc. or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

The market and planning commentary on this site may discuss topics that are timely to current events at the time they were written or filmed. The relevance of such topics may change at future dates.

Investments are subject to market fluctuation, investment risk, and possible loss of principal.

Diversification and asset allocation do not protect against loss or guarantee a profit. Past performance is no guarantee of future results.

Please consult your Financial Advisor before making any investment decisions.

Citigroup Inc. and its affiliates do not provide tax or legal advice. To the extent that this material or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.

The information set forth was obtained from sources believed to be reliable, but we do not guarantee its accuracy or completeness.

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