Another quarter has unfolded against a backdrop of continuing challenges for central banks fighting to control inflation and amid global political tensions. Yet equity markets have shown to be remarkably resilient. Once again, we have prepared a number of articles to examine some of the nuances and provide food for thought on how to position a multi-asset portfolio.

Overall, I am a skeptic when it comes to this FOMO-like equity rally, but equities do have merit during a period of high inflation as companies, in theory, are able to adjust prices to offset rising production costs. On the other hand, a recession is looming, and we surely need to keep a keen eye on both producer price indices and unemployment rates, as central banks try to manufacture a controlled landing without causing too much pain.

That's not an easy task. Given how central banks have been slow to tackle inflation, there is now an elevated risk that they will have to overshoot to bring core inflation under control. Personally, I am more risk off these days, but as our article on emerging markets shows, we have seen examples of both very good and mediocre returns. While you may find comfort in the very low volatility levels, I think they may move up.

In our private credit article, we provide some portfolio construction thoughts because we believe this asset class surely has a place within a diversified portfolio.

With the Wagner Group rebellion in Russia last month, we got a reminder that global tensions are high, and that events can unfold quickly. I also worry a lot about tensions between China and Taiwan. But this quarter we look at a problem that seems to come back every year: the US debt ceiling. We consider the underlying problems and the potential direction from here. Not a pretty picture.

In conclusion, in a northern-hemisphere summer with clear signs of global warming, and amid a different type of heat caused by the risks of recession, we share our views on commodities, inflation-protected bonds, pockets of real estate, and infrastructure so that there is some shade, should it get too hot for comfort.

Enjoy the vacation season.