The month continued with the invention of the “no landing” scenario: growth was expected to remain positive and inflation to miraculously correct its path. February saw inflation risk return to the forefront and stagflation advocates gain traction. Finally, March saw the return of a spectre that had been forgotten for a long decade, that of a global banking crisis.

In order to navigate the shifting currents of the quarter that now lies ahead, it is essential to take stock of the forces at play and their relative importance: where do we stand on systemic risk? Will inflation finally recede? And finally: where does growth stand? It is the balance between these three elements that should form the basis of any portfolio strategy.

In our view, growth should continue to slow, deflating the inflation balloon. Systemic risk has increased, but has remained contained thanks to the rapid intervention of our central bankers. This rise in systemic risk to our banks should accelerate the decline in growth: the landing is likely to be bumpy.