17 "THE YEAR 2022 WAS MARKED BY A BOTH UNEXPECTED AND UNFORESEEABLE GEOPOLITICAL SCENARIO." The urgent response provided by the central banks and governments to counter inflation and the energy crisis created a new political-economic balance that is diametrically opposed to the one that had prevailed since the 2008 financial crisis: a restrictive monetary policy accompanied by an expansionary fiscal policy (particularly in Europe due to the energy crisis). This has led to high public deficits and the continued rise in debt-to-GDP ratios. The main danger in this new policy mix resides in the lower sustainability of public debt. In this difficult context, our companies have been a source of resilience, with earnings that continue to positively surprise and provide more solid-than-expected margins despite the fact that outlooks have been revised down. During this Chinese year of the Water Rabbit, a symbol of prosperity, peace, adaptation, wealth and luck, investors should not give in to pessimism. First, inflation is starting to show signs of slowing down, suggesting possible reversal of the Fed's policy at the end of 2023. Secondly, the macroeconomic data has not deteriorated as much as we could have feared, for example Germany's GDP growth came in positive for Q3, despite the energy problems. The key element remains China, which, despite some long-term indebtedness, is opening up with significant potential for domestic consumption in the short-term. In 2023, all of the above-mentioned factors could lead to a recovery of general activity and the equity markets. Corporate bonds now offer an attractive yield, which should further improve this year. Lastly, after a decade of supremacy of equities, this is probably the good news of this new environment: the return of yield.
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