Against a friendlier macroeconomic backdrop, how should investors think about their asset allocation strategies in 2024?

I would say that compared to the last 20 years, we probably would argue that the optimal asset mix should have a bit more equity, but we have to admit that the first

step is probably just getting back to something like 6040 because a lot of investors in the last year also have

given up on that a bit.

I'm Allison Nathan and this is Goldman Sachs exchanges.

For much of 2023, cash was king. But with inflation and interest rates starting to

moderate, even as fears of a U.S. recession fade, the case for taking on more risk may be rising.

To help explain their outlooks for asset classes and portfolio strategies, I'm seeing down with

Christian Mueller-Glessman, who heads asset allocation research in Goldman Sachs research, and

Alexandra Wilson

Elizondo co-chief investment officer of the multi-asset solutions business in

Goldman Sachs Asset Management.

Alexandra is joining me in our New York studio and Christian is joining us remotely from our

office in London. Christian Alexander welcome to the program. Thank you for having us.

Thanks. So let's just start with an overview of the global economy just to get a

sense of the risks and returns across asset classes.

So Christian, where do you think we are right now in the economic and business cycle?

When we think about cycles, we always look at three overlapping cycles the structural cycle the business cycle and the sentiment cycle

So you are asking about the business cycle so let's start with the US economy. I think the US economy is still relatively late. I think the way we look at this is obviously unemployment, which is low. We look at it with regards to growth, profit margins are elevated.

There's a few good things, like for example, leverage in the private sector is not very high,

but net net we're late cycle and there's one other feature which you tend to have late cycle, which is that risk

premium tend to be low because things are good.

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