WisdomTree Europe Hedged Equity Fund [HEDJ] Stock Forecast

Performance is outstripping unhedged peers.

We think the energy crisis will spur a recession in Europe. The ECB is trying to fight inflation without recognizing the costs.

Smart Beta ETF report for HEDJ

The S&P Global Eurozone Manufacturing PMI fell to 49.6 in August, down from 49.8 and further beneath the 50.0 mark that separates growth from contraction. Weak demand and efforts to reduce high inventory levels are therefore combining to drive production lower in the months ahead.

High inflation and low unemployment will push up wage growth in 2022 and 2023. At the same time, labour productivity growth is expected to come down significantly.

The credit cocktail has changed after the European Central Bank announced a 50bp rate hike. Thus, we conclude credit is now looking more attractive due to lower rates and the value priced in.

The European Central Bank has raised interest rates by 50 bps to 0.5% (more than expected).

Europe is facing the risk of an energy shock-driven recession and periphery stress. That's why we think the ECB will stop hiking earlier than the Fed.

The market now has more than a 50% probability attached to a 100bp hike from the Fed in July. We think this is overdone, and we think the bond market agrees with us.

Smart Beta ETF report for HEDJ