Investment Prospects for the 4th Quarter of 2023


The first nine months of 2023 are behind us, indicating that only one quarter separates us from the end of the first year without a global pandemic, albeit with issues such as persistent high inflation. Investors who placed their bets on tech companies at the beginning of this year came out on top. Once again, growth companies proved to be resilient to the global problems related to increased growth. Bitcoin performed exceptionally well, gaining over 60% since the beginning of the year. Commodities, on the other hand, had a very flat past nine months and the outlook for the next 12 months doesn’t improve. So what awaits us in the last three months? What is worth having in your portfolio or betting on for a decrease?

Macroeconomic Situation

(prepared by Bartłomiej Mętrak and Filip Kondej)

The macroeconomic outlook for the upcoming quarter is shrouded in much uncertainty. Particularly since there was the initiation of a war between Israel and Palestine at the very beginning. Though this conflict seems geographically remote, the involvement of a larger number of countries could lead to a full-scale local or even global war. At this moment, it’s hard to discuss any prospects associated with this event, but certainly, it adds a lot of volatility and uncertainty to the markets.

The risk of inflation accelerating towards the end of the year remains real. It’s worth remembering that US inflation peaked around the middle of last year, and then the momentum of price increases started to slow down noticeably. This means that the effect of the base won’t be as favorable as it was in the first half of the year at the end of 2023. Moreover, the strong rise in oil prices recently further increases the risk of inflation rising in the last quarter.

Tightening monetary policy further may be required to bring inflation down. Naturally, it takes time for interest rate hikes to impact the economy, and it can’t be ruled out that maintaining high levels for an extended period will be necessary. This will negatively affect demand in the economy and additionally, high market rates will increase the cost of servicing debt. As a result, we will see a decrease in government expenditure in addition to weaker demand, which is a deadly combination for growth prospects.

The labor market in the US remains strong, and other data from the American economy do not point to an imminent catastrophe, which should allow the US economy to pull through the last quarter ‘dry’. Yet, further tightening of credit conditions will increase the risk of a hard landing next year.

Currency Market

(prepared by Michał Stajniak and Łukasz Stefanik)

The EURUSD has remained high for the majority of this year, but the recent strong rally in US yields has put the dollar back in the main game. Further developments in this area will depend on whether any economy in the world can equal the USA’s in terms of resilience. There is a strong potential for the sale of the US dollar – the currency has remained heavily bought over the past few years, but this is associated with a very hawkish Fed and a lack of alternatives globally. If the Bank of Japan were to revise its policy, it could cause even greater turmoil in the global debt market and trigger a significant correction on the USDJPY pair.

Looking at the Polish zloty, we see that most of the hard-earned gain was neutralized by the surprising decision by the Polish Monetary Policy Council (RPP) to sharply cut interest rates in September. Rates were cut again in early October, and we are likely to see another cut this year. However, it seems that most of the negative news is already priced into the zloty. Additionally, after the elections, regardless of their outcome, there will be a chance for investors to realize their profits on short positions on the zloty. That’s why there is a chance we might see a significantly stronger zloty at the end of the year, although a continuation of moderate weakness until November, when the latest inflation report is published, can’t be ruled out.


(prepared by Michał Stajniak)

This past year or last 12 months have not been the best for commodities. The broad Bloomberg Commodity Index, which is largely dependent on oil, lost about 6% in both periods. Interestingly, at the same time, oil came out almost flat, and the reason for the decline in the entire commodities index was largely due to industrial metals or grains. The commodities that performed really well were so-called softs, like cocoa, sugar or to some extent even cotton. Looking at the prospects for the next three months, one might ask whether current trends will continue or whether a reversal is coming.

Industrial and energy commodities will largely depend on the position of the US dollar. Believing in its decline, one might bet on industrial metals, oil which is experiencing a massive deficit, or even on precious metals, which are heavily oversold due to extremely high yields. If the Fed wants to avoid a financial disaster, it will eventually have to change its policy, which should benefit gold or silver.

Oil looks very flat in the last 9 or 12 months, but looking at the return since the middle of this year, the increases were really solid and are likely to continue, given the substantial deficit in the market. Even demand problems should not lead to oil trading again in the $60-70 per barrel range, although it was close at one point. However, the war between Israel and Palestine stopped the latest oil sell-off triggered by uncertainty about US demand.

Of course, it’s also worth noting the situation in Poland, where fuel prices have not been decreasing for a very long time, despite the low oil prices until the middle of the year, and currently the prices are not rising or are even falling, despite the high oil prices currently. This can be called averaging prices, but if oil reaches $100 per barrel, and the RPP decides to cut interest rates heavily, leading to zloty weakness – in such a case, fuel prices will finally have to react and return to the PLN 6.50-6.60 range or even higher. The price of a Brent barrel in Poland fell from PLN 420 to 370 at the beginning of October, but to maintain the average price from this year for PB95 at PLN 6.50, the price of a barrel would have to hover around PLN 340.


(prepared by Eryk Szmyd)

Historically, the last quarter of the year was strong for the cryptocurrency market, and Bitcoin ushered in October with dynamic increases. It seems that key to maintaining this in the coming months will be less about factors related to the crypto industry itself and more about global sentiment.

A significant risk factor for cryptocurrencies is the further increase in bond yields, which have recently reached peaks not seen in several years. A weakening dollar, falling yields, and seasonality – also driven by the upcoming 2024 halving – could potentially push Bitcoin above $30,000 USD in the fourth quarter of the year.

Simultaneously, the United States is approaching the financial reporting season for companies in the third quarter. US macro data in Q3 (including consumer sentiment and consumption) was relatively strong, which could suggest a relatively successful season and increased company profits. If the reporting season is mostly successful and tech companies boost the Nasdaq, the economy remains strong, and the Federal Reserve decides to keep interest rates steady in November (which would probably require further, consistent inflation declines and lower oil prices), we can expect Bitcoin to reach new annual highs. Interest in the halving has historically boosted Bitcoin’s price as the event approaches.

However, altcoins will likely remain subdued in Bitcoin’s shadow. As extremely risky and speculative assets, they’ve historically gained more from Bitcoin when the market was almost certain of ‘the next Bitcoin bull run’. Even if the price goes above $30,000 USD, there will still be an atmosphere of uncertainty. Factors related to the risk of recession, which could potentially hit the US economy while interest rates are the highest they’ve been in over 20 years, may also weaken the capital flowing into altcoins.

An increase in risk appetite may boost Bitcoin in the fourth quarter and lead it to new annual highs. The degree of risk seems ‘advantageously’ balanced with potential catalysts for the rise in Bitcoin prices. It’s a positive sign that many analysts are beginning to see Bitcoin as an asset that may potentially reduce portfolio risk due to periods of inverse correlation or no correlation whatsoever with global markets. Overall though, it’s safe to assume that Bitcoin will gain value when substantial capital is also flowing into the stock market.

Stock Market

(prepared by Filip Kondej and Mateusz Czyżkowski)

If the actual end of the monetary tightening cycle takes place on the market, and the United States manages to push back the specter of a government shutdown and debt pressure, we can expect a rebound, especially in the tech sector.

Such companies are fundamentally inversely correlated to yields on American debt instruments, which are currently on the rise, but according to partial data from investment banks, capital inflows to these companies are already being observed. Moreover, we focus on companies which have seen significant valuation drops, although these were not dictated by downward revisions in future earnings forecasts; in fact, there have been upward revisions in these forecasts (which allows us both exposure to a possible momentum rebound in oversold companies and capital allocation in fundamentally more attractive companies). Among American sectors, the highest upward revisions on a quarterly basis were in the technology (+4.4%), real estate (+3.6% YoY), and health care (+2.0%) sectors. The most significant downward revisions were noted for materials (-12.8%), consumer goods (-6.5%), and public utilities (-4.6%). The overall revision for the economy was -1.1%.

On the other hand, it’s worth noting that this year’s market exposure has dominated high-cap companies, which in the eyes of investors provide a more advantageous hedge against extreme situations given their stable market position. A scenario assuming a return of demand for risk could improve the position of small caps on the stock exchange.