The global economy has a lot going on, from rising rates in the US to a war in Ukraine.

Deciding how to allocate investment capital against this backdrop is a very complex task.

Insider spoke to HSBC's global CIO Willem Sels to get his take on what's next for markets.

The global economy has a lot going on right now. There are rising rates in the US, a spiking dollar, inflation around the world, a war continuing in Ukraine, an energy crisis in Europe and tension over Taiwan.

That's just the start of it. This all means those tasked with managing investment portfolios have their work cut out.

Among those responsible for vast sums of client money is Willem Sels, the global chief investment officer at HSBC.

Talking to Insider, Sels laid out how he sees the next few months playing out.

"Clearly, we had this rally from June to August on premature hopes that the Fed was going to go more slowly, and I think it's now clearly been illustrated that won't be the case," he said. "It's similar with other central banks like the ECB, so there's no tail wind coming from central banks because they won't be more dovish soon."

So while Sels expects markets to struggle to gain any upward momentum in the near term, he sees a good chance that June saw the cycle bottom for US stocks.

"I think there's limited chance of big downside because clearly at the lows of June, we priced in a lot of negative news. We have had the rates side priced in for quite some time, but also the growth side. People are already expecting quite weak growth."

Sels warned that he expects a series of "false rallies" followed by corrections before a sustained new bull market takes hold.

With that being said, Sels still has a strong preference for US equities relative to European due to the difficult economic outlook and energy crisis.

"We do see a big differentiation between US equities and European equities. We have only a third of our normal position in Europe," he said.

"The price-earnings differential is still not compensating for the difference in the outlook. For the US, yes, we are comfortable that we've seen the lows, but not Europe."

In terms of when investors may be able to feel confident of a new bull market starting, Sels said it doesn't require a complete stop to Federal Reserve rate hikes, but a slowdown to 25 basis point hikes. The Fed is widely expected to announce a 75-basis-point hike this month and some are calling for 100 points.

Once we are through September and October, things could get very interesting heading into the year end, Sels explained.

"I don't think we need to see an entire pivot to cuts. We don't think we will get cuts. But we need to see the Fed go to the 25 point pace before the market really breaks out.We think that they can do it by November."

Sels said while there remains serious downside risk in European markets, he does not see the Russia-Ukraine war or related energy crisis spilling over into the realm of systemic risk for the global economy and will be contained to the continent.

The thing to watch out for is any sign that inflation in the US is going higher again, or even not budging from the current 8% level.

"There are a number of elements of core inflation such as services and rents and food prices which are quite sticky that you could have the market reassess interest rates policy," Sels said. "That to me is still the systemic or the more broad-based risk to global markets."

The mention of rents obviously brings up the question of the US housing market, and it is something Sels is watching closely.

"Clearly housing is one of the weaker elements in the USA economy now, so that concerns us from an activity perspective. Rents are sticky and we've seen that in data but if house prices continue to come down eventually you will have rents coming down as well."

Sels sees little chance of any major housing crash though, and noted the situation is very different to the global financial crisis.

"In 2008, you had the leverage, you had the CDS, you had CDOs and so on. There's less bad lending and households typically are in a much better position in terms of their balance sheet if you look at the savings rates."

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HSBC's global investment chief warns of 'false rallies' for stocks, reveals how investors can spot the true start of a new bull run, and offers his take on the housing market