It’s been a tough year for markets, as investors grapple with a strong U.S. dollar, stubbornly high consumer prices and the prospect of higher-for-longer interest rate hikes. “The market backdrop is very much dominated by the actions of central banks and what appears to be increasingly hawkish rhetoric. It will be the path of inflation, how central banks respond to it, that determine the path of markets over the short and medium term,” Neil Veitch, investment director at Edinburgh-based SVM Asset Management, told CNBC Pro Talks last week. He believes the macro landscape will remain “quite difficult” for the remainder of the year. “We have got a lot of uncertainty as to where inflation may end up through 2023 and how central banks will respond to that. We have got third-quarter earnings coming on. I think we will be okay, but as we have seen with companies like FedEx , where perhaps they were over-earning through the pandemic, there may be some quite significant readjustments necessary for forecasts,” he said. Veitch believes the market will become “more constructive” in the first quarter of 2023 — though he thinks earnings estimates will have to come down first. “I think earnings will be the driver over the short term and at the moment, any sort of negative surprise is being heavily punished by the market. That’s typically the pattern of behavior in a bear market — short termism and negative momentum dominates,” he added, echoing the comments of a slew of market watchers who have long warned that earnings estimates remain too high . Inflation will also have to come down meaningfully — below 4% — before the Fed slows it current rate of tightening, Veitch said. Buy the dip? So how should investors position against this backdrop? While Veitch cautioned that “there are a lot of moving parts” and indicated he would stay “tactically cautious,” he also sees opportunities to buy the dip. “With stocks down in many instances at 50% and trading on high single-digit or low double-digit price-to-earnings, even allowing for the risk of further earnings downgrades, they are beginning to look more attractive,” Veitch said. “It’s perhaps a little bit too early to pull the trigger for shorter-term money, but if you have a medium-term outlook, some of these businesses I think are discounting an awful lot and ultimately we’ll come out the other side of this, whenever that is, in a better and stronger position,” he added. Growth, value or both? Veitch also waded into one of the key debates on Wall Street today — the battle between value and growth stocks. He favors a barbell approach, liking U.S. consumer behemoths that are “de facto monopolies,” as well as “classic value, early cyclical businesses,” such as selected retailers that he believes would respond positively when the Fed starts to slow its pace of rate hikes. “Again, it’s all going to be about stock picking. It’s no point just selecting retailers across the board. We have to try and understand what the medium-term dynamics are, what their long-term earnings potential is,” he said. Within the growth space, he finds some FAANG stocks , such as Alphabet , attractive on a medium-term basis.