Tactical Asset Allocation Strategy Under Market Volatility

As an investment consultant, you are tasked with developing a tactical asset allocation strategy for a high-net-worth client who is concerned about potential market volatility in the upcoming year. The client has a current asset allocation of 60% equities, 30% fixed income, and 10% alternatives. Given recent macroeconomic indicators such as rising inflation, changes in interest rates, and geopolitical tensions, you need to assess whether these indicators warrant a shift in the client’s allocation. Create a tactical asset allocation proposal for the next year, justifying your recommended adjustments (if any) to the current asset allocation and discussing the rationale behind your decisions.

Please explain the theoretical framework for tactical asset allocation, the indicators you considered, and how your approach aligns with the client's investment goals, risk tolerance, and time horizon.