Capital Market Expectations Analysis for Global Equity Portfolio

As part of an investment committee, you are tasked with developing the capital market expectations (CME) for a diversified global equity portfolio over the next five years. Consider the impact of various macroeconomic factors such as inflation, interest rates, GDP growth, and geopolitical risks on expected returns and volatilities. Additionally, assess the implications of current monetary policy stances of major central banks on global risk assets.

In your essay, critically analyze how these factors interrelate and influence expected returns across different equity markets. Furthermore, discuss how these expectations can guide investment strategies and asset allocation decisions for a long-term investor, taking into account potential market inefficiencies.

Be sure to provide a reasoned assessment that illustrates a clear understanding of the underlying economic principles and market dynamics.