🏛️(11 Critical Points) US recession in the next 6-12 months 👇
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US recession in the next 6-12 months 👇
🏛️(11 Critical Points)
✔ “We continue to expect a US recession in the next 6-12 months.”
USD WEAKNESS TO EXTEND 💲
✔ “We expect the USD downtrend to extend as market conviction in an earlier pause in rate hikes by the Fed relative to other major central banks strengthens.”
✔ “This should not only lead to a rise in other G10 currencies, but also support Emerging Market assets, particularly in Asia ex-Japan.”
💹 LONG-TERM FUNDAMENTALS
✔ “As investors, it is important to keep in mind the potential discrepancies between short-term market indicators, such as sentiment and positioning, and longer-term fundamental factors, such as growth and earnings.”
✔ “Often, investor sentiment can overwhelm market fundamentals in the short run, leading famed investor Benjamin Graham to declare that “in the short run, the market is a voting machine, but in the long run, it is a weighing machine.”
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VALUATION FOR GLOBAL EQUITIES 👇
✔ “Valuation for global equities is above its long-term average and not pricing in risks to a growth slowdown, in our view.”
✔ “2023 earnings growth for global equities has been revised down since the start of the year but upgraded for China equities.”
✔ “Valuation for global equities still looks too optimistic to us. Earnings for global equities are under pressure, in contrast to China which is seeing upgrades.”
🏛️ PAUSE BY THE FED
✔ “A pause in the Fed’s rate hiking cycle is USD bearish in our opinion.”
✔ “While US government bond yields have risen over the past month, we expect the Fed to hike rates in its May FOMC meeting but indicate the likelihood of a pause thereafter.”
✔ “The USD is likely to touch new 2023 lows over the next three months and could even dip below the psychologically important level of 100.”
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Disclosure
This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. This material has been prepared for informational purposes only. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.