Expectations are rising that a recession is around the corner, but current economic conditions do not correspond with that outlook: unemployment is low, while demand is strong as consumers catch up after a spell of pandemic-induced parsimony, as Maya Bhandari, head of multi assets, explains to chief market strategist Daniel Morris.
They expect to see a hard economic landing with the accompanying spike in unemployment and contraction in spending, but until the middle of next year. By then, company earnings trends may be negative to reflect recessionary conditions and credit spreads should have widened. At that point, the odds of major central banks reversing their rate rising cycles will have grown substantially.
Watch the video with Maya and Daniel for more on BNPP AM’s cautious multi asset allocation including an underweight position in European equities and long positions in Chinese tech and Japanese stocks thanks to their immunity from the current risk factors.
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Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice.
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