Divergences persist: US resilience vs China weakness

Thursday 07 September 2023

Global Investment Views, Equity, Fixed income

   

Divergences persist: US resilience vs China weakness

September 2023 | If the recession in the US plays out as feared, both earnings and margins would come under pressure. The fiscal boost from the government has helped consumers, but we think excess savings could dissipate. We believe markets, which are priced for perfection, don't reflect this risk. On the other hand, valuations in some pockets are expensive vs others, making this an attractive market for active management.

01 | Although we revised up our 2023 US growth forecasts from 1.6% to 2.1%, we still think that a (mild) recession from Q1 is possible, due to the lagged effect of tightening financial conditions and dwindling excess savings.

02 | We remain active on duration, with a slightly positive view on the US and a close to neutral/slightly cautious stance on Europe.

03 | US and EU equities still show high valuations despite the recent pullback. If our scenario of a mild recession plays out, this could be negative for equities, especially US large caps, growth and tech.

Global Investment Views - Divergences Persist

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