Head of Macroeconomic Research
Summary: What is a recession ? This looks like an easy question. Most investors and analysts would answer that two consecutive quarters of negative GDP growth is the common rule-of-thumb definition of a recession. This is not quite that. That’s why even if today’s U.S. 2Q GDP growth is in contraction territory (after a negative print in 1Q at minus 1.4 %), this does not necessarily mean the United States is in a technical recession.
Short answer: probably not judging by the main indicators the NBER and economists look at.
This does not mean that the United States will exit this cycle without going through a recession or a recessionette (term coined by the U.S. economist Diane Swonk to define a healthy contraction in GDP growth which brings down inflation). This will depend on several factors we cannot fully assess now, such as the speed of monetary policy tightening and its impact on the overall economy or the effect of the ongoing Chinese stimulus on the global economy. There is still a lot of uncertainty and lags which make it difficult to forecast the pace of the economy in the near future.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
