Head of Macroeconomic Research
Summary: In the short term, trade war has a more limited impact than most expected, but the US economy is not immune to current headwinds. The monthly job cut report published by Challenger, Gray and Christmas provides an interesting insight regarding the effect of tariffs on the US labor market.
In the short term, trade war has a more limited impact than most expected, but the US economy is not immune to current headwinds. The monthly job cut report published by Challenger, Gray and Christmas provides an interesting insight regarding the effect of tariffs on the US labor market.
This report is published every month and provides information on the number of announced corporate layoffs by industry and region based on data provided by state labor departments.
What is interesting us today is related to the reasons given by employers to justify job cuts. In the latest report from July, tariffs were one of the top reasons. In fact, 1,053 cuts were announced in one month due to tariffs, for a total of 1,430 this year versus 798 in 2018. Without much surprise, manufacturers are being hit the most and this negative trend is likely to continue as new potential tariffs against China are looming.
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.
