Two-Sided Macro Risks: Recession vs Reacceleration
Key Findings from the Latest Monthly pack:
Global monetary policy settings have moved from headwind to substantial tailwinds as central banks step up precautionary easing into a window of contained inflation and macro downside risks.
The big macro edge risks are recession (+deflation) on one edge vs reacceleration (+inflation resurgence) on the other edge.
The US faces heightened risk of recession given policy uncertainty and confidence shocks from the chaotic start to the year, albeit with some offsetting factors e.g. fiscal stimulus, AI capex, rising asset prices.
Meanwhile the rest of the world is looking better (Japan going strong, Europe and China turning up out of slowdown + stimulating).
Among the asset classes most at risk of downside given (stretched) valuations and the stage of the cycle are US tech stocks, US housing, US dollar, and US credit (spreads) — basically US exceptionalism [but do you bet against it yet though?].
Areas which see superior upside risk/reward meanwhile include government bonds, commodities, emerging markets, and certain sectors on a tactical basis such as defensives, small caps, and emerging markets [basically all the out of favor and out of fashion asset classes!].
Clearly some of these will benefit significantly under (different levels of) the recession vs reacceleration scenarios.
Rotation and Relative value are thus key themes along with smart diversification and risk management (diversify diversifiers, progressively upweight more attractively priced diversifiers, portfolio strategy and signals).
For SG users only, Welcome to open a CBA today and enjoy access to a trading limit of up to SGD 20,000 with unlimited trading on SG, HK, and US stocks, as well as ETFs. Find out more here.
Complete your first Cash Boost Account trade with a trade amount of ≥ SGD1000* to get SGD 688 stock vouchers*! The trade can be executed using any payment type available under the Cash Boost Account: Cash, CPF, SRS, or CDP.
Other helpful links:
💰Join the TB Contra Telegram Group to Get $10 Trading Vouchers Now🎉
How to open a CBA. How to link your CDP account. Other FAQs on CBA. Cash Boost Account Website.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
