Capex

The Santa Claus rally is a repricing of the "soft landing" scenario as a likely economic outcome. Yet, many investors remain cautious, and harbor significant cash balances. Next year, repricing of various scenarios will continue, and volatility will be elevated. We remain in a "hard landing" camp and recommend defensive stance on a strategic investment horizon.

Global Investment Strategy predicted the surge of inflation in 2021/22 and the immaculate disinflation of 2023. Now their unique framework is predicting a recession in the second half of 2024.

We expect the US economy to slow and potentially downshift into a recession sometime in 2024, as tighter monetary policy weighs on consumers and businesses. In addition, (geo)political tensions may increase market volatility. The risk/return for US equities is unfavorable. We recommend that our clients reduce portfolio beta and increase allocations to defensives and quality growth.

The recent uptick in European economic data will not last beyond the next six months. How will European corporate credit perform in this context?

Today, we are sending you the BCA annual outlook for 2024. The report is an edited transcript of our recent conversation with Mr. X and his daughter, Ms. X, who are long-time BCA clients with whom we discuss the economic and financial market outlook for the next twelve months toward the end of each year.

European markets have room to rebound in the coming weeks, however, a recession looms. What are the lessons from history that investors can use to position themselves under these conditions?

Europe’s weak patch is not about the ECB’s policy tightening, at least not yet. 2024 is another story, and the ECB’s policy will prompt a Eurozone’s recession around the summer.

US monetary policy is restrictive, as evidenced by a falling jobs-workers gap. The reason that unemployment has not risen is because labor demand still exceeds supply. That will change in the second half of 2024 when the US economy succumbs to recession. Investors should increasingly favor bonds over stocks.