Capex
Western policymakers are pursuing three capital “T” Truths: China is evil, climate change is a major risk, and Russia is… also evil. Pursuing all three priorities at the same time presents a version of the classic “impossible trinity.”
After resisting the consensus narrative in 2022 that a US recession was imminent, and then predicting an immaculate disinflation for 2023, the Global Investment Strategy team has joined the dark side and is now expecting a recession to start in the US within the next six months. Accordingly, we recommend that investors underweight stocks and overweight government bonds.
The Draghi report highlights sensible reforms that would address many of Europe’s productivity shortcomings. Whether European capitals heed Mario Draghi’s advices remains to be seen.
The ECB will cut rates once more this year; however, markets underprice how far it will ease next year.
