Demographics

Investors should prepare for economic data to weaken even as policy uncertainty and geopolitical risk skyrocket ahead of the US election.

Following today’s US jobs data release, the Joshi rule real-time US recession indicator inched up to 0.18 and is now just a whisker from its recession event-horizon of 0.20.

The Republican Party’s odds of winning the 2024 election will benefit, if anything, from state courts’ attempts to exclude President Trump from primary or general election ballots. Higher odds of a change of ruling party will increase stock and bond market volatility.

Our recommendations for blogs and X’s (on the economy, financial markets, asset allocation, bonds, quants, energy, real estate, geopolitics, and specific countries and regions) to try over the holidays.

Illegal immigration into the US has skyrocketed to record levels. Correctly accounting for this, US real consumption growth on a per head basis is already fragile. Meanwhile, the real bond yield is only now approaching the pain point that typically triggers a recession. Ahead of the upcoming US jobs report, we point out what it would take for the Joshi rule real-time US recession indicator to breach its event horizon. And how to position in stocks and bonds, both tactically and cyclically. Plus: potential turning points in Biotech and Genome, ADBE, and Taiwan versus China.

Our kinked Phillips curve framework predicted the immaculate disinflation of 2023. That same framework is now warning that the global economy is heading towards a recession in the second half of 2024.

The Netherlands has a healthier and more stable economy and demography than its European peers. Investors should stay overweight developed European equities, including Dutch equities, relative to emerging European equities.

Natural gas storage levels in the US and EU are sufficient to balance flowing supply and demand this winter, assuming normal weather. China continues to invest in domestic production, and to diversify supply sources to compensate for a lack of storage. Longer-term Qatari contracts are giving higher weight to natgas trading hub prices. We remain long the XOP ETF to retain exposure to fossil-fuel producers supplying DM and EM economies with natgas beyond the 2050 net-zero-emissions goals advanced by the IEA.