Labor Market
Indian stocks have further downside in absolute terms as profits disappoint. Their underperformance versus the EM equity benchmark, however, is late, which warrants a shift from underweight to neutral allocation.
The greater risk to the world economy in 2026-27 is not that a recession triggers a market crash, but that a market crash triggers a recession. This is because a market crash will destroy the wealth that is funding the crucial marginal spending of 2.5 million excess American retirees. Plus, a new tactical trade is: Overweight Switzerland (SMI) versus UK (FTSE 100).
Our Portfolio Allocation Summary for November 2025.
In the absence of official government data, investors are turning to alternative sources to gauge the direction of the US economy. Our analysis of this data suggests that the economy has continued to expand at a moderate pace over the past two months. If the Supreme Court were to strike down the tariffs, this would reduce the near-term odds of a recession while raising the odds of overheating.
The Fed cut rates today, but a follow-up rate cut in December is uncertain. It will depend, in large part, on who wins a debate about the neutral rate of interest.
