Just three months ago, the escalating US-China trade war and a disturbing signal in the US bond market triggered a global panic, triggering a stock sale and for the first time in ten years, the dreaded r-word resurfaced: recession .
See here: "Recession worries disappear" was a takeaway from Bank of America Merrill Lynch's latest survey of fund managers. Global growth expectations for the next 12 months had the biggest jump ever between October and November.
Investors are sitting on less money as they increase their exposure to global equities, notes Bank of America. Michael Hartnett, the chief investment strategist, describes what happens as FOMO, or "fear of missing out."
But a jump in FOMO does not mean that the risk that investors had been worried about has evaporated. Capital Economics on Friday described four reasons to stay alert:
- The recent US-China ceasefire could turn around.
- The Fed cannot meet investors' expectations for more relief by 2020.
- The US economy could go south.
- The American election may come as a surprise.
The trading situation is particularly uncertain. In the recent two-year outlook, Moody's pointed out that it is not clear that an agreement can be reached to roll back existing tariffs, which are weighing on growth. In addition, technological restrictions on Chinese companies such as Huawei will likely remain in place independently, "perpetuating an ongoing source of friction."
Brexit uncertainty will also pull in next year, the rating agency noted. Germany and the UK both avoided a recession in the third quarter, but they are not yet in danger.
For now, traders do not want to be left on the sidelines.
hold: "We see no economic reason for a recession in the advanced world over the next two years," Berenberg economists said in a note to clients Friday, noting that economic and economic indicators are "flashing amber instead" too red. "
"Unless political risks begin to rise again, trade and production should gradually recover by 2020."
Dealers show their cards before the holidays
Here is a post from my CNN Business colleague Nathaniel Meyersohn at retail:
Top dealers deliver the third quarter revenue this week. Wall Street will look closely for clues about American consumers and the health of the fierce retail that is entering the holiday shopping area.
Among the big names reporting the results: Target, Kohl's, Macy's, Nordstrom, Home Depot, Lowe's, Gap and Victoria's Secret parents L Brands.
Target has been one of the hottest stocks in 201
"We are preparing for a good holiday," said Walmart CEO Doug McMillon.
Monday: US International Purchase Data for the Treasury