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Home / Business / This forecast hardly forecasts any growth in US equities next year – and a big fall if the recession

This forecast hardly forecasts any growth in US equities next year – and a big fall if the recession



First, the good news – although not good. In a new forecast, Oxford Economics expects the world economy to stabilize during the first half of next year.

“We believe the economy will be close to the new structural growth rate. Poor demographics, the cumulative effect of years of weak public and private investment and the ongoing weakness in productivity mean that we have to get used to slowing growth, ”writes the Oxford Economics team. If a recession occurs, it will probably be a mild style in 2001 rather than a carnage from 2008.

Now for the bad news: financial markets are overrated, according to Oxford Economics. "Double printing of weak price power and low productivity means a bleak outlook for margins ̵

1; warning signs of a market that seems to have gone ahead of itself," it says. The expected return for US equities next year, according to the Oxford Economics model and today's call is only 1%, and not for bonds.


Innes McFee, Managing Director of Macro and Investor Services at Oxford Economics, said US equities are overvalued by around 35%. So if there is a recession, a correction could hit stocks by that amount or even more.

He also pointed out that in the seven times when global GDP has declined by 1% since the 1980s, G-7 central banks have cut interest rates by an average of 300 basis points. They clearly won't be able to do that this time around, since the average interest rate right now is 75 basis points. "There's not much room to maneuver," he said. And the key policy rates may be less effective than before in stimulating the economy.

The summing

Optimism was in the air after White House economic adviser Larry Kudlow told the Council on Foreign Relations that "mood music is good" for reaching a potential American and China trade agreement.

There are quite a few US economic reports on the horizon, especially the October and November issue of a New York-area production study.

Amazon

AMZN, + 0.08%

plans to protest the award of a 10-year, $ 10 billion Pentagon cloud computing contract to Microsoft

MSFT, + 0.51%

that many people assumed would go to that online store giant.

Nvidia

NVDA, + 0.58%

predicted a return to revenue growth after four quarters of decline as the chip maker projected its quarterly results.

The world's largest Starbucks

SBUX, + 0.52%

store opens in Chicago. RH

RH, + 1.29%

shot up in premarket trade after a filling showed that Warren Buffett's Berkshire Hathaway is building a stake in the furniture retailer.

BT

BT.A, -1.53%

shares fell in London following a proposal by the opposition Labor Party to partially nationalize it.

The markets

After another day of almost no movement for the Dow Jones Industrial Average

DJIA, -0.01%

Thursday, US Stock Futures

ES00, + 0.25%

YM00, + 0.30%

were higher on Friday.

Coupon

TMUBMUSD10Y, + 0.81%

angled higher, and gold futures

GC00, -0.52%

falls.

Chart


According to Société Générale & # 39; s hedge fund position tracking, commodity futures trading commission data records record short games against VIX

VIX, -0.92% ,

volatility measure. "Such a bold move can be understood as a clear statement of risk," said the French bank. Net long positions in emerging market equities jumped to almost record highs pending a positive result of the trade war.

Random reader

Cleveland Browns defensive end Myles Garrett tore off Pittsburgh Steelers quarterback Mason Rudolph's helmet and hit him with it at the end of Brown's & # 39; 21-7 victory.

A government audit has revealed that NASA went out of its way to pay too much for Boeing

BA, + 1.36%

for its commercial Crew Program astronaut launch services.

Thrown – A black hole cast a star out of the Milky Way galaxy.

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