Japanese Yen

The consensus soft-landing narrative is wrong. The US will fall into a recession in late 2024 or early 2025. We were tactically bullish on stocks most of last year, turned neutral earlier this year, and are going underweight today. We conservatively expect the S&P 500 to drop to 3750 during the coming recession.

In this insight, we update our thinking on the recent BoJ move in terms of positioning for the yen and JGB yields.

In this report, we review our trade recommendations based on incoming data in the last month.

In this week’s report, we defend four out-of-consensus claims. Claim #1: Underlying inflation in the US is not reaccelerating. Claim #2: The US labor market is set to weaken abruptly. Claim #3: The S&P 500 will drop to 3700 in 2025. Claim #4: Japan is not in danger of a currency crisis.

Central banks are in a dilemma whether to prioritize supporting growth or bringing inflation back to target. This is unlikely to end well. Investors should be defensively positioned.