Economic Growth

Although not our base case, there is a path for the US economy to avoid a recession over the next few years. We see the risks to stocks as tilted to the upside in the near term but to the downside over a 12-month horizon.

Spain is holding a general election this Sunday and the country is likely to veer to the right. Will this shift threaten European unity and herald a new period of tensions in the Eurozone?

In this report, we dissect which markets have broken out and which ones have not, and reflect what this entails for our global macro view. Also, we analyze how the S&P 500 has been taking its cues from a change in the inflation trend. Yet, inflation dynamics are complex, and a falling inflation rate does not mean that the inflation menace has been eliminated.

The S&P 500 reached our 4,500 mid-year target last week, but the bears have yet to capitulate and stocks could melt up so we are placing a trailing stop on our tactical overweight instead of downgrading equities outright.

In recent months, the European and US economies have greatly diverged, with the Euro Area massively disappointing while the US has surprised to the upside. Can this dichotomy continue or is it Europe’s turn to shine?