Global

Heading into a black hole, you pass a point of no return known as the ‘event horizon’ after which your impending oblivion is sealed. US recessions also have an event horizon, which we are fast approaching. We reveal a leading indicator of this event horizon, and what it means for investment strategy.

It is not unusual for a period of rebounding share prices to occur between an inflation-driven selloff and a growth scare. Initially, stocks rally on falling inflation and prospects of lower interest rates. Then, worries about corporate profits intensify, and equity prices deflate along with falling Treasury yields. This is what happened in the US in 2000-2001 and is likely to occur in the coming months.