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Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Business https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ This forecast predicts almost no growth in US equities next year – and a big drop if there is a recession

This forecast predicts almost no growth in US equities next year – and a big drop if there is a recession



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

"We believe that the economy is reaching the end of its new structural growth rate. Poor demographics, the cumulative effect of years of weak public and private investment, and continued weakness in productivity mean we will have to get used to lower growth, ”writes the Oxford Economics team. If a recession occurs, it will more likely be mild in 2001, rather than a blood supply in 2008.

Now for the bad news: financial markets are overvalued, according to Oxford Economics. "The twin pressures of weak price power and low productivity suggest gloomy prospects for margins ̵

1; warning signs of a market that appears to have outpaced itself," the release said. The expected return on US stocks next year, according to the Oxford Economics model and our call of the day is only 1% and nothing at all for bonds.


Innes McPhee, managing director of macro and investor services at Oxford Economics, said US stocks were overpriced by about 35%. So if there is a recession, a correction could hit stocks by that amount or even more.

He also noted that in the seven times that global GDP has slowed by 1% since the 1980s, G7 central banks have cut interest rates by an average of 300 basis points. They will obviously not be able to do it this time, as the average interest rate is currently 75 basis points. "There's not much room to maneuver," he said. And perhaps the policy rate is less effective than in the past to stimulate the economy.

The buzz

Optimism was up in the air after White House economic adviser Larry Kudlow told the Foreign Relations Council that "mood music is good" for a potential US trade deal and China in the beginning.

There are quite a few US economic reports on the horizon, in particular the October Retail Sales Report and the November production of a production survey in the New York area.

Amazon

AMZN, + 0.08%

plans to protest Microsoft's $ 10 billion 10-year cloud computing contract

MSFT, + 0.51%

which many assumed would go to the online retail giant.

Nvidia

NVDA, + 0.58%

forecast a return on revenue growth after four quarters of decline as the chip maker beat estimates for its quarterly results.

The World's Largest Starbucks

SBUX, + 0.52%

The store is opening in Chicago. RH

RH, + 1.29%

shot dead in market trading after stuffing showed Warren Buffett's Berkshire Hathaway building a stake in the furniture retailer.

BT

BT.A shares, -1.60%

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

Markets

After another day of almost no movement for the industrial average

DJIA, -0.01%

on Thursday, US futures

ES00, + 0.27%

YM00, + 0.31%

were higher on Friday.

Bond yields

TMUBMUSD10Y, + 0.57%

higher edges and gold futures

GC00, -0.45%

has fallen.

The chart


According to the tracking of Société Générale hedge fund positions, through futures trading data, there are record short stakes against VIX

VIX, -1.07% ,

instability measure "Such a bold move can be seen as a clear statement of risk," the French bank said. Net long positions on emerging market shares have jumped to near-record expectations in anticipation of a positive outcome from the trade war.

Random brushes

Cleveland Browns defensive end Miles Garrett broke away from the Pittsburgh Steelers 'Mason Rudolph's helmet and hit him at the end of the Browns' 21-7 victory.

Government audit revealed that NASA went out of its way to pay Boeing

BA, + 1.36%

for their services for launching astronauts for a commercial crew program.

Discarded – a black hole cast a star from the Milky Way galaxy.

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