August 2024
Alan Dunne spoke with Peter Berezin, Chief Strategist at BCA Research on Top Traders Unplugged about why he sees the US economy moving into recession in late 2024/early 2025 and why that points to the S&P 500 falling to 3750, or potentially lower.
Here are some key areas Peter is focused on that have received less attention in the marfkets recently:
The current weakness in the US housing market
The ongoing stresses in the commercial real estate sector and how this may impact regional US banks
The coming fiscal adjustment at the state and local government level
Signs of softness in leading indicators of the labour market such as in job openings
Weakness in manufacturing
Initial signs of slowing in the consumer at a time when savings rate at 3.5% is well below the long term average
Importantly, Peter points out that while current GDP is still solid (at about 2% annualised) in the past we have seen solid growth just before the economy has turned down (such as in Q4 2007).
On the plus side Peter suggests the outlook points to a shorter, less pronounced “income statement recession” in contrast to the deeper more challenging “balance sheet recession” after the Global Financial Crisis.
They also discuss the likely path for Fed policy in a recession and the outlook for bonds, currencies and commodities.
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