The Market Ear on equities.
The outlook is so awful…
When macro economists sound the most bearish, it often means the worst is already priced in. Markets don’t wait for confirmation—they front-run fear. Historically, when the consensus gets overwhelmingly negative, the actual downside rarely plays out as expected. Yes, we admit that this process has been a little too rapid even for our taste and trading style – but it does not change the fact that economists and strategists are now very one-sided in their negativity, and that awakes the contrarian in us. Let’s have a look at the latest bearish comments on the economy from sell-side over the weekend.
Economic surprises free-fall
JPM shows that the global economic surprise indices (6 week revision) are in free-fall.
Source: JPM
Ready for recession
Stocks lead the economy – not the other way around. Everyone is getting ready for the recession…
Source: @MichaelAArouet
Miss Market pricing growth
US equity market internal pricing of economic growth – Miss Market is very negative and pessimistic.
Source: Goldman
Now between ‘bad’ and ‘ugly’ scenario
Even after delay of some tariffs, aggregate tariff hits 25%, enough to trigger a US recession.
Source: Macrobond
Worsen and worsen
GS: “The US macro backdrop has worsened and, based on our economists’ baseline, we expect the growth/inflation mix will worsen further”
Source: Goldman
Now that’s a hit
BBG estimates indicate 30% tariff knocks 3-4% off GDP, adds 2-3% to inflation rate.
Source: Macrobond
Slowing sharply
Global growth is likely to slow sharply this year.
Source: Goldman
Inflation to pick up sharply
GS: “US inflation is expected to pick up sharply and remain elevated until the summer of 2026”
Source: Goldman
Yo Mama inflation
Americans now expect inflation to soar to over 6% within the next year, the highest reading in 44 years.
Source: FT
US is far worse than Europe
US in trade war with all partners, Europe only with one… key is to avoid escalation from EU!
Source: Macrobond
US growth expectations are falling…
….and the Fed is likely to find it harder to cut than the ECB.
Source: Macrobond
Recession is not priced.
