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Home / Business / This forecast barely predicts growth in US equities next year – and a big decline when it comes to a recession

This forecast barely predicts growth in US equities next year – and a big decline when it comes to a recession



First, the good news – even if it's 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 economic trough is near its new structural growth rate. With poor demographics, years of accumulation of weak public and private investment, and continuing weakness in productivity, we need to get used to lower growth, "writes the Oxford Economics team. If it comes to a recession, it is more a mild 2001-style recession than a 2008 bloodbath.

Now for the bad news: financial markets are overvalued, according to Oxford Economics. "The double pressure of weak pricing power and low productivity implies gloomy margin prospects ̵

1; warning signals for a market that has apparently outperformed itself," it says. The expected return on US equities next year, according to the Oxford Economics model and our daily is only 1% and nothing for bonds.




Innes McFee, Managing Director of Macro and Investor Services at Oxford Economics, said US equities are overvalued by around 35%. So when it comes to a recession, a correction could hit stocks by that amount or even more.

He also pointed out that over the seven years that global GDP has slowed by 1% since the 1980s, G7 central banks cut interest rates by an average of 300 basis points. Clearly, they will not be able to do this this time, as the average interest rate currently stands at 75 basis points. "There is not much room for maneuver," he said. And key interest rates may be less effective for reviving the economy than in the past.

Enthusiasm

After White House economic adviser Larry Kudlow told the Council for Foreign Relations that the "mood music is good" when a potential trade agreement between the US and China is in one early stage, optimism was in the air.

There are some US economic reports in sight, notably the October retail report and the November release of a production survey for the New York area.

Amazon

AMZN, + 0.08%

is planning to protest against the award of a 10-year Pentagon cloud computing contract to Microsoft for $ 10 billion

MSFT, + 0.51%

many of which have assumed that they would go to online retail giants.

Nvidia

NVDA, + 0.58%

predicted a return to revenue growth after four quarters of decline as the chipmaker outperformed estimates for its quarterly results.

The world's largest Starbucks

SBUX, + 0.52%

Store opened in Chicago. RH

RH, + 1.29%

shot up in premarket trading after a fill showed that Berkshire Hathaway of Warren Buffett is building a stake in the furniture retailer.

BT

BT.A, -1.51%

Stocks fell in London following a proposal by the opposition Labor Party to nationalize these in part.

The Markets

After another day on which the Dow Jones Industrial Average barely moved

DJIA, -0.01%

on Thursday, US stock futures

ES00, + 0.27%

YM00, + 0.30%

were higher on Friday.

bond yields

TMUBMUSD10Y, + 0.48%

slightly higher and gold futures

GC00, -0.37%

declined.

The graph




According to Société Générale's tracking of hedge fund positions, there are record short bets against the VIX according to data from the Commodity Futures Trading Commission

VIX, -1.07% ,

the volatility measure. "Such a bold move can be understood as a clear risk assessment," said the French bank. Emerging market's net long emerging market equities hit a record high in anticipation of a positive trade war result.

Read Occasionally

Cleveland Brown's Defensive End Myles Garrett tore off the helmet of Pittsburgh Steelers quarterback Mason Rudolph and beat him at the end of the Browns' 21-7 win.

A government review has revealed that NASA has done everything possible to overpay Boeing

BA, + 1.36%

for the Astronaut Launch Services of the Commercial Crew Program.

Eject – A black hole threw a star from the galaxy galaxy.

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