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Oliver's Insights - The "gradually" maturing investment cycle - what is the risk of a US recession?
26/02/2018

Oliver's Insights - The "gradually" maturing investment cycle - what is the risk of a US recession?

The "gradually" maturing investment cycle - what is the risk of a US recession??

Article by Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital.

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In terms of trying to work out whether the recent 10% correction in US/global share markets will go onto become a major bear market or is just another 10% or so correction in a continuing cyclical bull market, the key is whether a US recession is imminent or not. The attached note looks at the gradually maturing global investment cycle and the risk of recession in the US. The key points are as follows:

  • With inflationary pressures starting to rise in the US the global investment cycle is starting to get more mature. This is likely to mean a further rise in bond yields and more share market volatility.
  • However, there is still little sign of the sort of excesses that precede economic downturns, profit slumps and major bear markets suggesting that we are still not at the top in the investment cycle. Key to watch for will be: over investment, rapidly rising inflation above target and tight monetary policy.
Click here to read the full article

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