Staying the course - Nov. Macro Snapshot

Our leading indicators are still supportive for risk assets over the next six months: policy and liquidity tailwinds are intact while our growth leading indicators for the US, Eurozone, and China are elevated. Our “no recession” Fed easing cycle roadmap is starting to play out (stronger dollar, higher equities, rising yields).

On a tactical basis, there are notable divergences in US equity markets alongside optimistic earnings estimates, which is a reason for caution for more nimble portfolios.

Despite the US data blackout, what data is available suggests consumption and manufacturing are resilient while labor and housing remain the areas to watch for further weakness.

Section Summary:

• Cyclical Asset Allocation: Growth, policy, and liquidity tailwinds persist
• Fed Easing Cycle: Equities, USD still tracking “no recession” Fed easing cycles
• Tactical Warning Signs: Notable breadth and credit divergences
• US Growth: Resilience from consumption and manufacturing …
• US Growth: … but labor and housing markets remain weak
• Equity: Earnings optimism elevated, macro tailwinds for value, EM
• Fixed Income: Yields trading around fair value
• FX: USD short squeeze thesis playing out
• Commodities: Outlook strong, energy and industrial metals still cheap vs gold