“The risk really is if inflation does not come down as we expect. We expect that to be on a downward trajectory, which really paves the way for the major central banks to be lowering interest rates. And the second one is the traditional indicators of a recession, like your inverted yield curve is still there,” said Fook Hien Yap, Senior Investment Strategist, at Standard Chartered Bank in an interview with CNBC-TV18.
He still sees about a 20% probability that US could go into a recession.
Danielle DiMartino Booth, CEO and Chief Strategist at QI Research, also recently talked about signs of underlying weakness in the US economy, adding that the US market rally could be in its last leg.
She believes this may prompt the US Federal Reserve to lower interest rates as early as September.
“We are seeing a distinct weakening in the job market. We have a major revision coming to our payroll statistics in August…We know that Americans have stopped charging on their credit cards for the first time in three years. The evidence is multiplying that the United States equity market rally is in its last throws, in its last hurrah,” Booth told CNBC-TV18 in an interview.
Within Asia, Yap prefers the Indian market.
He noted that when the markets make all-time highs, more often than not, the next six-twelve months’ average and medium returns are positive.
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He expects mid-teens kind of earnings growth for India.
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He is approaching Indian markets with a barbell strategy, with industrials, consumer discretionary, and healthcare, as his preferred bets.
He favours largecap stocks in India.
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