Charts That Matter

Goldilocks: Possible But Improbable

15 Mar 2023

by Arthur Budaghyan, Chief EM/China Strategist

The odds of achieving a goldilocks scenario in the US where inflation drops amidst robust growth are low. If US bank woes do not escalate, the Fed will continue hiking amid a contraction in US corporate profits and global trade. The recovery in China’s industrial economy will disappoint. Commodity prices are breaking down.

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Contents

Executive Summary / Insight
A Systematic US Banking Crisis Is Not Likely, But Credit Tightening Will Weigh On Growth
The Fed Is Hiking Amid A US Profit Contraction
US Inflation Will Prove Sticky; The Fed Will Hike Further
Global Trade / Manufacturing Will Continue Shrinking
The Asian Export Contraction Will Deepen
Commodity Prices Will Break Down
Reflation Trades Are On The Back Foot
Little New Stimulus From China
Deflation Risks In China = A Weaker RMB
Stay Put On Risk Assets
US And EM Equities: Where Is The Next Support?
EM Equities Are Fairly Valued, Not Cheap
Is The EM Secular Underperformance In Its Final Phase?
Strategic Themes (18 Months And Beyond)
Equities Cyclical Recommendations (6-18 Months)
Cyclical Recommendations (6-18 Months)