David Bowers in The Times, a “Hard landing for the global economy may be good news for markets”
2nd MAR. 2023
Simon Nixon was in discussion with David regarding implications of the US Senior Loan Officer Survey, showing demand for credit has collapsed and that lending standards have tightened. David notes, that has “typically foreshadowed a rise in credit risks within a year…”
…adding “US house prices have declined for six straight months”.
Nixon writes: “Whether this weaker underlying data is signaling an imminent hard landing is unclear, but a hard landing is surely needed if inflation is to be tamed. Even if headline inflation rates fall this year — as they mechanically will as energy prices fall — labour shortages in developed markets have given workers more bargaining power, raising the risk of wage-price spirals.”
David Bowers notes, “the soft landing or no landing narratives envisage global growth rebounding before any spare capacity or economic slack has been eliminated and with unemployment rates in America and Europe at, or close to, secular lows.”
This is not ASR’s base case. We remain positioned for a US ‘hard landing’ as policy bites.
To read the full article in the Times , see HERE (Times subscription required)
ASR clients can read our views on Staying Defensive as Credit Risks Rise and David Bowers on Hard Landing … Soft Landing … No Landing
To request copies of these notes as part of an ASR trial, kindly reply HERE