Perspectives
Stay up-to-date with the current investment and macroeconomic issues at ClearBridge Investments. We provide analyses of the themes and trends which lie at the heart of your investment challenges.
AOR Update: Two Steps Forward, One Step Back
The ClearBridge Recession Risk Dashboard has seen a shift with Jobless Claims improving to green, a development inconsistent with substantial deterioration in the labour market.
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Rising Unemployment: Closer Look, Different Conclusion
A triggering of the Sahm rule has spooked financial markets in recent weeks but a deeper analysis shows increasing labour supply, rather than job losses, is a primary contributor to the pickup in unemployment.
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AOR Update: The Great Rotation?
With equities experiencing the most volatility since the pandemic, we examined the five factors driving the move out of mega cap growth stocks and why a slowing but still expansive economy, with the aid of imminent rate cuts, should support value, small cap and cyclical stocks in coming quarters as well as active management.
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The Long View: It's All About Perspective
The ClearBridge Recession Risk Dashboard improved to an overall green signal this month with three underlying indicator improvements, supporting our view of continued economic normalisation.
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AOR Update: Resilient Economy Gets More Credit
Credit Spreads became the first indicator to turn green this month while Profit Margins improved to yellow, bringing the overall dashboard closer to green.
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AOR Update: Wage Moderation Allows Fed Patience
Jeff Schulze and Josh Jamner examine why slowing wage growth in the U.S. should offset fears that recent hot inflation prints could spur additional Fed tightening. They also explain how wages have achieved a “Goldilocks” zone supportive of a soft landing.
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The Long View: A Unique Cycle
The distinct nature of the current economic cycle appears to have tripped up many traditional recession indicators. Several leading indicators have improved over the last six months, including an upgrade of the ClearBridge Recession Risk Dashboard to yellow from red.
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AOR Update: It's Looking Different
Unsynchronised post-pandemic business cycles look to have spoiled recession expectations, with the ClearBridge Recession Risk Dashboard moving from red to yellow, favouring a soft landing.
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AOR Update: Soft Landing Coming into View
The overall reading of the ClearBridge Recession Risk Dashboard, while still in red or recessionary territory, is nearing the threshold for yellow.
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The Long View: Here Comes the Sun?
Several rays of light are showing through the macro clouds, including an increasing likelihood of a soft landing with the Fed being in a more flexible position as inflation moderates and three positive indicator changes for the ClearBridge Recession Risk Dashboard in the last quarter.
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U.S. Economic Outlook: Beware Lagged Effects
The economy is at the crux of this cycle, the most difficult period of headwinds. We expect the lagged effects of Fed tightening to slow economic growth during the first half of 2024 and we continue to maintain our base case of a recession as we move through this period.
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AOR Update: The Fed is Done, What's Next?
With the U.S. market and Federal Open Market Committee suggesting the rate hike cycle is complete, the first rate cut could come by May, a pause consistent with the Fed’s “higher for longer” messaging.
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