Topic: recession

With the risk of stagflation fading, with not much stagnation and not much inflation, the market is overwhelmingly betting that the Fed will decide to cut rates in its 17-18 Sept. meeting.

Whether the US economy falls into recession is not the only thing that matters for financial markets, but it is close. The simplest explanation for why equity markets have been so buoyant this year is that the widely forecast recession in the US has failed to materialise.

While global market headlines about high interest rates, persistent inflation, US debt, the impact of artificial intelligence and US-China tensions have been dominating the news, the elephant in the room is recession.

Large investors have slashed their allocations to equities to the lowest level since the 2008 financial crisis and hold more cash than in the last two decades.