Chinese trade negotiators suddenly canceled a visit to meet U.S. farmers after they wrapped up trade talks in Washington this week.Marketsread more
The Pentagon will deploy U.S. forces to the Middle East on the heels of the attack on Saudi Arabian oil facilities, United States Secretary of Defense Mark Esper announced...Defenseread more
President Trump also said he is "not looking for a partial deal" with Beijing, moving away from his suggestion last week that he would consider an "interim deal."Politicsread more
Progress on trade talks will determine how far market will move above new highs.Trader Talk with Bob Pisaniread more
"Sure, the trade war's taking its toll on business ... it's just not taking its toll where it was supposed to," Jim Cramer says.Mad Money with Jim Cramerread more
Joe Biden called on President Donald Trump Friday to release the transcript of a call with a foreign leader that is the subject of a whistleblower complaint. Biden described...Politicsread more
For investors taking a breather from the chaos in August, buckle up as the market is about go crazy again, Goldman Sachs warned.Marketsread more
Palantir Technologies is targeting a valuation of at least $26 billion in a private fundraising round, the first for the Peter Thiel-backed data analytics startup in four...Wall Streetread more
Michael Pack, a conservative filmmaker linked to Steve Bannon, saw at least $1.6 million in donations from his nonprofit sent into the coffers of his independent production...Politicsread more
The New England Patriots released Antonio Brown just 11 days after signing the wide receiver. The NFL Super Bowl champion team initially had kept him in the face of a rape...Sportsread more
A tour bus carrying Chinese-speaking tourists crashed near a national park in southern Utah, killing at least four people and critically injuring up to 15 others, authorities...U.S. Newsread more
Some money managers are increasingly nervous about an upcoming recession amid higher interest rates and tighter credit availability.
“It’s a classical late cycle story. So, when I was here last time, I said we were long and nervous. We are no longer long, we are increasingly nervous about this,” Roelof Salomons, chief strategist at Kempen Capital Management, told CNBC’s “Squawk Box Europe” on Thursday.
A late cycle represents an economy that has been growing, but is poised to fall into a recession, amid tighter credit availability, lower profit margins and tighter monetary policy.
According to Salomons, the evidence for a late cycle is all there: the yield curve is flattening, which usually predicts an upcoming recession; the credit spreads are widening, suggesting that investors are afraid of taking risks; and defensive stocks are outperforming, which are a safer option to survive changes in the economic cycle.
“Everybody is talking about when this cycle will rollover, but that’s a late 2019, early 2020 story. But the pest is biting and the money matters,” Salomons said.
“It is too early for the economy to rollover but for markets it is time to get back home,” he added, suggesting that as investors are taking fewer risks, thereby they prefer U.S. stocks to emerging market equities, credit with investment grade, and so on.
Laurent Godin, senior equity analyst at Indosuez Wealth Management, voiced similar concerns in a note Wednesday.
“The market is concerned about the duration of the global economy expansion cycle and the bull market has now limited runway,” he wrote.
An end to a bull market would suggest that equities might fall in price and boost selling. According to Godin, the best sectors to hold in such scenario are technology, financials, and energy.
“They are also the sectors that currently benefit from the most net analyst upgrades for the coming quarters. However, equity markets will face a more volatile environment in the coming months with limited upside, in our opinion,” Godin added.