US Economy

If a US recession comes, it will be 'shallow,' says Barings chief

Key Points
  • Any recession in the U.S. is likely to be "shallow," given the current state of the U.S. economy, according to Barings' Tom Finke.
  • The U.S. consumer and growth in sectors such as technology have offset declines in other American industries, said Finke, who is chairman and CEO at Barings.
  • Finke said investors should look at the "fundamentals, and not just look at the movement in stock market day-to-day."
Workers assemble cars at a plant in Chicago, June 24, 2019.
Jim Young | AFP | Getty Images

Any recession that happens in the United States would likely be "shallow" given the current state of the country's economy, according to Tom Finke, chairman and CEO of investment management firm Barings.

"From the U.S. point of view and the U.S. economy, if we're talking about a recession in the U.S., the consumer and growth industries like (technology) have offset declines in ... other industries," Finke told CNBC's Oriel Morrison at the Milken Institute Asia Summit in Singapore.

"We still have tight labor markets, you still have growth industries," Finke said. "It's not the typical, if you will, cyclical slowdown where you have ... a big long decline going into it ... We're actually growing still."

Finke's comments come amid worries that Washington's trade war with Beijing could drive the U.S. economy into a downturn, with the two powerhouses slapping tariffs on billions of dollars worth of each other's goods.

The data so far has been mixed. In August, the Institute for Supply Management's Purchasing Managers' Index contracted for the first time in three years, and nonfarm payrolls for that month fell short of estimates. On the other hand, the September print of preliminary data released by the University of Michigan showed consumer confidence stateside rising more than expected.

Advice for investing in turbulent markets

As the U.S.-China trade fight rages, major stock markets across the globe have fluctuated wildly. Finke said Barings keeps its eye on the fundamentals in such an environment.

"What we're looking at," he said, "is industries and companies and their balance sheets and their income statements to say: 'OK, do they have sustainable growth going on ... are they able to generate cash flow, are they in an industry that's being disrupted like retail, or are they in an industry that's growing like technology?'"

"You gotta look at those fundamentals and not just look at the movement in stock market day-to-day, and picking value in credit markets and in asset markets like real estate," he said.