Abbey Road Investment Views, Dec. 2022
US GDP resilience is likely temporary
• US economic activity has accelerated recently
• But leading indicators still point to recession
• The Fed needs rising unemployment to tame wages
• Why the USD will likely decline further (Focus p2)
• US stock valuations; and bond opportunities (p3)
After two negative quarters, US GDP came in at a solid 2.9% in Q3 and is tracking at 4.3% in Q4 so far according to the Atlanta Fed’s ‘nowcast’. This surprising strength may explain
why industrial stocks have performed well in the last couple of months. But most leading indicators still point to a recession soon, including the shape of the yield curve (see p2). The US Leading Indicator Index from the Conference Board is giving a clear recession signal (see chart opposite).
Download the full Investment Views of the month below.