A global rebound could be underway, according to Goldman Sachs Group Inc. Chief Economist Jan Hatzius, who cites that while growth is lukewarm, the investment firm’s current activity indicator in February is slightly above downwardly-revised numbers for December and January.
“Some green shoots are emerging that suggest that sequential growth will pick up from here,” Hatzius and Sven Jari Stehn wrote in a note dated Feb. 26.
International and merging markets investors have been feeding off the latest U.S.-China trade negotiation news, especially now that U.S. President Donald Trump is open to extending the 90-day trade truce that is set to expire on March 2. In the meantime, optimism is permeating throughout the capital markets on a permanent trade deal getting done is reflected in emerging markets ETFs that have been receiving the lion’s share of net inflows.
As the trade deadline looms, however, it could be a bumpy ride for emerging markets. As more news regarding trade floods the capital markets, the international and EM space will be one of the more sensitive areas to respond.
Jamie Dimon: “Prepared for a Recession”
Earlier this year, the International Monetary Fund lowered its global growth forecast, pointing to ongoing trade wars dampening China’s economic outlook as well as rising interest rates in the United States. The IMF trimmed its growth expectations to 3.5 percent from 3.7 percent. Global growth outlook for 2020 was also cut to 3.6 percent from 3.7 percent.
In the meantime, it’s not all rose-colored glasses for all. Over three-quarters of business economists are foreseeing a U.S. recession by the end of the year 2021, according to a semiannual National Association for Business Economics (NABE) survey released Monday.
The survey results show that 10 percent expected a recession at the beginning of this year, while 42 percent are expecting one within a year. Another 25 percent expect to see an economic contraction by the beginning of 2021 while the rest have no opinion or see a recession happening after 2021.
“We are prepared for a recession,” said Jamie Dimon, Chief Executive Officer of JPMorgan Chase & Co. “We’re not predicting a recession. We’re simply pointing out that we are very conscious about the risks we bear.”
For investors looking for continued upside in U.S. equities over international equities, the Direxion FTSE Russell US Over International ETF (NYSEArca: RWUI) offers them the ability to benefit not only from domestic U.S. markets potentially performing well, but from their outperformance compared to international markets.
Conversely, if investors believe that international markets will outperform U.S. domestic markets, the Direxion FTSE International Over US ETF (NYSEArca: RWIU) provides a means to not only see international markets perform well, but a way to capitalize on their outperformance compared to the U.S. markets.
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