Bravos Research: Nobody Will See This Coming
Currently, the global economy is on track for a “soft landing.” That means that inflation is moderating, thanks to interest rate hikes by central banks. But the economy has escaped a recession.
That’s good news. But it’s also an idea that was floated in 2000 and 2007. Those dates preceded hard landings for the economy. A soft landing often looks attainable. But it’s also possible that the softening data could coalesce into a recession.
Meanwhile, the media is currently looking at a soft landing. So it’s likely that we’re nearing a point where a recession could start. Most interest rate hike cycles end before the start of a recession. A soft landing is a much rarer event.
Consequently, investors likely won’t see a recession coming. That could mean being unpleasantly surprised by markets. While it seems unlikely with stock near all-time highs, similar market peaks occurred in 2000 and 2007.
The key sign for a recession is unemployment. It’s currently on the rise. The recent growth of government jobs is hiding a deteriorating private sector. However, with the overall rate still low, this could mark a rare occasion for a soft landing.
A soft landing could still mean weaker market performance in 2025. Investors may want to lighten up on their strongest-performing positions and take some profits into the end of the year.