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Bloomberg
3 hours ago
- Bloomberg
Morgan Stanley's Slimmon: Markets Too Optimistic on Rate Cuts
Andrew Slimmon, Morgan Stanley Investment Management senior portfolio manager, says the markets are bound for a correction but it won't be because of tariffs. He speaks on "Bloomberg Open Interest." (Source: Bloomberg)
Yahoo
3 hours ago
- Yahoo
UBS sees 'a further slowing in U.S. economic growth' in second half of 2025
-- UBS expects U.S. economic growth to decelerate to around 1% in 2025, citing a mix of fiscal fade, persistent inflation, and elevated interest rates. In a note to clients on Tuesday, the bank stated, 'We see a further slowing in US economic growth to ~1% in 2025,' and warned of a rising unemployment rate, projecting it will reach 4.6% by year-end. UBS analysts pointed to 'softening in private payrolls,' a decline in job listings in services, and higher effective tariffs as primary headwinds. The firm also noted that the average tariff rate is now roughly 16%, up from about 2% in 2024, and expects this to result in 'core PCE of ~3.4% by end-2025.' UBS sees these pressures weighing on real disposable income growth, which is already trailing personal consumption expenditures. While fiscal measures tied to the Big Beautiful Bill may support consumption, UBS noted these won't take effect until the first half of 2026. 'We see tariff impacts in 2H 2025,' the firm wrote. UBS also highlighted signs of stress in consumer and corporate credit. 'Our credit-based recession indicator is rising with a probability of a downturn through Q126 at 47%,' analysts said. Meanwhile, consumer delinquency rates are said to be climbing, especially in student and mortgage loans. Despite these pressures, the firm sees potential offsets, including credit usage and continued upper-income spending. UBS maintains a defensive positioning in credit, favoring higher quality and consumer non-cyclicals given tighter spreads compared to 2022. Related articles UBS sees 'a further slowing in U.S. economic growth' in second half of 2025 Victoria's Secret Exposed: The Warning Sign Behind the Stock's 52% Collapse Buy this massive AI stock into upcoming Q2 print: Morgan Stanley
Business Insider
4 hours ago
- Business Insider
3 reasons investors are moving on from the trade war
President Donald Trump's trade war is starting to feel like old news for markets. Bank of America's monthly global fund manager survey, published on Tuesday, showed that investors have largely moved past the fear of tariffs and are feeling good about the stock market again. A sentiment reading of fund managers surveyed from July 3 to July 10 rose to 4.3 from 3.3 in the last month, the most positive investors have felt about the market since February, early in Trump's new term and months before the worst of the tariff volatility rocked markets. That boost in sentiment comes even as Trump's latest volley of tariff threats reignites uncertainty around the trade war. More than half—53%—of fund managers said they believed the final tariff rate the US would impose on the rest of the world would hover around 15%, up from the 10% rate investors expected in June. And yet, most investors aren't too worried about the prospect of higher tariff rates. Here's what they're thinking about instead. 1. Recession expectations are falling Investors aren't worried about a global recession. The percentage of investors who believed a global recession is likely in the next year dropped to its lowest level in five months, according to BofA's survey. The percentage of investors who believed a global recession was unlikely also grew to 59%. Meanwhile, 65% of fund managers said they believed the most likely outcome for the world economy was a soft landing, a slight economic slowdown that avoids an outright recession. Twenty-one percent of investors said they believed the most likely outcome was a " no-landing," a situation in which inflation comes down and the economy continues on a path of uninterrupted growth. 2. Corporate earnings optimism Investors are also feeling pretty good about the picture for corporate earnings growth. Forty-two percent of fund managers in the BofA survey said they believe earnings-per-share would surprise to the upside for the second quarter, compared to 19% of investors who said they believed earnings would likely surprise to the downside. The outlook for earnings has brightened in recent weeks. Morgan Stanley's gauge for earnings revisions breadth has climbed from -25% in mid-April to 3%, analysts at the bank wrote in a note on Monday. "The vibe right now is: underpromise and overdeliver," Hardika Singh, an economist strategist at FundStrat, wrote in a note on Tuesday. "And given that there is now more clarity on what's happening with tariffs, it's not an unrealistic scenario," she said of earnings beats. 3. AI bullishness The hype for artificial intelligence is still strong — and some investors think the economy is already starting to reap the benefits. Forty-two percent of fund managers said they believed productivity was already rising from AI use, while 21% said they believed productivity would rise as soon as next year. Meanwhile, the Roundhill Magnificent Seven ETF, which tracks the seven mega-cap tech firms, has rallied nearly 40% from its low on April 8. "The market has become numb to the administration's moves and is instead focusing on AI, tech and corporate America's ability to adapt and be nimble," Skyler Weinand, the chief investment officer at Regan Capital, wrote in a note on Tuesday.
