Sophie Huynh, a cross asset strategist at Societe Generale, says the US has less than a year to go before a recession hits and a bear market in US stocks sets in.
Still, Huynh says investors should understand there are limits to how bad things are going to get for US stocks in particular.
She’s recommending three trades ahead of that downturn. Two of them are built around the market’s big winners continuing to outperform. But for a third, she’s saying it’s time to pull the ripcord.
Click here for more BI Prime stories.
The three-legged stool is a classic approach to retirement. And Sophie Huynh, a cross asset strategist at Societe Generale, says a different three-legged stool can help investors prepare for a rough stretch in the stock market.
Huynh expects the US economy to go into a recession in the second quarter of 2020, leading to a downturn for stocks. But her prediction also calls for a relatively mild recession. And just as important, she said there are powerful trends that limit how badly US stocks are going to get hurt.
Even if the Federal Reserve can’t prevent a recession, its interest rate cuts will be a key source of support for the market, Huynh says. She thinks the high dividends of US companies will help as well.
And while a recession always hurts corporate earnings growth — which has historically been the biggest driver of stock prices — Huynh says this would be a mild recession after a period of already-slow growth. That means earnings forecasts won’t fall as much as they usually do when a recession hits, and that means stocks won’t be punished as badly.
With that in mind, she’s offering three trades to help investors thrive during the downturn.
(1) US stocks, especially dividend aristocrats
Yes, Huynh says US stocks still make …read more
Source:: Business Insider