It’s been quite a topsy turvy 7 days for US stockmarkets. Having hit correction territory only to stage something of a bounceback, George Lagarias, Chief Economist at Forvis Mazars, shares his latest comments with us as follows:
“US equities reached correction territory before rebounding on Friday. What we have been living is not investors pricing in a brand-new economic reality, as much as a healthy reaction to a very expensive US, tech-driven equity market. However, the fact that the US and the global economy was not really the main protagonist of the correction does not mean that we should dismiss concerns over inflation and economic growth. US trade policy spillovers may be inevitable.  While we believe that many of Washington’s strategies make sense on their own, it is the sum of the parts and the execution which make success questionable.
“The larger picture, however, is that Washington is trying to solve a global growth problem by recasting it as a global competition problem. We believe that persistent lack of clarity and constant changes in direction, will force producers to increase stocks, reducing profits (stock maintenance costs money) and increasing inflation (which reduces real growth) as they compete for resources. There’s already evidence that consumers are becoming more reticent. Meanwhile, protectionism in the US could spread to avoid dumping of goods in other places, killing the very growth it seeks to protect.”
