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No Man's Land
Aurelie Barthere
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Key Takeaways
8 min read
  • We are in no-man's land, where the economy is slowing, but the ambiguity remains around hard vs soft landing.
  • Equity investors clearly expect a “soft landing“ and appear too complacent in their positioning, which increases the probability of a market correction in May.
  • The Fed is likely to hike by 25 bps at its next meeting and hold rates steady for the rest of the year, even as growth deteriorates.
  • For crypto investors, it makes sense to maintain a careful risk management approach as long as the ambiguity around a future soft vs hard landing persists, while taking advantage of price sell-offs as more asymmetric entry points.

Solid growth so far, but the direction of travel is down

Growth in the US and other mature markets remains resilient, as demonstrated by a hefty rebound in leading Services business surveys: the Flash PMIs for the Services sectors ranged from 52+ to 56+ in the US, Eurozone, UK, Australia and Japan. As a reminder, a reading above 50 indicates a likely future expansion of the aggregated Services sector over the coming month.

The strength of Services consumption was equally highlighted in the earnings guidance given notably by airline companies in the S&P 500, with this summer’s travel bookings flagged as very robust.

Outside of Travel & Leisure and Services more generally, growth is clearly slowing. Most mature markets exhibited...