By: Scott Davis
Folks, in the link below please find our latest Melius Macro Views slide deck. Key takeaways below:
- Short cycle and deep cyclical markets appear to be heading into a global recession, although very mild. Longer cycle markets remain solid – led by anything capex or aerospace related.
- Forward datapoints show China stabilizing at low levels (p. 9) and Europe still weakening.
- Inventories remain elevated at levels last seen during the 2008 financial crisis and are a key risk going into the back of half of the year (p. 10-14)
- Industrial metals prices are stable at lower levels for now, and rising oil prices should help a key industrial market (p. 19-20)
- Industrial stock valuations back to levels last seen during 2015-2016 industrial recession (p. 45). Funds continue to flow out of industrials but are closing in on prior trough levels (p. 31). Net/net the market is ahead of the data…too late to sell.