Negative sentiment pervades but depth of possible recession key to market path

Our proprietary survey shows investors are as pessimistic as they have been all year, leading to the biggest shift to bonds from equities since the Global Financial Crisis. But the news is not all bad. Savita Subramanian notes companies have effectively cut costs driving stability or improvement in margins and one reason March quarter results beat expectations. Though not constructive on markets at the index level, she sees opportunities in certain sectors.  But recession still looms and according to Elyas Galou,  every past Fed hiking cycle has ended with a credit event.  He suggests the next major credit event could lead us to the next recession, a risk for markets but a buying opportunity once it happens. You may also enjoy listening to the Merrill Perspectives podcast, featuring conversations on the big stories, news and trends affecting your everyday financial life.

 

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