TS Lombard has a 30 year track record in making bold, off consensus-calls at major inflection points in economics, politics and markets. For example, building on our global economic and financial analysis to find imbalances and fragilities, we identified the coming storm of the Global Financial Crisis – identifying the crucial turning point in the cycle and calling the stock market bottom as recovery began.
We are at another inflection point. We are convinced bears, and expect the S&P 500 to fall at least 20% with longer lasting downward pressure. On our analysis stock market bulls are wildly optimistic in pricing earnings returning to ‘normal’. The private sector recovery will be slow, even assuming no resurgence of the virus. Incomes have been hammered. Companies and households have no desire to invest or spend. CapEx is on hold and household savings rates are soaring and will stay high. Our forecast is that the full year 2020 will see US GDP down nearly 4% (still -3% YoY by 2020 Q4) and the EA’s down by 8.5%. World growth will be depressed for years. The recovery from this year’s recession will only get GDP back to 2019 levels by 2022. To access all our research relating to the virus and what it means for growth and asset prices please .