Steve Blitz, our Chief US Economist, looks at the strength of the US economy in the light of investor flows.
Investors have recently favoured US equities with large foreign revenue exposure, as opposed to domestically orientated operations. He forecasts that real growth will slow in Q1 to 2% qoq but for transitory reasons: US government shutdown, weather effects, and inventory overhang. The Fed will adjust its QT rate in March. The “real” slowdown in domestic growth is likely to come later this year - we think by summer - and that is when we expect the Fed to finally drop the funds rate by 25 basis points.
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