Services Versus Manufacturing – September 30, 2019

Services Versus Manufacturing

Politics in the U.S. and U.K. dominated the headlines this week, yet the financial markets only churned as investors digested what has been an eventful month, with bond yields and equity prices rebounding solidly. A crossroads has been reached: is the world headed for recession as government bond yields are discounting, or will the global economy once again prove resilient causing the equity bull market to revive?

Our latest research has focused on key topical investment issues, particularly the outlook for the global stock/bond ratio. The critical issue is whether the weakness in manufacturing will soon end, or whether the previously firm service sector will join manufacturing activity on the downside. We lean towards the former outcome, but there is considerable economic and political uncertainty, and thus are staying cautious in the near term – stay tuned.

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