Signals of a Coming Recession Are Absent, Ned Davis Says

Forget about retreating to defensive stocks for now, per the firm’s analysts, as the risk of a downturn in the ‘next several months is low.’


That recession so many have expected over the past two years has not yet materialized. By the reckoning of Ned Davis Research, there are no signs that an economic downturn and its misbegotten compatriot—a bear market in equities—are imminent.

A big reason the Federal Reserve is poised to reduce its benchmark interest rate, with an announcement expected Wednesday, is its concern that the economy is about to slow. Still, Fed Chair Jerome Powell avoids the R-word in his predictions, saying that his aim is to find a “soft landing,” whereby the nation avoids both a recession and high inflation.

“Economists do not have a great track record identifying recessions beforehand,” wrote Ed Clissold, Davis’ chief U.S. strategist, and Thanh Nguyen, a senior quantitative analyst, in a commentary. They wrote that some indications of a pending downturn have cropped up since 2022—notably the inverted yield curve, in which short-term yields are higher than long-term ones.

But other factors, such as a growing gross domestic product (up 3% in this year’s second quarter from 1.4% in the prior three-month period) and increasing retail sales, bolster the optimistic case, Clissold and Nguyen contended.

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Thus, “the risk of recession in the next several months is low,” they wrote. As a result, turning to defensive stocks (health care, utilities, consumer staples) soon is a bad idea, they cautioned.

The report detailed the run-up to past recessions, such as the bursting bubbles of the dotcom crash in 2000, the global financial crisis of 2008 and 2009, and the 2020 pandemic. Indeed, the market’s current fascination with artificial intelligence stocks could bring another burst bubble, the two strategists admitted. “But this is not our base case,” they added, apparently unconvinced that a fading of AI’s investor popularity would be strong enough to spread to the wider economy.

The stock market has played a role as predictor in the past, they indicated, and on average, an S&P 500 slide precedes a recession by six months. Nonetheless, the lead time between the start of a market descent and the arrival of a recession has fluctuated wildly over the past four decades, they found.

In 1981, for instance, stocks peaked just three months before the recession started in July. In the 2007-08 period, the S&P 500 topped out in October 2007, and the recession began two months later. The Davis report commented that recession-propelled bear markets tend to get worse as time goes by.

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Inverted Yield Curve Nears Its First Birthday—and There’s No Recession

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China to Raise Retirement Age, Starting in 2025

The new limits are aimed at stretching retirement resources to support the increasingly aged population.




For the first time since the 1970s, China will in 2025 begin “gradually raising” the national retirement age as it looks to stretch dwindling pension funding further to sustain its aging population.

The Standing Committee of the National People’s Congress approved proposals to raise the statutory retirement age gradually over the next 15 years. Individuals will not be able to retire earlier than the statutory age and will only be able to delay retirement by three years.

The retirement-age plan follows modelling from the Chinese Academy of Social Studies that found the main state pension fund will run out of money by 2035 if nothing is done. China’s public pension cost is estimated to currently be more than 5% of its GDP.

For men, the retirement age will rise to 63 from 60. For women working in blue-collar jobs, retirement age will rise to 55 from 50. White-collar female workers’ retirement age will be lifted to 58 from 55.

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Meantime, starting in 2030, employees will also have to contribute more toward the cost of China’s social security program to ensure they receive pension payments. By 2039, they will have to have contributed for at least 20 years to access payments.

An aging and shrinking population is at the core of the decision, driven in part by the country’s one-child policy that ran from 1980 to 2015.

At the end of 2022, China had a population of 1.42 billion, more than 500 million of which was older than 50. As it stands, some 300 million people will retire over the next decade in China.

Meanwhile, the population is expected to decrease by 7.9% by 2050. According to projections from the United Nations, China’s population will fall below 1 billion in 2070 and will have more than halved by 2086. By 2100, the U.N. predicts 52% of the population will be at least 60.

Since 2000, the average life expectancy has increased by about six years to 77.6 years.

This article initially appeared in our sister publication, Financial Standard, which, like CIO, is owned by ISS STOXX.

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